 From theCUBE Studios in Palo Alto in Boston, bringing you data-driven insights from theCUBE and ETR. This is Breaking Analysis with Dave Vellante. This past week, we saw two of the big three cloud providers present the latest update on their respective cloud visions, their business progress, their announcements, and innovation. The content at these events had many overlapping themes, including modern cloud infrastructure at global scale, applying advanced machine intelligence, aka AI, end-to-end data platforms, collaboration software. They talked a lot about the future of work, automation, and they gave us a little taste each company of the Metaverse Web 3.0 and much more. Despite these striking similarities, the differences between these two cloud platforms and that of AWS remain significant with Microsoft leveraging its massive application software footprint to dominate virtually all markets and Google doing everything in its power to keep up with the frenetic pace of today's cloud innovation, which was set into motion a decade and a half ago by AWS. Hello and welcome to this week's Wikibon Cube Insights powered by ETR. In this Breaking Analysis, we unpack the immense amount of content presented by the CEOs of Microsoft and Google Cloud at Microsoft Ignite and Google Cloud Next. We'll also quantify with ETR survey data the relative position of these two cloud giants in four key sectors, cloud IS, BI analytics, data platforms, and collaboration software. Now, one thing was clear this past week. Hybrid events are the thing. Google Cloud Next took place live over a 24-hour period in six cities around the world with the main gathering in New York City. Microsoft Ignite, which normally is attended by 30,000 people, had a smaller event in Seattle in person with a virtual audience around the world. AWS re-invent, of course, is much different. Yes, there's a virtual component at re-invent, but it's all about a big live audience gathering the week after Thanksgiving in the first week of December in Las Vegas. Regardless, Satya Nadella's keynote address was prerecorded, was highly produced and substantive. It was visionary, energetic, with a strong message that Azure was a platform to allow customers to build their digital businesses, doing more with less, which was a key theme of his. Nadella covered a lot of ground, starting with infrastructure from the compute, highlighting a collaboration with ARM-based ampere processors, new block storage, 60 regions, 175,000 miles of fiber cables around the world. He presented a meaningful multi-cloud message with Azure Arc to support on-prem and edge workloads, as well as, of course, the public cloud, and talked about confidential computing at the infrastructure level, a theme we hear from all cloud vendors. He then went deeper into the end-to-end data platform that Microsoft is building from the core data stores to analytics to governance and the myriad tooling Microsoft offers. AI was next with a big focus on automation, AI, training models. He showed demos of machines coding and fixing code, and machines automatically creating designs for creative workers, and how Power Automate, Microsoft's RPA tooling, would combine with Microsoft syntax to understand documents and provide standard ways for organizations to communicate with those documents. There was, of course, a big focus on Azure as a developer cloud platform, with GitHub co-pilot as a linchpin, using AI to assist coders in low-code and no-code innovations that are coming down the pike. And another giant theme was workforce transformation, and how Microsoft is using its heritage and collaboration and productivity software to move beyond what Nadella called productivity paranoia, i.e., our remote workers doing their jobs, in a world where collaboration is built into intelligent workflows and even showed a glimpse of the future with AI-powered avatars and partnerships with Meta and Cisco with teams of all firms. And finally, security, with a bevy of tools from identity, endpoint governance, et cetera, stressing a suite of tools from a single provider, i.e., Microsoft. So a couple points here. One, Microsoft is following in the footsteps of AWS with Silicon advancements and didn't really emphasize that trend much except for the ampere announcement, but it's building out cloud infrastructure at a massive scale. There is no debate about that. Its plan data is to try and provide a somewhat more abstracted and simplified solutions which differs a little bit from AWS's approach of the right database tool, for example, for the right job. Microsoft's automation play appears to be to provide simple individual productivity tools, kind of a ground up approach and make it really easy for users to drive these bottoms up initiatives. We heard from UiPath at forward five last month, a little bit of a different approach of horizontal automation, end to end across platforms. So quite a different play there. Microsoft's angle on workforce transformation is visionary and will continue to solidify, in our view, its dominant position with Teams and Microsoft 365. And it will drive cloud infrastructure consumption by default on security as well as a cloud player. It has to have world-class security and Azure does. There's not a lot of debate about that, but the knock on Microsoft is patch Tuesday becomes hack Wednesday because Microsoft releases so many patches. It's got so much Swiss cheese and it's legacy estate and patches patching frequently. It becomes a roadmap and a trigger for hackers. Hey, patch Tuesday, these are all the exploits that you can go after so you can act before the patches are implemented. And so it's really become a problem for users. As well, Microsoft is competing with many of the best of breed platforms like CrowdStrike and Okta, which have market momentum and appear to be more attractive horizontal plays for customers outside of just the Microsoft cloud. But again, it's Microsoft. They make it easy and very inexpensive to adopt. Now, despite the outstanding presentation by Satya Nadella, there were a couple of statements that should raise eyebrows. Here are two of them. First is he said, Azure is the only cloud that supports all organizations and all workloads from enterprises to startups to highly regulated industries. I had a conversation with Sarbjit Johal about this. You know, to make sure I wasn't just missing something and we were both surprised somewhat by this claim. I mean, most certainly AWS supports more certifications, for example, and we would think it has a reasonable case to dispute that claim. And the other statement that's Nadella made is Azure is the only cloud provider enabling highly regulated industries to bring their most sensitive applications to the cloud. Now, reasonable people can debate whether AWS is there yet, but very clearly Oracle and IBM would have something to say about that statement. Maybe Satya would say, oh, they're not real clouds. You know, they're just kind of hosting in the cloud, if you will. But still, when it comes to mission critical applications, you would think Oracle is really the leader there. Oh, and Satya also mentioned the claim that the Edge browser, the Microsoft Edge browser, no questions asked, he said, is the best browser for business. We can see some people having some questions about that. Like, isn't Edge based on Chrome? Anyway, so we just had to question these statements and challenge Microsoft to defend them because to us, it's a little bit of BS and makes one wonder what else in Satya's awesome keynote and it was awesome, it was hyperbole. Okay, moving on to Google Cloud next. The keynote started with Sundar Pichai doing a virtual session. He was remote stressing the importance of Google Cloud. He mentioned that Google Cloud from its Q2 earnings was on a $25 billion annual run rate. What he didn't mention is that it's also on a $3.6 billion annual operating loss run rate based on its first half performance, just saying. And we'll dig into that issue a little bit more later in this episode. He also stressed that the investments that Google has made to support its core business and search, like its global network of 22 subsea cables to support things like YouTube video, great performance, obviously. We all rely on those innovations there. Innovations in BigQuery to support its search business and its threat analysis that it's always had and its AI, it's always been an AI first company, he stressed, that they're all leveraged by the Google Cloud Platform, GCP. This is all true, by the way. Google has absolutely awesome tech and the talk as well as his talk, Pichai, but also Kirian's was forward thinking and laid out a vision of the future. But it didn't address in our view, when I talked to Sarbjit Johal about this as well, today's challenge is to the degree that Microsoft did and we expect AWS will at reinvent this year. It was more out there, more forward thinking, what's possible in the future, somewhat less about today's problem. So I think it resonates less with today's enterprise players. Thomas Kirian then took over from Sundar Pichai and did a really good job of highlighting customers. I mean, I think he has to, right? He has to say, look, we are in this game, we have customers, nine of the top 10 media firms use Google Cloud, eight out of the top 10 manufacturers, nine of the top 10 retailers, same for telecom, same for healthcare, eight of the top 10 retail banks. He and Sundar specifically referenced a number of companies, customers, including Avery Denison, Group Renault, H&M, John Hopkins, Prudential, Mina Bank out of Japan, A&Z Bank, and many, many others during the session. So, you know, they had some proof points and got to give them props for that. Now, like Microsoft, Google talked about infrastructure. They referenced training processors and regions and compute optionality and storage and how new workloads were emerging, particularly data-driven workloads in AI that required new infrastructure. He explicitly highlighted partnerships with Nvidia and Intel. I didn't see anything on ARM, which somewhat surprised me because I believe Google's working on that or at least has come following in AWS's suit, if you will, but maybe that's why they're not mentioning it or maybe I got to do more research there, but let's park that for a minute. But again, as we've extensively discussed in breaking analysis, in our view, when it comes to compute AWS via its Anapurna acquisition is well ahead of the pack in this area, ARM is making its way into the enterprise, but all three companies are heavily investing in infrastructure, which is great news for customers and the ecosystem. We'll come back to that. Data and I go hand in hand and there was no shortage of data talk. Google didn't mention Snowflake or Databricks specifically, but it did mention, by the way, it mentioned Mongo a couple of times, but it did mention Google's quote, open data cloud. Now, maybe Google has used that term before, but Snowflake has been marketing the data cloud concept for a couple of years now. So that's struck as a shot across the bow to one of its partners and obviously competitor at Snowflake and BigQuery is a main centerpiece of Google's data strategy. Curian talked about how they can take any data from any source in any format from any cloud provider with BigQuery, Omni and aggregate and understand it. And with the support of Apache Iceberg and Delta and Hootie coming in the future and it's open data cloud alliance. They talked a lot about that. So without specifically mentioning Snowflake or Databricks, Curian co-opted a lot of messaging from these two players, such as Life and Tech. Curian also talked about Google workspace and how it's now at 8 million users up from 6 million just two years ago. There's a lot of discussion on developer optionality and several details on tools supported and the open mantra of Google. And finally on security, Google brought out Kevin Mandia. He's a CUBE alum extremely impressive individual who's CEO of Mandiant, a leading security service provider and consultancy that Google recently acquired for around 5.3 billion. They talked about moving from a shared responsibility model to a shared fate model, which is again, it's kind of a shot across AWS's bow kind of with the shared responsibility model. It's unclear that Google will pay the same penalty if a customer doesn't live up to its portion of the shared responsibility, but we can probably assume that the customer is still going to bear the brunt of the pain. Nonetheless, Mandiant is really interesting because it's a services play. And Google has stated that it is not a services company. It's going to give partners and the channel plenty of room to play. So we'll see what it does with Mandiant, but Mandiant is a very strong enterprise capability and in the single most important area, security. So interesting acquisition by Google. Now as well, unlike Microsoft, Google is not competing with security leaders like Okta and CrowdStrike. Rather, it's partnering aggressively with those firms and prominently putting them forth. All right, let's get into the ETR survey data and see how Microsoft and Google are positioned in four key markets that we mentioned before, IS, BI analytics, database data platforms and collaboration software. First, let's look at the IS cloud. ETR is just about to release its October survey, so I cannot share that data yet. I can only show July data, but we're going to give you some directional hints throughout this conversation. This chart shows net score or spending momentum on the vertical axis and overlap or presence in the data, i.e. how pervasive the platform is that's on the horizontal axis. And we've inserted the Wikibon estimates of IS revenue for the companies, the big three. Actually, big four, we included Alibaba. So a couple of points in this somewhat busy data chart. First, Microsoft and AWS as always are dominant on both axes. The red dotted line there at 40% on the vertical axis, that represents a highly elevated spending velocity and all of the big three are above the line. Now at the same time, GCP is well behind the two leaders on the horizontal axis and you can see that in the table insert as well in our revenue estimates. Now why is Azure bigger in the ETR survey when AWS is larger, according to the Wikibon revenue estimates? And the answer is because Microsoft with products like 365 and Teams will often be considered by respondents in the survey as cloud by customers. So they fit into that ETR category, but in the insert data, we're stripping out applications and SAS from Microsoft and Google and we're only isolating on IS. The other point is when you take a look at the early October returns, you see downward pressure is signified by those dotted arrows on every name. The only exception was Dell or Dell and IBM which showing slightly improved momentum. So the survey data generally confirms what we know that AWS and Azure have a massive lead and strong momentum in the marketplace. But the real story is below the line, unlike Google cloud, which is on pace to lose well over $3 billion on an operating basis this year. AWS is operating profit is around $20 billion annually. Microsoft's intelligent cloud generated more than $30 billion in operating income last fiscal year. Let that sink in for a moment. Now again, that's not to say Google doesn't have traction, it does and Curian gave some nice proof points and customer examples in his keynote presentation. But the data underscores the lead that Microsoft and AWS have on Google and cloud. And here's a breakdown of ETR's proprietary net score methodology, that vertical axis that we showed you in the previous chart. It asks customers, are you adopting the platform new? That's that lime green. Are you spending 6% or more? That's the forest green. Is your spending flat? That's the gray. Is your spending down 6% or worse? That's the pinkest color. Or are you replacing the platform defecting? That's the bright red. You subtract the reds from the greens and you get a net score. Now one caveat here, which actually is really favorable from Microsoft. The Microsoft data that we're showing here is across the entire Microsoft portfolio. Okay, the other point is, this is July data, we'll have an update for you once ETR releases its October results. But we're talking about meaningful samples here, the Vans, 620 for AWS, over 1,000 for Microsoft, and more than 450 respondents in the survey for Google. So the real tell is replacements, that bright red. There is virtually no churn for AWS and Microsoft, but Google's churn is 5x those two in the survey. Now 5% churn is not high, but you'd like to see three things for Google given its smaller size. One is less churn, two is much, much higher adoption rates in the lime green. Three is a higher percentage of those spending more, the forest green, and four is a lower percentage of those spending less. And none of these conditions really applies here for Google. GCP is still not growing fast enough, in our opinion. It doesn't have nearly the traction of the two leaders, and that shows up in the survey data. All right, let's look at the next sector, BI analytics. Here, we have that same X, Y dimension. Again, Microsoft dominating the picture, AWS very strong also in both axes, Tableau, very popular and respectable, of course, acquired by Salesforce on the vertical axis, still looking pretty good there. And again, on the horizontal axis, big presence there for Tableau. And Google with Looker and its other platforms is also respectable, but again, it has some work to do. Now, notice Streamlet, that's a recent snowflake acquisition. It's strong on the vertical axis, and because the snowflakes go to market prowess, it's likely going to move to the right over time. Grafana is also prominent in the Y axis, but a glimpse at the most recent survey data shows them slightly declining, while Looker actually improves a bit. As does Cloudera, which will move up slightly. Again, Microsoft just blows you away, doesn't it? All right, now let's get it to database and data platform. Same X, Y dimensions, but now database and data warehouse, snowflake as usual takes the top spot on the vertical axis, and it actually keeps moving to the right as well. With again, Microsoft and AWS is dominant in the market. As is Oracle on the X axis, albeit it's got less spending velocity, but of course it's the database, you know, King. Google is well behind on the X axis, but solidly above the 40% line on the vertical axis. Note that virtually all platforms will see pressure in the next survey due to the macro environment. Microsoft might even dip below the 40% line for the first time in a while. Lastly, let's look at the collaboration and productivity software market. This is such an important area for both Microsoft and Google. And just look at Microsoft with 365 and Teams up and to the right. I mean, just so impressive and ubiquitous. And we've highlighted Google. It's in the pack. It certainly has a nice base with 174N, which I can tell you that N will rise in the next survey, which is an indication that more people are adopting. But given the investment and the tech behind it and all the AI and Google's resources, you'd really like to see Google's in this space above the 40% line, given the importance of this market, of this collaboration area to Google's success and the degree to which they emphasize it in their pitch. And look, this brings up something that we've talked about before on breaking analysis. Google doesn't have a tech problem. This is a go-to-market and marketing challenge that Google faces. And it's up against two go-to-market champs in Microsoft and AWS. And Google doesn't have the enterprise sales culture. It's trying, it's making progress. But it's like that racehorse that has all the potential in the world, but it's just missing some kind of key ingredient to put it over the top. It's always coming in third. But we're watching and Google's obviously, you know, making some investments as we shared with earlier. All right, some final thoughts on what we learned this week in this research. Customers and partners should be thrilled that both Microsoft and Google, along with AWS, are spending so much money on innovation and building out global platforms. This is a gift to the industry and we should be thankful, frankly, because it's good for business, it's good for competitiveness, and future innovation is a platform that can be built upon. Now, we didn't talk much about multi-cloud. We haven't even mentioned super-cloud, but both Microsoft and Google have a story that resonates with customers in cross-cloud capabilities unlike AWS at this time. But we never say never when it comes to AWS. You know, they sometimes and oftentimes surprise you. One of the other things that Subjit Johal and John Furrier and I have discussed is that each of the big three is positioning to their respective strengths. AWS is the best IS, Microsoft is building out the kind of quote, we make it easy for you cloud and Google is trying to be the open data cloud with its open source chops and excellent tech. And that puts added pressure on Snowflake, doesn't it? You know, Thomas Kurian made some comments according to CRN, something to the effect that we are the only company that can do data, the data cloud thing across clouds, which again, if I'm being honest, is not really accurate. Now, I haven't clarified these statements with Google and often things get misquoted, but there's little question that as AWS has done in the past with Redshift, Google is taking a page out of Snowflake and data bricks as well. Now a big difference in the big three is that AWS doesn't have this big emphasis on the up the stack collaboration software that both Microsoft and Google have. And that for Microsoft and Google will drive captive IS consumption. AWS obviously does some of that in database, a lot of that in database, but ISVs that compete with Microsoft and Google should have a greater affinity one would think to AWS for competitive reasons. And the same thing can be said in security, we would think because, as I mentioned before, Microsoft competes very directly with CrowdStrike and Okta and others. One of the big thing that Sarbjit mentioned that I want to call out here, love to have your opinion, AWS specifically, but also Microsoft with Azure have successfully created what Sarbjit calls brand distance, AWS from the Amazon retail and even though AWS all our time talks about Amazon X and Amazon Y as in their product portfolio, but you don't really consider it part of the retail organization because it's not. Azure same thing has created its own identity and it seems that Google still struggles to do that. It's still very highly linked to sort of core Google. Now maybe that's by design, but for enterprise customers, there's still some potential confusion with Google, what's its intentions? How long will they continue to lose money and invest? Are they going to pull the plug like they do on so many other tools? So maybe some rethinking of the marketing there and the positioning. Now we didn't talk much about ecosystem, but it's vital for any cloud player. And Google again has some work to do relative to the leaders, which brings us to super cloud. The ecosystem and end customers are now in a position this decade to digitally transform. And we're talking here about building out their own clouds, not by putting in and building data centers and installing racks of servers and storage devices. No, rather to build value on top of the hyperscaler gift that has been presented. And that is a mega trend that we're watching closely in the CUBE community. While there's debate about the super cloud name and so forth is little question in our minds that the next decade of cloud will not be like the last. All right, we're going to leave it there today. Many thanks to Sarvjeet Johal and my business partner John Furrier for their input to today's episode. Thanks to Alex Meyerson who's on production and manages the podcast and Ken Schiffman as well. Kristen Martin and Cheryl Knight helped get the word out on social media and in our newsletters and Rob Hoth is our editor in chief over at Silicon Angle who does some wonderful editing and check out Silicon Angle, a lot of coverage on Google Cloud Next and Microsoft Ignite. Remember all these episodes are available as podcasts wherever you listen. Just search Breaking Analysis podcast. I publish each week on wikibon.com and siliconangle.com and you can always get in touch with me via email david.volante at siliconangle.com or you can DM me at dvolante or comment on my LinkedIn posts and please do check out etr.ai, the best survey data in the enterprise tech business. This is Dave Vellante for theCUBE Insights powered by ETR, thanks for watching and we'll see you next time on Breaking Analysis.