 From theCUBE Studios and Palo Alto in Boston, bringing you data-driven insights from theCUBE and ETR, this is Breaking Analysis with Dave Vellante. Despite its faster growth in infrastructure as a service, relative to AWS and Azure, Google Cloud Platform remains a third wheel in the race for cloud dominance. Google begins its cloud next online event starting July 14th in a series of nine rolling sessions that go through early September. Ahead of that, we want to update you on our most current data on Google's cloud business. Hello everyone, this is Dave Vellante and welcome to this week's Wikibon Cube Insights, powered by ETR. In this session, we'll review the current state of cloud and Google's position in the market. We'll drill into the ETR data and share fresh insights from our partner and the Cube community. So let's get right into it. You know, Google, if you think about it, was actually very early into the cloud game. Google's 2004 IPO was a milestone event for the tech industry and in many ways, it really marked the end of the post.com malaise. It signaled the beginning of a new era of innovation. During this time, Google was busy building out its massive global cloud infrastructure, probably the largest in the world, with undersea cables, global data centers and tools like the Google file system and of course Bigtable. But it took many years for Google to pull its head out of its ad serving butt and realize the opportunity to sell its cloud services to global enterprises. Bigtable, Google's NoSQL database, for example, was released in 2005, but it wasn't until 2015 that Google made this service available to its customers. That was the same year Google brought in VMware founder, Diane Greene, to begin its enterprise journey in earnest. Now Google, they have a dizzying array of services in compute, storage, database, networking, IT ops, dev tools, machine learning, AI, analytics, big data, security, on and on and on. Name a category and it's likely that Google has something in it as a cloud service. But Google to this day still hasn't figured out how to sell to the enterprise. It really struggles to find the right formula. So as you know, Google brought in Thomas Curian from Oracle to figure this out. Of course, Curian is, he's going to go with Google strengths like analytics and database, but it has to have differentiation. So it comes up with unique pricing models like sustained discounts, which automatically apply discounts for heavy usage, as opposed to forcing users to buy reserved instances such as what AWS does. Google is more aggressive partnering around multi-cloud for instance with Anthos and it's smartly open sourced Kubernetes, really to minimize the importance of physically where workloads run. The bottom line however, is that these moves are necessary for Google to compete because it lags behind the leaders. It has a long way to go before it's going to be satisfied with its cloud business. Let's look at the IS market in context. Now, I don't want to say it's all gloom and doom for Google, far from it. Earnings for Q2, they're going to start rolling out later this month, but this chart shows our latest estimates of IS and PAS for the big three cloud players. Now, I got to caution you as I did before, other than AWS which reports very clean numbers each quarter on IS and PAS, we have to estimate Azure and GCP revenue because they bundle in other things. I'll give an example. Google reports its overall cloud numbers which include G Suite. Microsoft reports a category they call intelligent cloud. Now that includes public, private clouds, hybrid, SQL server, window server, system center, GitHub, enterprise support and consulting services and Azure that IS and PAS numbers also in there too. So what we have to do is to squint through the earnings reports and the 10Ks and try to get a clean IS and PAS figure for these players. And that's what we show here. Now there's really two points that we want to stress with this data. First, on a trailing 12 month basis, the big three cloud players now account for nearly $60 billion in IS and PAS revenue. And this $60 billion on a weighted average basis is growing in the mid 40% range. So well on its way to being a $100 billion business just for these three firms. And as we've reported, that's eating directly into the on-premises infrastructure install base, which is a flat to declining market. And that trend is going to play out in a big way this decade. We've predicted that public cloud is going to outpace on-prem infrastructure by more than 1800 basis points over the next 10 years from a spending standpoint. Now the second point that I want to make relates to Google IS and PAS growth. We peg it at greater than 70% based on public statements, reading the 10Ks and ETR data, which we'll discuss in a moment. So very healthy growth, but from a much smaller install base or base than AWS and Azure. But in our view, it's not enough because AWS and Azure are so large and strong still growth-wise that we feel Google is going to remain a distant third really indefinitely. Nonetheless, a lot of companies would be thrilled to have a $4 billion cloud business and there's certainly good news in the data for Google. So let's look at some of that survey data. Now, as we've reported in the past, Google pushes G Suite very hard as part of its cloud story and it leads oftentimes with G Suite and its messaging. But to us, that's never really been that compelling. So let me start with some anecdotal data from ETR. ETR runs a regular program, they call it Venn. And in the Venn, they invite clients into a private session to listen to named CIOs talk about their experience with vendors and overall spending intentions. It's a facilitated session. And we've had ETR's Eric Bradley on as a guest who directs the Venn program, it does much of the facilitation. And here's a statement from a recent Venn session quoting a CIO at a mid-sized telco that I think sums it up nicely. He says, Google's G Suite is fine and dandy, but I don't see that truly as an enterprise solution. And frankly, it's still not of the quality of an office application, talk about Microsoft. All in all, I really like the infrastructure as a service and the platform as a service components that GCP had. And I thought they were coming along very, very well in that space. Now, the reason that I share this is because the IT buyers that we speak with, you know, they're very serious about exploring Google. They want options other than Azure and AWS and they see Google as having great tech and as a viable alternative. So let's talk about GCP in the enterprise. When we look into the ETR data for the most recent survey which ran in June and early July, GCP is showing strength in one really important bellwether category, the giant public and private companies. These are the largest firms in the ETR dataset and often point to secular trends. Now, before we get into that, let's look at the picture for GCP using ETR's net score methodology. This is fundamental to the ETR approach. And remember, each quarter ETR goes out and asks its respondents, are you planning to spend more or less? In its July survey, ETR focuses on second half spending. The next chart captures results across Google's entire portfolio. So here's the breakdown for Google across all sectors. 14% of the respondents are adopting new. That's the lime green. 39% plan to increase spending in the second half versus the first half. That's the forest green. There's a big fat middle that's flat and you see that in the gray area. And then 7% spending less with 2% replacing. That's the pinkish and dark red respectively. So I would say this result is mixed in my opinion. Yeah, it's not bad, don't get me wrong. And we'll see once ETR comes out of its quiet period how this compares to Azure and AWS. Remember, I can only share limited data until ETR clients get the data and have time to act on it. But this calculates out to a net score of 44%, which is respectable, but frankly not overly inspiring. So let's look across the GCP portfolio using the ETR taxonomy and see what it looks like. This chart shows the net score comparisons across three different surveys, October 19, April 20 and July 20. So reading the bars left to right, you can see Google's strong suit really is machine learning and AI. Container platforms are also very strong as are functions or serverless. And databases, very solid. We'll talk more about that in a minute. Video conferencing was just added by ETR and sure it pops up with the work from home. Cloud is actually holding firm when compared to October of last year. But surprisingly, analytics is looking a bit softer. And ETR for the first time added G Suite with it shows a 26% net score first time out which is pretty tepid. I mean, not very impressive at all. But overall, the picture looks pretty good for Google. So let's dig further into the giant public and private sector that Bellwether I talked about. And let's peel the onion a bit and look closer at the results from the largest companies in the data set. So this chart shows the giant public plus private organization. So it'll include like monster public companies but also large companies like a Cargill or a Koch Industries if in fact they responded in this survey. And you can see in that all important sector it's a story of a lot of green with hardly any red. So quite a positive sign for Google within those Bellwethers. Here's what I think is happening here. These large and often far flung organizations have realized that they have multiple cloud vendors and they're asking their senior IT leadership to bring some consistency and sanity to their cloud strategies. So they look at the big three and say, okay, what's the best strategic fit for each workload? So they might say, for instance, let's use AWS for core IS, let's use Azure for productivity workloads and we'll sprinkle some Google in for machine learning and related projects. So we do see some real strength in some of the larger strongholds for Google. Although interestingly, ETR sort of tells me that there's softness in the mid-size and smaller companies that have powered AWS for so many years. And of course this within Google's base but compare that to AWS and AWS much stronger in those smaller companies startups and the like and of course COVID's the wild card in all this. We have to take that into account and we will with Sagar Kadakia who's ETR's director of research in the coming weeks. But I want to look at Google in the all important database category. So before we wrap, let's look at database. You remember Google's playing catch up in the cloud and its marketing takes a more open posture around partners and things like multi-cloud and you can contrast that with AWS for example but look, make no mistake, Google wants your data in their cloud and that's why database is so strategic and so important. Look, it's the mother of all lock specs. All you got to do is look at Oracle and their success. Now, as we've reported many times there's a new workload emerging in the cloud around this idea of the modern data warehouse. I mean, I don't even like that term anymore data warehouse because it sounds just so static. But anyway, I'm talking about workloads that bring database, machine learning, AI, data science, compute and storage along with visualization tools to deliver real-time insights and operational analytics. Database is at the heart of everything here. When the database and everything else falls into place. Now, Google has six or seven database products and one of the most impressive in my opinion is BigQuery. I mean, for those who have followed me over the years you know I love the technology behind Google Spanner but BigQuery is where much of the action is around this new workload that I'm talking about. So let's look at deeper at Google's position in database. This chart shows one of my favorite views. On the y-axis is the net score or spending momentum and on the x-axis is market share or pervasiveness in the ETR dataset. The chart plots various database companies in their position within the all important giant public plus private sector. So these are the companies in the ETR survey that are the largest and oftentimes again are bellwether. And you can see Microsoft and Oracle and AWS have very strong presence of the horizontal axis. MongoDB looms large, MemSQL, they just raised $50 million this past May. MariaDB just raised another $25 million this month. You can see Couchbase and Redis, they show up and they're on my radar. I'm learning more about those companies. Folks database is hot, VCs are pouring money in and it's something that's very important to the CUBE community to look at. And of course you see Google in the chart with a strong net score, but not the type of market presence that you see from the other big cloud players. In fact, they've pulled back a little somewhat in this last ETR survey. So despite some bright spots in the enterprise in terms of spending momentum, just not quite enough presence yet. Oh, by the way, look who's right there with Google. I know I sound like a broken record, but Snowflake is everywhere. You'll find them in AWS, you'll find them in Azure and on GCP. Now remember, Snowflake is only about one-tenth the size of Google's IS and PAS business, but it has stronger spending momentum than all the big guys and it continues to creep its way to the right in terms of market share or presence. You know, but Google has great database tech and BigQuery is at the heart of its strategy to support analytics at scale and automate the data pipeline. BigQuery is very well designed. It started as a cloud native database. It's based on serverless, it's highly scalable and it's very cost effective. In fact, ESG Enterprise Strategy Group wrote a report comparing the TCO of the cloud databases. Let me pull that up and show you. Now the report was commissioned by Google, so they got to caution you there, but it was very well done in my opinion by a guy named Aviv Kaufman. And you can see here, it compares BigQuery with the other cloud databases. And of course, you know, BigQuery wins, got the lowest TCO, but again, I thought the report was really detailed and well researched. I have no doubt that Snowflake has an answer for the big brown bar, which is on demand cloud costs. I think ESG was making certain assumptions, maybe worst case assumptions about the need to over provision resources for Snowflake, which I'm sure ESG can defend, but I'll bet dollars to donuts that Snowflake has an answer to that or a comeback. I'm going to ask him. But the point I want to make here is that BigQuery was designed from day one. Again, as a cloud native database, we've been talking about that a lot. It's very efficient and it's going to be competitive. So you can see there are some bright spots in the enterprise for Google. Okay, let's wrap up. Now, having called out some of the positives, and there are many, Google is still not getting it done in the enterprise in my opinion. I certainly would not say too little too late, but I would say they spotted the competition a huge lead. And the only reason is Google just didn't act on the opportunity staring them in the face within the enterprise fast enough, and they finally woke up. But enterprise sales, they're really hard. Thomas Curian, for all his experiences, is coming from way, way behind with regard to the enterprise. Go to market, systems and processes, pricing partnerships, special deals for the enterprise. Google's still learning how to sell the business outcomes and is relying far too much on its technology chops, which while impressive are not going to win the day without better enterprise sales, marketing and ecosystem integration. Now, I feel like for years, Google has said to the enterprise market, give me heat and I'll add the wood, meaning we got the best tech, go ahead and use it. That strategy just doesn't work in the enterprise. Curian knows it and I suspect that's why Google showing some strength within these large, giant public and private companies. They're probably applying focused sales resources to nail customer success with some of its top accounts where they have a presence. And then once they nail that, they'll broaden to the market, but they got to move fast. We'll learn more about Google's intentions and its progress over the next few months as they try their online event experiment. And of course, we'll be there providing our wall-to-wall coverage. Remember, these breaking analysis episodes, they're all available as podcasts. ETR is shortly exiting its quiet period this week and we'll be rolling out the data, so check out ETR.plus. I publish weekly on wikibon.com and siliconangle.com and as always, please comment on my LinkedIn post. I really appreciate the feedback. This is Dave Vellante for theCUBE Insights, powered by ETR. Thanks for watching everyone. We'll see you next time.