 From the SiliconANGLE Media Office in Boston, Massachusetts, it's theCUBE. Now, here's your host, Dave Vellante. Hello everyone and welcome to this week's WikibonCube Insights, powered by ETR. In this breaking analysis, we want to dig into the so-called multi-cloud arena. Some of the questions we're getting from our community are, what is multi-cloud? Do we really need it? What problems does multi-cloud solve? And importantly, what problems does it create? How is this thing called multi-cloud likely to evolve? And who are some of the key players to watch? How do they stack up relative to each other? You know, recently I got a couple of interesting questions from a customer that says, I have all this AI action going on and doing sophisticated modeling and this data lives and all clouds all over the place. How do I cross-connect to the data and the workloads that are running on these clouds with a consistent experience? What are other customers doing? Another question came up in the community today. Is there a financial advantage to multi-cloud? Or is it just about avoiding lock-in? So I'm going to take a stab at addressing these questions. So first of all, let's look at some of the noise that's going on in the marketplace and try to extract the little signal. Every vendor, especially the ones who don't own a cloud, are touting this thing called multi-cloud and they tell us that customers want to avoid lock-in and organizations want seamless integration across clouds. And they say we, the vendor, are uniquely qualified to deliver that capability. Although as you can see here in 4A, not everybody agrees because some feel that multi-cloud is less secure, more complicated, and higher cost. Now the reality is that one, two, and three are true as is 4A to a certain degree. But generally I would say that multi-cloud to date is more of a symptom of multi-vendor than a clear strategy. But that's beginning to change and there's a substantial opportunity out there for anyone to win. So let's explore this a little bit. Now in an exclusive sit-down with Andy Jassy prior to re-invent 2019, John Furrier got Jassy to talk about this trend. Here's what he said. We have a large number of companies who have gone all in on AWS and that's growing. But there's going to be other companies who decide that they're going to use multiple clouds for different reasons. He went out to say that the vast majority of organizations pursuing cloud tend to pick a predominant provider. That it's not a 50-50 scenario. Whether it's more like a 70-30 or 80-20 or even a 90-10. Furrier went on to write somewhat paraphrasing I think Jassy, in my view. It's not hard to find the reasons for using multiple clouds, right? There's M&A, there's shadow IT, there's developer preference. But it's really not multi-cloud by design. It's just more of the same enterprise IT mishmash that we've seen for decades. So I generally have to say I agree with that, but it is changing and I want to dig into that a bit. So first, let me recap the basic premise that we work off of. First, cloud is winning in the marketplace. We know this. Building data centers is not the best use of capital unless you're a data center operator or a hyperscaler or maybe a SaaS provider, maybe. So more and more work is going to continue to move to the cloud. This was pretty much the first wave of cloud, if you will, a cloud of remote infrastructure services for very obvious workloads like web, test dev, analytics and certain SaaS offerings. The second wave of cloud, which we've been talking about for 15 years, was or should I say is about hybrid, connecting remote cloud services to on-prem workloads. And the third wave, which is really hitting somewhat in parallel is this thing that we call multi-cloud. Now, it's not a perfect analogy, but these multi-generational waves remind us of the early days of networking. Now some of you may remember that years ago, the industry was comprised of multiple dominant vendors that controlled their own proprietary network stacks. For example, IBM had SNA, digital or DEC had DECnet. All the mini-computer vendors had their own proprietary nets. Now in the early to mid-1980s, the OSI model emerged with the objective of creating interoperability amongst all these different communication systems. And the idea was we're going to standardize on protocols and the model had seven layers all the way from the physical layer through the application. But really, in reality, it was a pipe dream because it was way too complicated and it sort of assumed that customers were going to rip and replace their existing networks and then standardize on the OSI model. Now in reality, that was never going to happen. However, what it did is it opened the door for new companies and you saw firms like Cisco and 3Com emerge with TCP, IP and Ethernet becoming standardized and enabling connections between these systems. And it totally changed the industry as we now know it. So what does this have to do with multi-cloud? Well today, you kind of have a similar situation with dominant public cloud leaders like AWS and Azure. And in this analogy, they are the proprietary siloed networks of the past like IBM and digital. They're more open, obviously, but still. Ultimately, customers are going to put workloads on the right cloud for the right job. And that includes putting work on-prem and connecting it to the public cloud with let's call it a substantially similar and ideally identical experience. That's what we call hybrid. Now that's today's big wave and you're seeing it with Amazon's Outposts and VMware and Amazon and Azure Stack, et cetera. So all this hybrid action is getting wired up. Customers are putting work into AWS and Azure and certainly Google and IBM Cloud and the Oracle Cloud and so forth. And customers are wanting to connect across clouds with a substantially similar experience because that reduces cost and of course it speeds business outcomes. That's what we call multi-cloud. Now, I'm not by any means suggesting that Amazon and Microsoft are going to go the way of the mini computer vendors. I don't believe that. I think leaders today are much more savvy and tuned in to how to surf the waves, they're more paranoid and they're frankly just smarter than back in the 70s and 80s. But it's not a rite of passage. If they ignore the trends, they will face challenges. They could become driftwood. So you're seeing the emergence of some of the moves from the vendor crowd, the big whales connecting their infrastructure like AWS and VMware and Microsoft and Oracle, quite interesting and IBM, Red Hat with everybody, Cisco, Dell, HPE with everyone, Google with Anthos and a lot of other players all are trying to stake a claim in this hybrid and multi-cloud world. But you also have these emerging players that are innovators, companies like CrowdStrike in security, Cumulo in file storage, Clumio in the backup space and many dozens of well-funded players looking to grab a share of this multi-cloud pie. And it's worth pointing out that they're all kind of going gaga over Kubernetes. Now, of course this makes sense because Kubernetes has emerged as a standard. It's certainly very popular with developers. Why? Because it enables portability and allows them to package applications. And of course, all the related dependencies around those applications and then hand that app off for testing or deployment and it's going to behave in the exact same way as when they ran it locally. This we've seen and we know this. But I want to share something. I had a great conversation with Bernard Golden yesterday and he made an excellent point about both Kubernetes and containers. He said this, portability is a necessary but insufficient condition for multi-cloud. To succeed, you still have to have an integrated management approach to security, ID management, monitoring, performance, reporting and then get into cross training of people and skills, et cetera. Okay, I want to shift gears and as always I want to dig into these segments and bring in the ETR perspective. Now I'm pretty sure ETR has a lot of data on multi-cloud from their Venn meetings and other surveys but what I've done today is pulled some data that I'm using as indicators or proxies for multi-cloud. So I can't go out and buy me some multi-cloud today. It doesn't really exist in that form. So what we have to do is highlight some of the trends in the data and draw some inferences from that. So let's take a look at this chart. What it shows is the relative position of a number of companies that my view are participating in the multi-cloud arena. The chart plots these companies showing net score or remember spending momentum on the y-axis and we've juxtaposed that to what's called market share on the x-axis. Market share is a measure of pervasiveness in the dataset. And what we've done is we've filtered on three sectors, cloud, container orchestration and container platforms using it as a proxy for multi-cloud. So these are buyers, 791 of them as you can see by the end who are spenders in these three areas and we're isolating on a select group of names and as a last filter we selected only companies with 50 or more results in the dataset from the survey and we're using this as a multi-cloud sector proxy. So let me make a couple of comments here. First, I know Kubernetes is not a company but ETR captures spending on Kubernetes. It's one of the hottest areas in the dataset with a nearly 82% net score. So we're capturing that as a reference point. The next thing I want to say is you can see the big cloud players, Azure and AWS and once again, as in previous breaking analysis segments, we see those two, look, they're leaders. They're out in the lead, both companies showing very, very strong momentum from a net score standpoint. Now AWS, you might say, why are you including AWS, Dave? They don't explicitly have a multi-cloud offering but in my view, you cannot talk about multi-cloud without including the leading cloud supplier. You also see Google. Not so much in the market share of the big two but Google showing strong net score. We've talked about that before and they're very well positioned in multi-cloud with Anthos. They're behind, they're playing cloud agnostic to try to catch up. Again, remember, this is a proxy that we are running. It's not necessarily a reflection of firm's specific multi-cloud offerings. It's an indicator based on the filters that we've run. Now let's take a look at some of the others. Rubrik, the data protection specialist and CrowdStrike, who's a security darling, they show some real strength. Both have multi-cloud offerings. They have strategies around there. Look at HashiCorp. They stand out as an important player in our view as they provide developer tooling to run secure and deploy applications across clouds. I believe it's VCF, VMware Cloud Foundation and it's right there in the mix and you can also see Fortinet in there as well executing from a security position. I talked about them last week in my breaking analysis. They have a nice cloud portfolio and they're benefiting from execution, strong execution. Let me call your attention to IBM and Red Hat, Red Hat OpenShift. Look at their respective positions on this chart. IBM's spending velocity or net score is low but Red Hat has quite strong spending velocity and this is CEO Arvind Krishna's opportunity. Leverage IBM's large install-based presence shown here as market share or pervasiveness and bring Red Hat to the right and leverage OpenShift's coolness to increase IBM's relevance and elevated spending velocity. If Arvind can make the kind of progress that I'm showing here in this picture, you know, he'll end up being CEO of the decade but that really is IBM's opportunity. Now you can also see, I put Oracle in the chart as well because of their multi-cloud relationship with Microsoft, which I actually think has great potential for running mission-critical Oracle databases. As I've noted many times, IBM and Oracle both have clouds, they're in the cloud game, they're all hyperscaler clouds but they have very large installed software franchises. Why is that important? Because it insulates them from the IS knife fight and the pricing pressures that are putting forth by the hyperscalers. But finally I have to mention Cisco I've said many times comes at multi-cloud from a position of strength and networking and of course security. They've got a huge market presence. And not without challenges but they clearly are a player here. Okay, now let's go on and look at some similar proxy data basically the same cut isolated on a few big players participating in multi-cloud. So again, same cut as before but this shows a time series isolating on some of those biggies showing their net score or spending momentum in cloud and those two container related sectors that I talked about. You got Azure leading, GCP showing momentum, IBM Red Hat with OpenShift and VMware all with solid net scores that are in the green. Cisco not as strong from a net score or a spending velocity standpoint but it's shared in or presence in the data set is significant in this cut. So the takeaways here really are one, this is a wide open race, it's jump ball you really can't pick a winner yet. And two, each is going to come at this from their own unique position of strength which brings me to how we see this space evolving. This simple chart here really shows how we see the multi-cloud infrastructure stack emerging. Starting at the bottom, we show in the stack networking, you got to have networking to cross-connect clouds. And this is where Cisco, you have to win the day. It's not optional for them. Some big players are going after the control plane including Microsoft Arc, Google with Anthos, VMware with Tanzu, IBM Red Hat and we think eventually AWS is a possibility to enter that game. On the data plane, you got some big whales like Dell EMC, you got NetApp, you got HPE, you got IBM, the big storage players as well. You have specialists like Pure who's doing some interesting things in block in the cloud and Cumulo in the file side bringing innovations across clouds. Then in data management and data protection, you have a bunch of companies like Veritas, Cohesity, Rubrik, Veeam, Actifio's going to be in there, Commvault, I mentioned Clumio before, IBM is another one. You got a whole bunch of folks in networking. Big portfolio plays from the likes of Cisco, I said network, I meant security. From Cisco, Palo Alto, Fortinet, along with many of the security specialists we've highlighted in the past like CrowdStrike and there are many, many others. Now on the left most side of this chart is really interesting. We showed the full stack interconnects. Here we're referring to the direct cloud to cloud connections and functions up and down the entire stack. Examples here are AWS, VMware, yes that hybrid but also emerging at the edge and Microsoft and Oracle. So the bottom line is we're seeing a battle brewing between the big companies with larger appetites gobbling up major portions of the market with integrated suites that are playing out within each layer of the stack. Competing with smaller nimble players that are delivering best-of-breed function along those stack layers. All right, let me summarize. So here are the questions that I said I would answer. Let's see how I did. What the heck is multi-cloud? Well, let me first say, it feels like everything in IT is additive. What do I mean by that? Well, we never get rid of stuff. We keep things forever. Think about it, the typical enterprise has multiple data centers. They get many SaaS providers. More likely they have more than one IaaS provider and they're starting to think about what should I do with the edge? There is no standard for hybrid or multi-cloud deployments. You talk to 100 customers and you're going to hear 120 or 150 or 300 different environments and several orders of magnitude of challenges that they face. Do we really need multi-cloud? Well, in an ideal world, no, we wouldn't need multi-cloud. But we talked about how we got here earlier. How real is it? How real is multi-cloud? Well, look, companies use multiple clouds. Is it easy to do things across these clouds? No, so it's one of these problems that the industry has created that it can now make money fixing. It's a vicious cycle, I know, but so goes the enterprise IT business. What problems does multi-cloud solve and create? Look, the goal of multi-cloud should be that it creates more value than just the sum of the individual parts. And that is clearly not happening yet in my opinion. Moving data around is a problem. So ultimately the value comes from being able to bring cloud services to data that resides all over the place. And as Bernard Golden implied, even with Kubernetes, the experience is far from seamless. So we understand that technology created this problem and IT people, processes and technology will be asked to clean up the crime scene, as I often say. It's a common story in enterprise tech. We talked about how multi-cloud will evolve along a stack that it comprises specialists and big companies with very big appetites. My opinion is that multi-cloud will evolve as a mishmash and vendor relationships, the right tools for the right job, the edge, IT and OT tensions and mergers and acquisitions, these are going to create even a bigger mess down the road. We have well-funded companies that are exceedingly capable in this business and the leaders are going to get their fair share. Cloud is a trillion dollar market opportunity and there will not be, in my opinion, a winner take all in multi-cloud. So who wins? Look, I've tried to lay out some of the leaders within different parts of the stack but there's way more to the story. I do believe that the cloud players are well positioned. Why? Because they invented cloud, AWS and others who followed. Right now, Microsoft and Google are playing actively in that market but I definitely think AWS will eye that space. But I think VMware, Red Hat, IBM, Cisco, et cetera, some of this from the respective positions of strength and they have the added benefit of being cloud semi-agnostic because generally they're not wed to a hyperscale cloud. IBM as a cloud, Oracle as a cloud but it's not a hyperscale cloud. And as always, there's specialists that are going to solve problems that are too small initially for the big whales to see. So they get a lead to market advantage but those opportunities can grow over time and allow these guys to reach escape velocity. But I'll say multi-cloud in and of itself is I believe an opportunity, one that will be attacked from a position of strength within the stack and there are opportunities to be specialists up and down that stack. Think HashiCorp. All right, this is Dave Vellante for Wikibon's Cube Insights, powered by ETR. Thanks for watching this breaking analysis and remember, these episodes are available as podcasts. You can check it out as you're driving around your car wherever you listen to podcasts. You can connect with me at david.vellante at siliconangle.com or at dvellante on Twitter or please comment on my LinkedIn posts. Thanks for watching everyone. We'll see you next time.