 From theCUBE Studios in Palo Alto in Boston, bringing you data-driven insights from theCUBE and ETR. This is Breaking Analysis with Dave Vellante. The conference season is kicking into high gear. And it's a big week for events, including Microsoft Build, which will no doubt volley a shot back from the messaging that we saw at Google I.O. And it's a time of year to get serious and extract the signal from the event noise. Two big events will take place this week. Red Hat Summit slash Ansible Fest in Boston and the annual Dell Technologies World in Las Vegas. The Cube will be covering both of these shows and we want to take this opportunity to update you in the state of hybrid multicloud and what we call SuperCloud. Hello and welcome to this week's Wikibon Cube Insights powered by ETR. In this Breaking Analysis, we examine some of the key infrastructure players in hybrid multicloud with the focus on Red Hat and Dell Technologies, two firms that increasingly are partnering with each other to create more choice in the market. Now here's a quick snapshot of some key players that over the past decade have worked hard to create their own version of cloud platforms. These firms have different levels of cloud maturity and varied strategies, but they're all impacted by the public cloud and are working to both complement and compete with the hyperscalers as well as each other. This chart shows net score on the vertical axis, which is ETR's proprietary measure of spending momentum within that platform. And then the horizontal axis shows the overlap and presence within 1,171 accounts in the ETR survey that self-select as cloud computing customers. We've drawn a red dotted line. You see that red dotted line at 40% that indicates a highly elevated net score. And we've purposefully excluded the hyperscalers from this data. Let me start with Oracle. Their presence is notable. They were probably the first to introduce that notion of same, same architecture for on-prem and public cloud. VMware cloud is also prominent. You know, once they figured out their cloud strategy, customers really started to lean in. Now note, this excludes VMware cloud on AWS and only signifies VMware's hybrid and private cloud offerings like VCF. We've highlighted Equinix because they're a leader in the data center co-location space and they're a go-to partner for virtually any and all infrastructure players. And as we'll see later, they're a leading indicator of hybrid cloud activity. Cloudflare, they're really not a hybrid cloud play. It's more like they're like the everywhere cloud. They'll front end hybrid clouds and secure connections across the super cloud. In fact, we would say that Cloudflare in many ways is what multicloud should have been. Note that in this group, Cloudflare is the only player above the 40% net score line. So when we talk, let's bring back that slide. When we talk about Red Hat, we're going to talk about them next, but notice that 40% line. Only Cloudflare is just slightly above it. Let's talk about Red Hat. We highlight here their OpenStack and OpenShift offerings and we'll talk about Ansible later on. Red Hat OpenShift is a super cloud enabler and it helps enable consistent experiences between on-prem to any cloud and across clouds. Whereas OpenStack is more of a private cloud play, but as we heard during SuperCloud 2 with Walmart's triplet model from Jack Greenfield, it definitely can support hybrid operations. Now of course, Walmart SuperCloud is purpose built that OpenStack instance, they built themselves, they built it by Walmart, they've got the skills, but a lot of telcos use Red Hat OpenStack to manage their internal clouds. Next, we're highlighting Dell and HPE. These two companies have launched their versions of cloud, Dell with Apex and HPE with GreenLake. And from the survey data, they still, they haven't gained the prominence that the marketing would lead you to believe marketing usually is ahead of the actual progress, but they're now on the radar of customers and they're showing up in the ETR data progressing to the right. As you can see, the spending velocity is still not there, but be aware, this is not pure play Apex and GreenLake data. Those platforms are growing fast from their smaller bases, but they're both becoming more meaningful businesses. So in the data where it's a mix of anything the customer sees as clouds, not specifically surveying for Apex and GreenLake. HPE has said that GreenLake surpassed the billion dollar run rate. They think they announced this last year, and it continues to put all the wood behind that GreenLake arrow. Dell is more balanced in its approach and as such is not focused solely on as a service the way HPE is. You know, we'll talk about more on this later. And you can see here that we've sprinkled in some other names in the mixes. There are either supporting players like HashiCorp, DXC, which provides a lot of cloud services, and Digital Realty, which is another colo that competes with Equinex. And we've plotted IBM's cloud, which is really only a special situations cloud. It's like a mainframe cloud, if you will. Now a couple of weeks back, we shared that we felt the platform andomics repatriation index was breaking a three year trend. And that's exactly what happened. Our friend Charles Fitzgerald tracks this. He gets a lot of grief, he wrote about this. He gets a lot of grief for such as taking such a simple approach, i.e., he takes the combined revenue of Equinex and Digital Realty and he divides that by the revenue of AWS. But we like that simple metric. It's an indicator and it reversed the trend this past quarter as the growth rates of AWS they're dropping and these colos are growing in the low to mid teens. So the question is this a flip or is it a long term trend? Our premise is that the market is approaching a sort of equilibrium state. It's not there yet, and we expect cloud to continue to outpace on-prem and hybrid, but there are some wild cards and opportunities and assumptions that we think are worth revisiting. Now not to beat a dead horse, but we shared this a while back. It's data from an ETR survey asking customers their percent of usage between public and private cloud over time. Well over half the customer said most of their workloads are on-prem, but that number averages out to 57%. And it's expected to drop to under 50% by 2025. So it's nowhere near the 90% figure that we hear thrown around all the time. And the other tell on this chart is only 14% of customers say they're all in on public cloud and that number is sticky. So one has to question this claim that 90% of today's workloads are still on customer premises. We hear this repeated over and over and it's really more, in our view, more cloud marketing that suggests there's plenty of upside left in the cloud. And there is, but we think it's going to come from new innovation, new workloads, new industry solutions rather than lifting and shifting the remaining on-prem workloads. That was kind of the low hanging fruit of the past 10 years. In fact, we think it's going to become harder and harder for hyperscalers to move the work that hasn't moved yet. Some of that mission critical work that's running on-prem and is running just fine in the business case, isn't necessarily there to move it. Here's some data from Statistica that further supports this assertion. It shows the percent of customer workloads running in the cloud. Now note that this is data from Statistica. We don't have a subscription anymore. We're not cheaping out. We don't spend the 50 bucks a month anymore. We're not trying to hold out on you. We just weren't using it enough. Maybe we'll start again. And this also was based on 2021 data forecast through the latter part of 2022. So it is somewhat dated. But with that caveat, the data sends a strong message that 60% of organizations in 2021 had more than 25% of their workloads in the cloud. And that number jumps to over 80% in the forecast period. So that was late 2022. And even back then, well over half expected to have most of their workloads in the cloud by now. And the other check sum on this data is you think about it. If the four big hyperscalers are approaching $200 billion in annual revenue, it's like 190 something, at a 10% penetration rate, that would suggest the market for on-prem infrastructure is approaching $2 trillion. And that just doesn't hold water. The market for servers, storage, networking, database and PAS is just not that large currently. It isn't. Now, by the way, this isn't an I told you so moment for what Fitzy calls the repatriates, i.e. those folks who believe the cloud has failed and customers are retreating from the cloud and droves. They're not. Cloud churn rates for AWS, Microsoft and Google are 2%, 1% and 4% respectively. So customers are staying put. They may be doing a little rebalancing, but we think cloud will continue to meaningfully outpace on-prem. However, there are growth opportunities in cross-cloud services and edge that incumbent vendors are in a better position, we think to attack than the hyperscalers. Here's the perspective of one IT decision maker who heads IT for a medium-sized city in the United States. Quote, we made sure that we adopted a multi-cloud provider strategy. We set up with a number of key players, Microsoft Azure, AWS, Google Cloud and Oracle. So we have the ability to use any of those for pretty much anything that we need to use them for based on a set of requirements and evaluation criteria. So essentially this individual is talking about horses for courses, we can tap best of breed where we need to. So that's the good part, but there is a flip side. So then he says, if you do the balance on the people, he's talking about the people skills, many organizations like ours can't have experts and senior people in three or more cloud technologies. So we have to pick probably two that we want to focus on and really gear our investments toward mainly from a skill set perspective, those two more than anything. Okay, so this person is basically saying, we like having multiple clouds to tap best of breed and hedge their bets presumably, but at the same time it's too complicated so they really can't take full advantage to the degree that they like without engaging outside talent. That's an opportunity, that is super cloud, i.e. a mesh of multiple clouds that are interconnected and managed as a single entity. And that should include on-prem and hybrid in our view. And we think this is an opportunity for the likes of Red Hat and Dell Technologies and other players with an on-prem heritage, including VMware, HPE, Cisco, IBM, Oracle and many others. So while these companies don't use the term super cloud, well, Cloudflare actually does, but they all have cross-cloud ambitions. They believe correctly in our view that the sentiments of that individual that we quoted earlier suggests that cross-cloud simplification is needed and will deliver business benefits in terms of getting more done with less faster. Now let's take a look at Red Hat's position in infrastructure software and then we're going to take a look at Dell's portfolio, which is obviously more hardware centric since they spun out VMware. Here's that same X-Y chart with the net score and the vertical axis and overlap with the 1,171 cloud accounts in the ETR data set. So we filtered on those cloud accounts and said, okay, show us the infrastructure software within those accounts. And you can see the dominant position of Red Hat generally on the far right. The presence of Ansible relative to Chef and Puppet and OpenShift as well. All three Red Hat offerings are leading the pack. And while none of them is over the red dotted elevated 40% line, they're all pretty respectable. We threw in Turbonomic IBM acquisition in the mix just for kicks. Let's take a look at a different view at Dell's portfolio. We're choosing a view here that we've not shown before, which is Dell's net score across a selected portion of its portfolio over time, relative to the overall net score in each sector that we show. So starting on the left, Dell's net score in laptops relative to the survey average for laptops over the three survey periods, April 2022, January 23 and April 23. So it's nuanced here. While laptops are down, we know in the market sort of PCs are suddenly in the tank, Dell's position in the sector is up significantly with that ratio of Dell's net score to the average net score jumping from 180%, which is very strong to over 230%. And then next you can see VxRail's relative momentum has dropped, but it's still well above the average. And then storage, which was well below the average last year, and we've reported on this and Dell was struggling in its storage business, but finally got it back on track. And then look now, it jumped 140% in this last survey, which is always going to be good for margins. And meanwhile, servers is eking out a slightly above average relative net score performance. Now Dell's cloud is presumably, it's like I said earlier, it's a mix of Apex and whatever else customers think of when they think of Dell's cloud. So as you can infer from this data in the previous charts that we showed, Dell has some work to do in terms of, customers really understanding its Apex strategy and customers, they're going to want proof points that it's a safe and reliable bet that they should make. And we threw in Dell's desktop relative net score as well, which is below average. Okay, let's end by taking a quick look at what we expect to hear at the combined Red Hat Summit and Ansible Fest, and then we'll look at what we think is going to happen at Dell Tech World. AI enablement is going to be a big theme, of course. And since Red Hat is all about cloud native and enabling hybrid environments, we think that will be an important theme. Ansible will also be a big area of focus as John Furrier has pointed out many times. Red Hat's acquisition of Ansible has paid off as they took over the top spot years ago from Chef and Puppet, when they came out they had all the momentum, Ansible has dominated since then, and so very, very strong obviously. At IBM Think earlier this month, Red Hat and IBM tipped their hand and showed Watson X and the Ansible Watson code assistant. You may have heard of Ansible's project, Wisdom, which is a Red Hat initiative developed with IBM Research to inject AI into Ansible. You can think of this as Ansible's version of GitHub co-pilot for DevOps. We talked to Rob Stretce, who's hosting Red Hat Summit with John Furrier, and he feels like this is a clear direction that makes sense for the company and really is the next gen automation powered by AI. Now let me just take it aside here for a moment. When you do some poking around you'll find some Reddit references that talk about this. There's also some references in GitHub. So this thing's out there, of course Red Hat's, you know, they're open source, so, and a lot of committers and people are playing around with this stuff. How do I turn off this AI and Ansible? So it's out there if you poke around. Okay, coming back in of course OpenShift as we showed you earlier, it's in a strong position and following up on Red Hat's acquisition of Stack Rocks last year. We fully expect to hear a lot about container security and ship left. It's always a hot topic at KubeCon and we'd expect some focus from Red Hat next week on security. It's the number one topic of course as we've reported amongst CIOs and CISOs and organizations. Okay, finally, let's take a look at what to expect next week at Dell Tech World 2023. You got to believe Dell will be aggressive about sharing its point of view on generative AI. Michael Dell is an industry luminary and he's not going to miss a chance to convey his views in front of nearly 1,000 customers. He'll be sharing his thoughts on this topic, no doubt. But it's going to be interesting to hear how Dell will apply AI to its infrastructure business, how it will help customers do the same and finally, what the infrastructure of AI and data of the future will look like. That's something that we're going to be probing in theCUBE. Now, as we said, Apex needs some proof points and maturity and there's a little doubt that Dell will make some news here. HPE with GreenLake got out to the lead and Dell is still playing catch up. And we saw that earlier in the numbers. HPE was a little bit ahead of Dell and the market really hasn't sorted out. You know, again, these are sort of trailing indicators from a survey standpoint, but it's a good indicator of what the fat middle of the market thinks. Now, this is a harder task for Dell because, you know, HPE's Antonio Neary essentially, HPE burned the bridge on the past and removed all the uncertainty as to where the company's focus lies. Whereas Dell's position is we're moving with the market, we're letting customers tell us how they want to consume them. And Dell's mapping to that, you know, that both strategies can win. It's just one is more focused. Regardless, Dell is serious about Apex and we'll kick that into high gear we think next week. They have to. Now, last year Dell announced a project, Alpine, which we called a storage super cloud, our words, not theirs, but it's a cross cloud abstraction layer that creates a consistent experience for customers. So will they announce Alpine as a product or like many EMC projects of the past, will it get buried? So EMC had a bad habit of doing that. You know, Dell is better at doing what it says than EMC has been the last 10 years. So we would expect more clear progress, not veiled references. It's kind of ironic in the early days of EMC they would never announce before a product was ready. And in the tail end, that's all they did is announce products that really either never saw the light of day or never succeeded. Anyway, I digress. Same thing with project frontier, which is edge infrastructure management and application orchestration. It got a lot of reference at Mobile World Congress, MWC 23 in February and Dell has hired an army of folks to go after edge and telco. So with that type of investment, they have to get product to market. And as has been the trend, we expect to see more and more ecosystem partner affinity beyond just VMware. We've seen Dell do deals with Red Hat. We saw this at MWC. We continue to expect more as alternatives to VMware as VMware has now spun out. And we've been encouraged to see Dell move up the stack with partnerships with the likes of Snowflake and Starburst and data management. We'd like to see more. Dell's data management strategy is still unclear and we think they're still trying to figure it out. It's pretty clear. They're still trying to figure it out. So a good way to do that is to partner with like-minded companies and go to market, sell some stuff and learn. And no doubt you're going to hear a lot about sustainability and ESG. Look, a hundred billion dollar companies like Dell not only understand that ESG is good business and increasingly a customer mandate, but it's also the responsibility of a large player like Dell to set an example and you can bet they will. As will theCUBE will be at both events, Red Hat Summit in Boston, John Furrier, Rob Strecce and Paul Gillin will be covering that show. Well, Lisa Martin and I will be on the show floor all week broadcasting from the Mandalay Bay in Las Vegas. So if you're at either of these events, please do stop by and say hello to your friends at theCUBE. All right, that's a wrap for today. Many thanks to Alex Meyerson who's on production and manages the podcast. Ken Schiffman as well. Kristen Martin and Cheryl Knight helped get the word out on social media and in our newsletters and Rob Hoef is our EIC over at siliconangle.com. Does some great editing, thank you. Remember all these episodes are available as podcasts wherever you listen, all you got to do is search breaking analysis podcast. I publish each week on wikibon.com and siliconangle.com and you can email me at david.volante at siliconangle.com or DM me at dvolante or comment on our LinkedIn post. Please do check out etr.ai for the best survey data in the enterprise tech business. This is Dave Vellante for theCUBE insights powered by ETR. Thanks for watching everybody and we'll see you next time on breaking analysis.