 Hello everyone, welcome to theCUBE's coverage here in New York City for AWS Amazon Web Services Summit. 2022, I'm John Furrier, host of theCUBE with Dave Vellante, my co-host. We are breaking it down, getting an update on the ecosystem as the GDP drops, inflation's up, gas prices up, the enterprise continues to grow. We're seeing exceptional growth. We're here on the ground floor live at the Summit's packed house, 10,000 people. Eric Bradley's here, chief stress at ETR, one of the premier enterprise research firms out there, partners with theCUBE, and powers are breaking analysis that Dave does. Check that out, it's the hottest podcast in enterprise. Eric, great to have you on theCUBE. Thanks for coming on. Thank you so much, John. I really appreciate the collaboration always. Yeah, great stuff. Your date is amazing, ETR, folks watching, check out ETR, they have a unique formula, very accurate, we love it. It's been moving the market, congratulations. Let's talk about the market right now. This market is booming. Enterprise is the hottest thing. Consumer's kind of in the toilet, okay, kind of said that, all right. Back out devices and consumer, enterprise is still growing. And by the way, this first downturn in the history of the world where hyperscalers are on full, pumping on all cylinders, which means they're still powering the revolution. Yeah, it's true, the hyperscalers were basically at this two sun system when Microsoft and AWS first came around and everything was orbiting around it. And we're starting to see that sun cool off a little bit, but we're talking about a gradient here, right? When we say cool off, we're not talking a shutdown. It's still burning hot, that's for sure. And I can get it to some of the macro data in a minute, if that's all right, or do you want me to go around? Yeah, go for it. Yeah, so right now we just closed our most recent survey, and that's macro and vendor-specific. We had 1,200 people talk to us on the macro side. And what we're seeing here is a cool-down in spending. We originally had about 8.5% increase in budgets. That's cooled down as 6.5 now. But what I'll say with the doom and gloom and the headlines that we're seeing every day, 6.5% growth coming off of what we just did the last couple of years is still pretty fantastic as a backdrop. Okay, so you started to see, John mentioned consumer, we saw that in Snowflake's earnings, for example. We certainly saw Walmart, other retailers, the Facebooks of the world, where consumption was being dialed down. Certain Snowflake customers, not necessarily, they didn't mention any customers, but they were able to say, all right, we're going to dial down consumption this quarter. Hold on, so we saw some of that in Snowflake results and other results, but at the same time, the rest of the industry is booming, but your data is showing softness within the Fortune 500 for AWS. Not only AWS, but Fortune 500 across the board. So going back to that larger macro data, the biggest drop in spending that we captured is Fortune 500, which is surprising, but at the same time, these companies have a better purview into the economy in general. They tend to see things further in advance, and we often remember, they spend a lot of money, so they don't need to play catch up. They'll more easily be able to pump the brakes a little bit in the Fortune 500, but to your point, when we get into the AWS data, the Fortune 500 decrease seems to be hitting them a little bit more than it is Azure and GCP. We're still talking about a huge business, right? I mean, they're catching up. Amazon has been transforming from owning the developer cloud, startup cloud, decade ago, to really putting a dent in the enterprise as being number one cloud. And I still contest that they're number one by long ways, but Azure kickin' ass and catching up, okay? You see people move to Azure, you got Charlie Bell over there, Sean Bytes former Amazonians, Teresa Carlson. People are going over there, there's lift over at Azure. And is there kinks in the armor for AWS? There's a couple of kinks, but I think your point is really good. We need to take a second there. If you're talking about true pass or infrastructure as a service, true cloud compute, I think AWS still is the powerhouse. And a lot of times the data gets a little muddied because Azure is really a hosted platform for applications. And you're not really sure where that line is drawn. And I think that's an important caveat to make, but based on the data, yes, we are seeing some kinks in the armor for AWS. So right now, a first of all caveat, 40% net score, which is our proprietary spending metric across the board. So we're not like raising any alarms here. It's still strong. That said, there are declines and there are declines pretty much across the board. The only spot we're not seeing a decline at all is in container spend. Everything else is coming down. Specifically, we're seeing it come down in data analytics, data warehousing and ML AI, which is a little bit of a concern because that rate of decline is not the same with Azure. Okay, so I got to ask. Macro, I see the headwinds on the macro side. You pointed that out. Is there any insight into any underlying conditions that might be there on AWS or just a chronic kind of situational thing? Right now it seems situational other than that correlation between their big Fortune 500 audience and that being our biggest decline. The other aspect of the macro survey is we ask people if you are planning to decline spend, how do you plan on doing it? And the number two answer is taking a look at our cloud spend and auditing it. So they're kind of say, all right, you know, for the last 10 years it's been drunken sale or spending. I was going to use that same line. You know, on cloud spend, just spend. We'll figure it out later. Who cares? And then right now it's time to tighten the belts a little bit. This is part of the allure of cloud. At some point, you could say I'm going to dial it down. I'm going to rein it in. So that's part of the reason why people go to the cloud. I want to focus in on the data side of things and specifically the database just to give some context. Correct me if I'm a little off here, but Snowflake, which saw this company on the planet, their net score was up around 80% consistently. It's dropped down the last quarter, last survey to 60%. So still highly, highly elevated, but that's relative to where Amazon is much larger, but you're saying they're coming down to the 40% level. Is that right? Yeah, they are. And I remember when I first started doing this 10 years ago, AWS had a 70% net score as well. So what's going to happen over time is those adoptions are going to get less and you're going to see more flattening of spend, which ultimately is going to lower the score because we're looking for expansion rates. We want to see adoption and increase. And when you see flattening of spend, it starts to contract a little bit. And you're right, Snowflake also was in the stratosphere. That cooled off a little bit, but still very strong and AWS is coming down. I think the reason why it's so concerning is because A, it's within the Fortune 500 and their rate of decline is more than Azure right now. Well, and one of the big trends you're seeing in database is this idea of converging function. In other words, bringing transaction and analytics together. At Snowflake Summit, they added the capability to handle transaction data. MongoDB, which is mostly transactions, added the capability in June to bring in analytic data. You see Databricks going from data engineering and data science now getting into Snowflake space and analytics, so you're seeing that convergence. Oracle is converging with MySQL heat wave and their core databases. Couch-based, MariaDB, MySQL. So virtually all these database companies are converging their platforms with the exception of AWS. AWS is still the right tool for the right job. So they've got Aurora, they've got RDS, they've got a DynamoDB, they've got Redshift, they've got on and on and on. And so the question everybody's asking is will that change? Will they start to sort of cross those swim lanes? We haven't seen it thus far. How is that affecting the data performance? I mean that's fantastic analysis. I think that's why we're seeing it because you have to be in the AWS ecosystem and they're really not playing nicely with others in the sandbox right now. Now I will say. Who, Evan's not playing nicely? Well no, that was simply to your point though that the other ones are actually bringing in others and consolidating other different vendor types. And they're really not. You know, if you're in AWS you don't need to stay within AWS. Now I will say their tools are fantastic. So if you do stay within AWS they have a tool for every job, they're advanced and they're incredible. I think sometimes the complexity of their tools hurts them a little bit. Because to your point earlier, AWS started as a developer-centric type of cloud. They have moved on to enterprise cloud and it's a little bit more business oriented but their still roots are still DevOps friendly. And unless you're truly trained, AWS can be a little scary. So a common use case is I'm going to be using Aurora for my transaction system and then I'm going to ETL it into Redshift, right? And now I have two data stores and I have two different sets of APIs and primitives, two different teams of skills. And so that is probably causing some friction and complexity in the customer base. Again, the question is will they begin to expand some of those platforms to minimize some of that friction? Well yeah, this is the question I wanted to ask on that point. So I've heard from people inside Amazon, don't count out Redshift. We're making, we're catching up. I think that's my word, but they were kind of saying that. Because Redshift is a good database, but they're adding a lot more. So you got snowflake success. I think it's a little bit of a jealousy factor going on there within Redshift team. But then you got Azure Synapse, which is a Synapse product. Synapse, yep. And then you got BigQuery from Google. BigQuery, yep. What's the differentiation? What are you seeing for the data, for the data warehouse or the data clouds that are out there for the customers? What's the data say to us? Yeah, unfortunately the data is showing that they're dropping a little bit. Who's day? AWS is dropping a little bit. Now of their data products, Redshift and RDS are still the two highest of them, but they are starting to decline. Now I think one of the great data points that we have, and we just closed the survey, is we took a comparison of the legacy data. Now please forgive me for the word legacy. I'm going to anger a few people. But we got Teradata, Oracle on-prem, we've got IBM, some of those more legacy data warehouse type of names. When we look at our survey takers that have them, where their spend is going, that spend's going to Snowflake first. And then it's going to Google, and then it's going to Microsoft Azure, and AWS is actually declining in there. So when you talk about who's taking that legacy market share, it's not AWS right now. So legacy goes to legacy. So, no, no, it's not. No, it's not. It's not. So let's work through in a little context because Redshift really was the first to take the database to the cloud. And they did that by doing a one-time license deal with PowerXL, which was an on-prem database, and then they re-engineered it. They did a fantastic job, but it was still engineered for on-prem. Then along comes Snowflake a couple of years later and true cloud native. Same thing with BigQuery, true cloud native architecture. So they get a lot of props. Now, what Amazon did, they took a page out of the Snowflake, for example, separating compute from storage. Now, of course, what Amazon did is actually not really completely separating like Snowflake did. They couldn't because of the architecture. They created a tiering system that you could dial down the compute. So little nuances like that, I understand. But at the end of the day, what we're seeing from Snowflake is the gathering of an ecosystem in this true data cloud, bringing in different data types. They got to the public markets. Databricks was not able to get to the public markets. And I think is struggling. At a $25 billion valuation. Right, and so that's going to be dialed down. Struggling somewhat from a go-to-market standpoint, whereas Snowflake has no troubles from a go-to-market. They are the masters at go-to-market. And so now they've got momentum. We talked to Frank Slutman at the Snowflake Summit. He basically said, I'm not taking the foot off the gas, no way. Yeah, few of our large consumer customers dialed things down, but we're going balls to the wall. Well, if you look up their show, before you get in the numbers, if you look at the two shows, Snowflake had their summit in person in Vegas. Databricks just had their show in San Francisco. And if you compare the two shows, it's clear who's winning. Snowflake is blew away from a market standpoint. We were at Snowflake, but we weren't at Databricks, but there's really nothing online. I heard from sources that it was like less than 3,000 people. So. And Snowflake was 1,900 people in 2019. Nearly 10,000. In 2022, I think it's going to be fun to sort of track that as an odd caveat to say, okay, let's see what that growth is. Because in fairness, Databricks, you know, a little bit younger. Snowflake's had a couple more years, so I'd be curious to see where they are. Their Lakehouse paradigm is interesting. And their product-first company, their go-to market might be a little bit weak from our analysis, but they'll figure it out. CEO is pretty strong. But I think it's worth pointing out. It's like two different philosophies, right? Snowflake has come into our data cloud, that's their proprietary environment. Think of the iPhone, right? And we guarantee it's all going to work and we're in control. Snowflake is like, hey, open source. No, Databricks. I mean Databricks, open source, bring in this tool, that too. Now, you are seeing Snowflake capitulate a little bit. They announced, for instance, Apache Iceberg support at the Snowflake Summit. So they are tipping their cap to open source. But at the end of the day, they're going to market and sell the fact that it's going to run better in native Snowflake. Whereas Databricks, they're coming at it from much more of an open source mantra. So that's going to, you know, we'll see. Look it, you had Windows and you had Apple. They both won. You got Cal and you got Stanford. They both can still get it. I don't think it's actually there yet. I find the more interesting dynamic right now is between AWS and Snowflake. It's really a fun tit for tat, right? I mean, AWS has the S3. And then, you know, Snowflake comes right on top of it and announces R2. We're going to do one letter, one number better than you. They just seem to have this really interesting dynamic. And I, and it is Slutman. No one's betting against him. I mean, this guy's fantastic. So, and he hasn't used his war chest yet. He's still sitting on all that money that he raised to your point that Databricks, their timing just was a little off. They're five billion in capital. Slutman hasn't used that money yet. So what's he going to do? What can he do when he turns that on, when he finds the right acquisition? They're making some acquisitions. They did the Streamlit acquisition, which is a nice little deal. Here's the problem with Databricks. Their valuation is underwater. So they're recruiting their M&A's in the toilet. They cannot make the moves because they don't have the currency. Until they refactor the multiple and let this market settle, I'm really nervous that they have to over factor the valuation. Having said that, to your point, Eric, the lake house architecture is definitely gaining traction. When you talk to practitioners, they're all saying, yeah, we're building data lakes or building lake houses. You know, it's a much, much smaller market than the Enterprise Data Warehouse. But nonetheless, when you talk to practitioners that are actually doing things like self-serve data, they're building data lakes. And Databricks is right there and is a clear leader in ML and AI. And they're ahead of Snowflake. And I was going to say, that's the thing. With Databricks, you know you're getting that analytics at ML AI built into it. You know what's ironic is, I remember talking to Matt Carroll, who's the CEO of Immuta, like four or five years ago, he came into the office in Marlboro and we were in temporary space. And we were talking about how there's this new workload emerging which combines AWS for cloud infrastructure, Snowflake for the simple data warehouse, and Databricks for the ML AI. And then now all of a sudden, you see Databricks and Snowflake going at it. I think, to your point about the competition between AWS and Snowflake, here's what I think. I think the Redshift team doesn't like Snowflake, but I think the EC2 team loves them. Exactly. So I think Snowflake is driving a lot of compute spend. At John's point, there's plenty to go around. And I think I saw just the other day, I saw somebody say less than 40% of true Global 2000 organizations believe that they're at real-time data analytics right now. They're not really there yet. Think about how much runway is left and how many tools you need to get to real-time streaming use cases. It's complex, it's not easy. It's going to be a product value market. To me, Snowflake and Databricks, they're not going away, right? They're winning architectures in the cloud. What Databricks did with Spark and took over the Hadoop market to your point. Now that big data market has got two players, in my opinion, Snowflake and Databricks converging. Well, Redshift is sitting there behind the curtain. They're a wild card. They're a wild card, Dave. Okay, I'm going to give one more wild card, which is the Edge, okay? And that's something that when you talk about real-time analytics and AI inferencing at the Edge, there aren't a lot of database of companies in a position to do that. You know, Amazon trying to put outposts out there. I think it runs RDS. I don't think it runs any other database, right? Snowflake really doesn't have a strong Edge strategy. I'm talking the Far Edge, the tiny Edge. I think that's going to be HPE or Dell is going to own the outpost market. I think you're right. I'll come back to that. Couchbase is an interesting company to watch with Capella. MongoDB really doesn't have a Far Edge strategy at this point, but Couchbase does. And that's one to watch. They're doing some really interesting things there. And I think- But they have to lead frog, Mongo, in my opinion. But there's a new architecture emerging at the Edge, and it's going to take a number of years to develop, but it could eventually, from an economic standpoint, seep back into the enterprise. Arm-based, low-end. Take a look at what Couchbase is doing with Capella. Do they hire an Amazon guy? Very interesting. They have to lead frog though. They need to, they can't incrementally- Who's they? Couchbase needs to make a big move in the lead frog. Well, I think they're trying to, that's what Capella is all about. Was not only, you know, their version of Atlas, bringing to the cloud, Couchbase, but it's also stretching it out to the Edge and bringing converged database analytics. Real quick, on the numbers, any data on Cloudflare? I've been sitting here trying to get the word Cloudflare out of my mouth the whole time you guys were talking about that. It's just another company that's innovated in the ecosystem. So Cloudflare started out- It was really simple for them early on, right? They're going to get that Edge network out there, and they're going to steal share from Akamai. Then they started doing exactly what Akamai did. We're going to start rolling out some security. Their security is fantastic. Maybe some practitioners are saying a little bit too much because they're not focused on one thing or another, but they are doing extremely well and now they're out there in the cloud as well. They got an S3 competitor. Exactly. So when I'm listening to you guys talk about, you know, Couchbase, I'm like, wow, those two would just be an absolute fantastic, you know, combination between the two of them. You mean Cloudflare and Couchbase, yeah. I mean, you got S3 alternative, you got a Mongo alternative, basically in my opinion. And you got the Edge network with security. And you got the Edge security, interesting dynamic. This brings up the super cloud day. I want to talk about super cloud because we're seeing a trend and we're reporting this since last year that basically people don't have to spend the cap X to be cloud scale and you're seeing Amazon enable that. But Snowflake has become a super cloud. They're on AWS, now they're on Azure. Why not? Tan expansion, expand the market. Why not get that? And they'll be on Google next. All these marketplaces. So the emergence of this super cloud and then the ability to make that across a substrate across multiple clouds is a strategy we're seeing. What do you think? Well, honestly, I'm going to be really frank here. Everything I know about the super cloud, I know from this guy. So I've been following his lead on this and I'm looking forward to you guys doing that conference and that summit coming up. From a data perspective, I think what you're saying is spot on though because those are the areas we're seeing expansion in without a doubt. I think when you talk about things like super cloud and you talk about things like metaverse, there's a there there. Look, every 15 or 20 years or so, this industry reinvents itself and a new disruption comes out. And you've got the internet, you've got the cloud, you've got an AI and VR layer, you've got machine intelligence, you've got now gaming. There's a new matrix emerging super cloud metaverse. There's something happening out there that's not just your father's SaaS or IS or PAS. Well, no, it's also the spend too, right? So if I'm a company like, say, Capital One or Goldman Sachs, my IT spend has traditionally been massive every year. It's basically like tons of catbacks. Here comes the cloud. It's an operating expense. Wait a minute, Amazon has all the catbacks. So I'm not going to dial down my budget. I want a competitive advantage. So next thing they know, they have a super cloud by default because they just pivoted their IT spend into new capabilities that they then can sell to the market in fintech. Makes total sense. Right, they're building out a digital platform. That was not possible pre-cloud. No, it wasn't, because you weren't going to go put all that money into catbacks expenditure to build that out, not knowing whether or not the market was there. But the scalability, the ability to spend, reduce, and be flexible with it, really changes that paradigm entirely. So we're looking at this market now, thinking about, okay, it might be Greenfield. In every vertical, it might have a power law where you have a head of the long tail that's a player like a capital one. In insurance, it could be Liberty Mutual or Mask Mutual that have so much IT and capital that they're now going to scale it into a super cloud. And they have data. And they have the data and tools. Right, and they're going to bring that to their constituents and scale it using cloud. So that means they can then service the entire vertical as a service provider. And the industry cloud is becoming bigger and bigger and bigger. I mean, that's really a way that people are delivering to market. Remember, in the early days of cloud, all the banks thought they could build their own cloud? Well, actually it's come full circle. They're like, we can actually build a cloud on top of the cloud. By the way, they're going to have a private cloud in their super cloud. Exactly. And you know what's interesting is we're talking about financial services, insurance, all the people we know spend money. In our macro survey, do you know the sector that's spending the most right now? It's going to shock you. Energy utilities. Yeah, I was going to say. The energy utilities industry right now is the one spending the most money. I saw that. Largely because they're planning to catch up, but also because they don't have these type of things for their consumers. They need the consumer app. They need to be able to do that delivery. They need to be able to do metrics. And they're the one spending right now. It's an arms race, but the vector shifts to value creation. So it goes back to your post, when it was a 2012, the trillion dollar baby. It's a multi-trillion dollar baby that the world is going after. Chassis posts on Forbes. Headline, trillion dollar baby, 2012. Should I add it? That's on the end. Yeah, exactly. Trillions of babies. Eric, great to have you on theCUBE. Thank you so much, guys. Great to bring the data. Thanks for sharing. Check out ETR. If you're into the enterprise and want to know what's going on, they have a unique approach, very accurate in their survey data. They got a great market basket of data, questions and people and community. Check it out. Thanks for coming on and sharing. Thank you, guys. I always enjoy. We'll be back with more coverage here in theCUBE in New York City live at ETR Summit. 22, I'm John Furrier with Dave Vellante. We'll be right back.