 Hello and welcome to this Analyst Angle focused on the recent announcements that Dynatrace made at their conference today and how the observability market is really changing. I'm Rob Streche, your analyst with the Cube Research. Let's start with Dynatrace and what they have announced and really kind of dig into those announcements a little bit. First, earlier in the week, Dynatrace announced its intent to acquire RuneCast. Their view is that by adding RuneCast to the Dynatrace platform, they will extend Dynatrace contextual security protection and analytics with RuneCast security posture management. Our view is this can be a good acquisition helping to broaden the security specific data in Dynatrace's platform and providing the ability to correlate security compliance, vulnerability assessment and configuration management with information already being collected from a DevOps perspective. But that kind of brings us to this first slide that we have with our partner ETR from their October 2024 survey on observability. As you can see here, almost half the respondents will do some amount of consolidation in 2024 of their observability platforms. This is not surprising when you start to look at how many observability platforms and how many companies are aiming at this market. In that same study, organizations cited the cost in full functionality as the two top buying criteria that is really driving this. So organizations really want to consolidate the observability tooling across their security and DevOps focused platforms to get better scale of economy and to save on costs. But again, as we dig into that same survey from October with ETR respondents talk about how 67% are using between three and eight tools today with the majority doing three to five. But most have a desire to get to three or less tools as well. This is really a key when you start to look at how much is it that I can consolidate? What is the functionality I'm getting? Really that really plays into this platform play. Moving to the second announcement that Dynatrace had, it was around AI observability for large language models and generative AI. Very, you know, makes a lot of sense given the hype around this and how important the use cases could be from a customer satisfaction or large organizations. This focus on providing end to end observability and security for LLMs and generative AI powered applications by covering all the infrastructure layers from customer facing aspects through in multi cloud and all the way back to the databases. Such as vector databases and where the actual rag may be happening. Our view is that observability of AI applications, not just the data will become increasingly important as large language models and segmented language models or SLMs become sources of record for organizations and their customers totally start to rely on them. Dynatrace's ability to ensure availability, performance, cost and security is crucial for AI based applications to be trusted to provide timely and accurate information. Imagine all the steps in the AI pipeline having to be known good with no chances of things such as false data injection being compromised to change the data for those organizations. That could be catastrophic for those organizations. We believe that this is a place where a roomcast and that acquisition should play a major role. On the third announcement from Dynatrace was around open pipeline. A new core platform technology that provides Dynatrace customers with a single pipeline to manage petabyte scale data ingestion. Very key when you start to think about all the different places and all the different telemetry that is coming into an organization as they have their own that they build into their own cloud native apps as well as legacy or other API driven. Our view is that Dynatrace is responding to customer need for help in managing pipeline sprawl. Again, all of those different sources sending all these different things in a different way. Within their observability environment. This can be a significant factor in Dynatrace effort to attract new customers who are searching for an observability platform rather than a set of tools. Here again, we'll take a look at our partner ETR and their data and dig into the research where we see that more companies like Dynatrace add features such as open pipeline. The overlap is actually shrinking with the granddaddy of them all Splunk. As you can see here in January Splunk and Dynatrace only had 14% overlap. That's not a lot. Dynatrace and Splunk net score remain the same in those overlapping accounts signaling synergies, but this is bound to diverge with these announcements and how they're going to expand the Dynatrace platform. In fact, when you start to look at some of the others in this data as well such as Datadog has the highest overlap with Splunk and the most to lose. Let's move on to the fourth announcement. Fourth announcement was around AI powered data observability for analytics and automation platforms, which builds on existing data cleansing capabilities provided by Dynatrace's platforms. One agent technology to ensure quality for data collected via open source standards and custom instrumentation such as open telemetry, logs or Dynatrace APIs and fuels the platforms Davis AI engine. Again, the smarts behind data, so it's great to collect all the data, but you have to have something that actually puts it in context and has the ability to tell you what's going on. Our view is that Dynatrace is providing assistance to organizations that are developing data products. Again, if you don't know what a data product is, you can go over to Silicon Angle. We actually have that up there and have that on thecuberesearch.com talk a lot about data products and how by enabling them to ingest custom data from their applications and pipelines. For example, if you're using one agent for logs, you want to ingest via API, some configuration steps are necessary. But after that, one agent log data is automatically contextualized and connected to the related application, infrastructure components and transactions. Again, we see that the acquisition with RuneCast could help this with the security aspects as well. Dynatrace is promising to help organizations gain a better understanding of new data-based applications by utilizing predictive and causal machine learning capabilities of Davis AI, which is super important because in the race to be the ultimate observability platform, as we can see in the net score across 1400 plus respondents in the ETR data from the January 2024 survey, really it's about how you can be that platform and be that platform play. A platform plays are really becoming the norm in observability with DevOps and security use cases dominating that platform play. Across all the 1400 respondents, the net score for Splunk and Dynatrace is actually equal. This is that spending momentum that we talk about here and really has an idea that Dynatrace has about as much momentum as Splunk here, with some of the others having even more momentum. In fact, Splunk shows up 3x more in the survey but has been trending lower since the Cisco announcement, as you can see here in the bottom right. Interestingly, Dynatrace has approximately the same spending momentum as seen in the net score as Splunk across this platform and when you put it in context with those other competitors. 2024 is definitely going to be an exciting year for the observability market with startups like Chronosphere and new entrants like Riverbed vying to tackle larger pieces of the market. Thank you for watching this episode of the Analysts Angle on Dynatrace in Observability Market on The Cube, the leader in high-tech enterprise analysis and coverage.