 From theCUBE Studios in Palo Alto in Boston, connecting with thought leaders all around the world, this is a CUBE conversation. Analysis from company earnings reports and customer survey data continues to show that Microsoft Azure and GCP are closing the gap on AWS's cloud dominance. Now while reporting definitions of the cloud remain fuzzy, it's very clear that clouds steady march into the stronghold of on-premises computing continues. The global coronavirus pandemic has only strengthened the cloud's position in the overall marketplace. Now, as you might recall, we reported last week the story of the haves and the have-nots and that's playing out in several sectors and in this breaking analysis, we're going to take a closer look at the big three cloud players and we'll do a brief investigation of AWS specifically in a short drill down. Welcome everyone to theCUBE Insights powered by ETR. Today we're going to try to really accomplish three things. First, we want to quantify how the cloud is impacting the on-prem business. As we enter this decade, let's take a snapshot of some of the vendors that are well positioned and maybe some of those that are facing greater headwinds. The second thing we want to do is we want to update you on the latest market share data for the big three cloud players. And then finally, I want to dig into the business of AWS and a little bit more depth to see where they're seeing the most strength and where perhaps maybe there are some cracks in their substantial armor. Now let's look at the IT landscape where we are in 2020. The first data point that we want to share really tells a familiar story and really drafts off the theme that we've set for the past several weeks, which is the bifurcation in the marketplace. Now if you take a look at this chart, what's really showing is it's sort of ETR's version of the Gartner Magic Quadrant, but it uses survey data to plot the vendors. So on the Y axis is the metric of net score, which is a measurement of spending momentum. And just to review, each quarter ETR surveys more than 1200 CIOs and IT professionals and asks them, are you essentially spending more or less on a particular supplier? And what we do is we subtract the less from the more and the remainder is the net score. So it's sort of like NPS and I'll go into that a little bit later. But that's the vertical axis. Now the X axis is called market share. You know, it's really not market share like IDC measures, rather it's a market, a measure of pervasiveness in the survey and it's calculated by dividing the mentions of a particular company by the total mentions in the overall survey. And you see that's plotted on the horizontal axis. So several points here that I want to note. First is remember, this is April survey data. So for more than 1200 buyers. And you can see we've plotted several companies, including the big three cloud players. You got Microsoft and AWS in the upper right and Google with much lower presence but decent spending momentum. And we've plotted a number of other enterprise players including several on-prem leaders like Dell EMC, IBM, Oracle, and Cisco. And we've also included some of the companies that are showing real promise from a momentum standpoint and penetration. These are business models that we like and they include Snowflake, the analytic database disruptor, UiPath, who's the RPA specialist, Okta and CrowdStrike who are really killing it in security and Datadog who provides cloud monitoring services. And as you can see, we've superimposed in the upper right a table showing the net scores and market shares for each of the companies. And the story here very clearly quantifies that cloud is winning. And we think it's likely to continue to grow fast and penetrate the enterprise. Now, as we've reported many times, downturns tend to be good for cloud. But the on-prem leaders, as you can see by Cisco's position, for example, they're not going to just roll over. And we'll be covering winning strategies for legacy players in a later segment. But let me just say this, if you're a customer with a lot of on-prem infrastructure and you're building out data centers, unless you're a big cloud provider, you're probably going to be on the wrong side of history here. Okay, let's take a closer look at the big three. I want to update you on their IaaS and PAS numbers as best we can. All three recently reported earnings and this chart shows the data for each of the companies. Now, as you can see, each of them has substantial businesses with AWS by far the largest. GCP is growing the fastest. What's notable is that AWS in 2018 was 2.7x larger than Azure. And today that Delta is under 2x based on our Q1 estimates. It's just about 2x on a trailing 12 month basis. Now I got to caution you that the AWS numbers are the cleanest. AWS reports religiously and easy to understand revenue and operating profit number for its cloud business. Every quarter, Microsoft and Google are much fuzzier. You know, for example, read through Microsoft's 10K reports and you'll see that their intelligent cloud revenue comprises public and private clouds, hybrid, SQL server, Windows server, system center, GitHub, enterprise support and consulting services and oh yeah, Azure. So we have to estimate how much of that hairball is actually comparable directly to AWS. Now Google similarly just started breaking out its cloud revenue and bundles more than just IaaS and PAS into its cloud numbers. Now having said that, both Microsoft and Google, they do give little, you know, 10 bits like canceling grattle of guidance in the form of growth rates or commentary on growth rates in their respective IaaS and PAS businesses, i.e. Azure and GCP. So this is our best estimate. Given all that is reported and what we know from survey data. Now I also want to point out that these clouds are really different in quality and they have different fits for different use cases. For example, Microsoft is building out a cloud really to support its huge install base of customers and really make it easy for them to tap into the Microsoft's cloud services. But it may not be the most robust cloud as has been widely reported and analyzed in the press. You know, Microsoft is struggling to provide adequate capacity for its customers. It's kind of using the COVID-19 pandemic as a bit of a heat shield on this issue. Microsoft put out a blog post essentially saying that it'll prioritize first responders, health workers and essential businesses during the COVID-19 pandemic. Oh, and Teams customers. So, okay, that's one of those caveat emptor situations. You know, if you're not one of these camps or frankly, maybe if you are. But it's unquestionable that Microsoft has strong momentum across its vast portfolio, including cloud. And really that's what I want to get into next. So let's take a look at some data we've been reporting for quite some time based on the ETR surveys that the big cloud players, you know, have very, very strong momentum as measured by net scores. So what this chart shows is the most recent survey results. Again, more than 1200 IT buyers, 1269 to be exact. And you can see broadly that all the big three are well in the green for net scores, as we show in the upper right-hand box and well over 50% net scores for all three. And Microsoft Azure is in the 70% range. So very, very strong demand across the board. Now remember, each hour is asking buyers to comment on the areas with which they are familiar. So a buyer might be interpreting cloud to include all those things in Microsoft and Google that may not be directly comparable to the AWS responses. But it doesn't matter. The point is they all have momentum and you can see, you know, even though there's a slight dip in the most recent survey, you know, which ran during the peak of the shutdown in the US. So even as a small dip relative to other parts of the survey, cloud is very, very strong. Now, let's dig into the data a bit more and take a look at the Fortune 500 drill down. So of course, this is an indicator of larger companies and you can see AWS overtakes Azure in this segment by a small margin. You're noting the same caveats that I mentioned earlier. But the strength of the net scores for all three is meaningful as they all increased within these larger buying bases. Now let's take a look at this next chart. If we extend that cut to include the Fortune 1000, you can see here that all three companies, again, continue to show strength. But you know, there's a convergence which really says to me that this multi-cloud picture that's emerged and that CIOs are really now starting to see that whether it's through M&A or maybe it was shadow IT or whatever, they're faced with a variety of choices that are increasingly viable. And despite my previously and sometimes snarky comments that multi-cloud has been more of a symptom of multi-vendor versus a clear CIO strategy, that maybe is perhaps beginning to change, especially as they're asked to clean up what I've often called as the crime scene. Now, I want to close by taking a little bit of a closer look at the AWS business specifically. And I want to come back to this notion of NetScore and explain it a little bit. So what we show here on this wheel chart is really a breakdown of responses across more than 600 AWS customers in the April survey. You remember, again, this survey ran at the height of the lockdown in the US. It's a global survey with well over 100 responses outside of the United States. But really what's relevant here is the strength of the AWS business overall. This chart shows how NetScore is essentially derived. ETR ask customers, are you adopting new? Are you increasing spend, meaning increasing by 6% or more? Are you keeping spending flat? Or are you decreasing spending by more than 6% or are you chucking the platform, i.e. replacement? So look at this. We're talking about nearly 70% of customers spending more in 2020 on AWS than they spent last year. And only 4% are spending less. That's pretty impressive for a player with a $38 billion business. Now the next data point I want to share really shows where the action is across the AWS portfolio. So let's take a look at this. The chart here shows the responses from an end of more than 700. And the NetScore or spending momentum across the AWS portfolio with the comparison across three survey dates last April, January 2020 and April 2020. And as you can see, the very elevated spending momentum across most of the AWS key business lines, including cloud functions, data warehouse, which is EDW, et cetera, AI and machine learning workspaces with the work from home pivot. And there are some areas that are maybe less robust, but nothing in the red zone. Meaning, NetScore would be like below, let's say 25% NetScore. And you can see there's really nothing close to that in the AWS portfolio. So you're seeing very, very strong momentum for AWS, specifically and of course the cloud in general. Now as I said, the pandemic has been good for cloud. Down turns generally are a tailwind. So if you're building data centers, it's probably not a good use of capital, so server huggers beware. There's an attract of this more so than ever with this COVID-19 pandemic of that dial up, dial down service. Watch for software companies starting to use that model, whereas today they often try to lock you in to a one year or a two year or a three year license. Increasingly we're seeing companies investigate and actually go to market with a true cloud model. Okay, thanks for watching this episode of theCUBE Insights powered by ETR. Remember, these breaking analysis segments are all available as podcasts. You can check out siliconangle.com, I publish there weekly, they have all the news, and I also publish on Wikibon. So don't forget to check out ETR.plus as well. Get in touch with me at D-Valante or you can email me at david.valante at siliconangle.com. Stay safe everybody and we'll see you next time.