 From theCUBE Studios in Palo Alto in Boston, bringing you data-driven insights from theCUBE and ETR. This is Breaking Analysis with Dave Vellante. Despite all the chatter about cloud repatriation and the exorbitant cost of cloud computing, customer spending momentum continues to accelerate in the post-isolation economy. If the pandemic was good for the cloud, it seems that the benefits of cloud migration remain lasting in the late stages of COVID and beyond. And we believe this stickiness is going to continue for quite some time. We expect I ask revenue for the big four hyperscalers to surpass $115 billion in 2021. Moreover, the strength of AWS specifically, as well as Microsoft Azure remain notable. Such large organizations showing elevated spending momentum as shown in the ETR survey results is perhaps unprecedented in the technology sector. Hello, everyone, and welcome to this week's Wikibon Cube Insights powered by ETR. In this Breaking Analysis, we'll share some fresh July survey data that indicates accelerating momentum for the largest cloud computing firms. Importantly, not only is the momentum broad-based, but it's also notable in key strategic sectors namely AI and database. There seems to be no stopping the cloud momentum. I'm certainly plenty of buzz about the cloud tax, so-called cloud tax, but other than wildly-assumptive valuation models and some pockets of anecdotal evidence, you don't really see the supposed backlash impacting cloud momentum. Our forecast calls for the big four hyperscalers, AWS, Azure, Alibaba and GCP to surpass $115 billion, as we said, in IS revenue this year. The latest ETR survey results show that AWS Lambda has retaken the lead among all major cloud services tracked in the dataset as measured in spending momentum. This is the service with the most elevated scores. Azure overall, Azure Functions, VMware Cloud on AWS and AWS overall also demonstrate very highly elevated performance, all above that of GCP. Now, impressively, AWS's momentum in the all-important Fortune 500, where it has always showed strength, is also accelerating. One concern in the most recent survey data is that the on-prem clouds and so-called hybrid platforms, which we had previously reported as showing an upward spending trajectory, seemed to have cooled off a bit, but the data is mixed and it's a little bit too early to draw firm conclusions. Nonetheless, while hyperscalers are holding steady, the spending data appears to be somewhat tepid for the on-prem players, particularly for their cloud. We'll study that further after ETR drops its full results on July 23rd. Now, turning our attention back to AWS, the AWS cloud is showing strength across its entire portfolio and we're going to show you that shortly. In particular, we see notable strength relative to others in analytics, AI and the all-important database category. Aurora and Redshift are particularly strong, but several other AWS database services are showing elevated spending velocity, which will quantify in a moment. All that said, Snowflake continues to lead all database suppliers in spending momentum by a wide margin, which again, will quantify in this episode. But before we dig into the survey, let's take a look at our latest projections for the Big Four hyperscalers in IaaS. As you know, we track quarterly revenues for the hyperscalers. Remember, AWS and Alibaba, IaaS data is pretty clean and reported in their respective earnings reports. Azure and GCP, we have to extrapolate and strip out a lot of the apps and other certain revenue to make an apples to apples comparison with AWS and Alibaba. And as you can see, we have the 2021 market exceeding $115 billion worldwide. That's a torrid 35% growth rate on top of 41% in 2020 relative to 2019. Aggressive, yes, but the data continues to point us in this direction. And until we see some clearer headwinds for the cloud players, this is the call we're making. AWS is perhaps losing a share point or so, but it's so large that its annual incremental revenue is comparable to Alibaba's and Google's respective cloud business in total, IaaS business in total. The Big Three US cloud companies all report at the end of July, while Alibaba is mid August. So we'll update these figures at that time. Okay, let's move on and dig into the survey data. We don't have the data yet on Alibaba and we're limited as to what we can share until ETR drops its research update on the 23rd. But here's a look at the net score timeline in the Fortune 500 specifically. So we filter the Fortune 500 for cloud computing. You got Azure in the yellow, AWS in the black and GCP in blue. So two points here stand out. First, is that AWS and Microsoft are converging. And remember, the customers who respond to the survey, they probably include a fair amount of application software spending in their cloud answers. So it favors Microsoft in that respect. And GCP, second point is showing notable deceleration relative to the two leaders. And the green call out is because this cut is from an AWS point of view. So in other words, GCP declines are a positive for AWS, so that's how it should be interpreted. Now let's take a moment to better understand the idea of net score. This is one of the fundamental metrics of the ETR methodology. Here's the data for AWS. So we use that as a reference point. Net score is calculated by asking customers if they're adding a platform new. That's the lime green bar that you see here. In the current survey, they're asking, are you spending 6% or more in the second half relative to the first half of the year? That's the forest green. They're also asking, is spending flat? That's the gray, or are you spending less? That's the pink, or are you replacing the platform, i.e. repatriating? So not much spending going on in replacements. Now in fairness, 1% of AWS is half a billion dollars. So I can see where some folks would get excited about that, but in the grand scheme of things, it's a sliver. So again, we don't see repatriation in numbers. Okay, back to net score. Subtract the reds from the greens and you get net score, which in the case of AWS is 61%. Now just for reference, my personal subjective elevated net score level is 40%. So anything above that is really impressive based on my experience. And to have a company of this size be so elevated is meaningful. Same for Microsoft, by the way, which is consistently well above the 50% mark in net score in the ETR surveys. Think about it, that's even more impressive perhaps than AWS because it's triple the revenue. Okay, let's stay with AWS and take a look at the portfolio and the strength across the board. This chart shows net score for the past three surveys. Serverless is on fire. By the way, not just AWS, but Azure and GCP functions as well. Well, look at the AWS portfolio. Every category is well above the 40% elevated red line. The only exception is Chime. And even Chime is showing an uptake. And Chime is met if you've ever used Chime. Every other category is well above 50% net score, very, very strong for AWS. Now, as we frequently reported, AI is one of the four biggest focus areas from a spending standpoint, along with cloud, containers, and RPA. So it stands to reason that the company with the best AI and ML and the greatest momentum in that space has an advantage because AI is being embedded into apps, data, processes, machines everywhere. This chart compares the AI players on two dimensions, net score on the vertical axis and market share or presence in the data set on the horizontal axis. For companies with more than 15 citations in the survey, AWS has the highest net score. And what's notable is the presence on the horizontal axis. Databricks is a company we're high on, also shows elevated scores above both Google and Microsoft, who are showing strength in their own right. And then you can see data IQ, data robot, Anaconda and Salesforce with Einstein all above that 40% mark. And then below you can see the position of SAP with Leonardo, IBM Watson, and Oracle, which is well below the 40% line. All right, let's look at the all important database category for a moment. And we'll first take a look at the AWS database portfolio. This chart shows the database services in AWS's arsenal and breaks down the net score components with the total net score superimposed on top of the bars. Point one is Aurora is highly elevated with a net score above 70%. That's due to heavy new adoptions. Redshift is also very strong, as are virtually all AWS database offerings with the exception of Neptune, which is the graph database. RDS, DynamoDB, ElastiCache, DocumentDB, Timestream and Quantum Ledger database all show momentum above that all important 40% line. So while a lot of people criticize the fragmentation of the AWS data portfolio and their right tool for their right job approach, the spending metrics tell a story and that the strategy is working. Now let's take a look at the Microsoft database portfolio. There's a story here similar to that of AWS. Azure SQL and Cosmos DB, Microsoft's NoSQL distributed database are both very highly elevated, as are Azure database for MySQL. Postgres and MariaDB. Azure Cache for Redis and Azure for Cassandra. Also, Microsoft is giving customers a lot of options, which is kind of interesting. You know, we've often said that Oracle strategy, because we already think about Oracle, they're building the Oracle database cloud. We've said Oracle strategy should be to not just be the cloud for Oracle databases, but be the cloud for all databases. I mean, Oracle's got a lot of specialty capability there, but it looks like Microsoft is beating Oracle to that punch, not that Oracle is necessarily going there, but we think it should to expand the appeal of its cloud. Okay, last data chart that we'll show, and then this one looks at database disruption. The chart shows how the cloud database companies are doing an IBM Oracle Teradata and Cloud Error accounts. The bars show the net score granularity as we described earlier, and the ETR callouts are interesting. So first, remember, this is in an AWS context. So with 47 responses, ETR rightly indicates that AWS is very well positioned in these accounts with a 68% net score. But look at Snowflake, it has an 81% net score, which is just incredible. And you can see Google database is also very strong in the high 50% range, while Microsoft, even though it's above the 40% mark, is noticeably lower than the others, as is MongoDB with presumably Atlas, which is surprisingly low, frankly. But back to Snowflake. So the ETR callout stresses that Snowflake doesn't have as strong a presence in the legacy database vendor accounts yet. Now, I'm not sure I would put Cloud Error in the legacy database category, but okay, whatever. Cloud Error, they're positioning CVP as a hybrid platform, as are all the on-prem players with their respective products and platforms. But it's going to be interesting to see because Snowflake has flat out said it's not straddling the cloud and on-prem, rather it's all in on cloud. But there is a big opportunity to connect on-prem to the cloud and across clouds, which Snowflake is pursuing, that ladder, the cross-cloud, the multi-cloud. And Snowflake is betting on incremental use cases that involve data sharing and federated governance, while traditional players, they're protecting their turf at the same time trying to compete in cloud native and of course across cloud. I think there's room for both, but clearly as we've shown, cloud has the spending velocity and a tailwind at its back. And AWS, along with Microsoft, seem to be getting stronger, especially in the all-important categories related to machine intelligence, AI, and database. Now, to be an essential infrastructure technology player in the data era, it would seem obvious that you have to have database and or data management intellectual property in your portfolio, or you're going to be less valuable to customers and investors. Okay, we're going to leave it there for today. Remember, these episodes, they're all available as podcasts wherever you listen, all you got to do is search breaking analysis podcast and please subscribe to the series. Check out ETR's website at ETR.plus, ETR.plus. We also publish a full report every week on Wikibon.com and SiliconANGLE.com. You can get in touch with me, David.Valante at SiliconANGLE.com. You can DM me at Dvalante. Or you can hit me up on our LinkedIn post. This is Dave Valante for theCUBE Insights, powered by ETR. Have a great week, stay safe, be well, and we'll see you next time.