 From theCUBE Studios in Palo Alto in Boston, bringing you data-driven insights from theCUBE and ETR. This is Breaking Analysis with Dave Vellante. In the pre-cloud era, hardware companies would run benchmarks, showing how database and or application performance ran better on their systems relative to competitors or previous generation boxes. And they would make a big deal out of it and the independent software vendors, you know, they do a little golf clap, if you will, in the form of a joint press release. It became a game of leapfrog amongst hardware competitors that was pretty commonplace over the years. The Dell Snowflake deal underscores that the value proposition between hardware companies and ISVs is changing and has much more to do with distribution channels, volumes, and the amount of data that lives on-prem in various storage platforms. For cloud native ISVs like Snowflake, they're realizing that despite their cloud-only dogma, they have to grit their teeth and deal with on-premises data or risk getting shut out of evolving architectures. Hello and welcome to this week's Wikibon Cube Insights powered by ETR. In this Breaking Analysis, we unpack what little is known about the Snowflake announcement from Dell Technologies World and discuss the implications of a changing cloud landscape. We'll also share some new data for cloud and database platforms from ETR that shows Snowflake has actually entered the Earth's orbit when it comes to spending momentum on its platform. Now, before we get into the news, I want you to listen to Frank Slutman's answer to my question as to whether or not Snowflake would ever architect the platform to run on-prem because it's doable technically. Here's what he said, play the clip. We'll get it. This will only work in the public cloud because this is how the utility model works, right? I think everybody is coming to this realization, right? I mean, the excuses are running out at this point. We think that people will come to the public cloud a lot sooner than we will ever come to the private cloud. It's not that we can't run a private cloud. It just diminishes the potential and the value that we bring. So you may be asking yourselves, how do you square that circle? Because basically the Dell Snowflake announcement is about bringing Snowflake to the private cloud, right? Or is it? Let's get into the news and we'll find out. Here's what we know. At Dell Technologies World, one of the more buzzy announcements was the, by the way, this was a very well attended event, I should say, but I would say 8,000 people by my estimates. But anyway, one of the more buzzy announcements was Snowflake can now run analytics on non-native Snowflake data that lives on-prem in a Dell object store. Dell's ECS to start with and eventually its software defined object store. Here's Snowflake's Clark Patterson describing how it works this past week on theCUBE. Play the clip. I can now access non-native Snowflake data using what? Materialized views, external tables. How does that work? Some combination of all the above. So we've had in Snowflake a capability called external tables, which we refer to. It goes hand in hand with this notion of external stages. Basically, through the combination of those two capabilities, it's a metadata layer on data wherever it resides. So customers have actually used this in Snowflake for data lake data outside of Snowflake in the cloud, up until this point. So it's effectively an extension of that functionality into the Dell on-premises worlds so that we can tap into those things. So we use the external stages to expose all the metadata about what's in the Dell environment. And then we build external tables in Snowflake so that data looks like it is in Snowflake. And then the experience for the analyst or whomever it is is exactly as though that data lives in the Snowflake world. So as Clark explained, this capability of external tables has been around in the cloud for a while, mainly to suck data out of cloud data lakes. Snowflake external tables use file level metadata, for instance, the name of the file and the versioning, so that it can be queried in a stage. A stage is just an external location outside of Snowflake. It could be an S3 bucket or an Azure blob, and it soon will be a Dell object store. And then using this feature, the Dell looks like it lives inside of Snowflake. And Clark essentially, he's correct to say to an analyst it looks exactly like the data is in Snowflake, but not exactly. The data is read-only, which means you can't do what are called DML operations. DML stands for data manipulation language and allows for things like inserting data into tables or deleting and modifying existing data. But the data can be queried. However, the performance of those queries to external tables will almost certainly be slower. Now users can build things like materialized views, which are going to speed things up a bit, but at the end of the day, it's going to run faster than the cloud. And you can be almost certain that's where Snowflake wants it to run, but sometimes organizations can't or won't move data into the cloud for a variety of reasons. Data sovereignty, compliance, security policies, culture, whatever. So data can remain in place on-prem or it can be moved into the public cloud with this new announcement. Now, the compute today presumably is going to be done in the public cloud. I don't know where else it's going to be done. They really didn't talk about the compute side of things. Remember, one of Snowflake's early innovations was to separate compute from storage. What that gave them is you could more efficiently scale with unlimited resources when you needed them. And you could shut off the compute when you don't need it. So you didn't have to buy and check. If you need more storage, you didn't have to buy more compute and vice versa. So everybody in the industry has copied that, including AWS with Redshift, although as we've reported, not as elegantly as Snowflake did. Redshift is more of a storage tiering solution, which minimizes the compute required, but you can't really shut it off. And there are companies like Vertica with Eon mode that have enabled this capability to be done on-prem. But of course, in that instance, you don't have unlimited elastic compute scale on-prem. But with solutions like Dell Apex and HPE's GreenLake, you can certainly, you can start to simulate that cloud elasticity on-prem. I mean, it's not unlimited, but it sort of gets you there. According to a Dell Snowflake joint statement, the companies will pursue product integrations and joint go-to-market efforts in the second half of 2022. So that's a little vague and kind of benign. It's not really clear when this is going to be available based on that statement from the two firsts. But we're left wondering, will Dell develop an on-prem compute capability and enable queries to run locally? Maybe as part of an extended Apex offering? I mean, we don't know. Really not sure there's even a market for that, but it's probably a good bet that, again, Snowflake wants that data to land in the Snowflake data cloud. Kind of makes you wonder how this deal came about. You heard Slupin earlier, and Snowflake has always been pretty dogmatic about getting data into its native Snowflake format to enable the best performance, as we talked about, but also data sharing and governance. But you could imagine the data architects, they're building out their data mesh. We've reported on this quite extensively in their data fabric and those visions around that, and they're probably telling Snowflake, hey, if you want to be a strategic partner of ours, you're going to have to be more inclusive of our data that for whatever reason, we're not putting in your cloud. So Snowflake had to kind of hold its nose and capitulate. Now the good news is, it further opens up Snowflake's TAM, the total available market. It's obviously good marketing posture, and ultimately it provides an on-ramp to the cloud. And we're going to come back to that shortly. But let's look a little deeper into what's happening with data platforms. And to do that, we'll bring in some ETR data. Now, let me just say, as companies like Dell, IBM, Cisco, HPE, Lenovo, Pure, and others build out their hybrid clouds, the cold hard fact is not only do they have to replicate the cloud operating model. Here, I'm talking about that a lot, but they got to do that. So that's critical from a user experience, but in order to gain that flywheel momentum, they need to build a robust ecosystem that goes beyond their proprietary portfolios. And honestly, they're really not even in the first inning, most companies. And for the likes of Snowflake to sort of flip this, they've had to recognize that not everything is moving into the cloud. Now, let's bring up the next slide. One of the big areas of discussion with Dell Tech World was Apex. That's essentially Dell's nascent as a service offering. Apex is infrastructure as a service cloud on-prem. And obviously it has the vision of connecting to the cloud and across clouds and out to the edge. And it's no secret that database is one of the most important ingredients of infrastructure as a service, generally in cloud infrastructure specifically. So this chart here shows the ETR data for data platforms inside of Dell accounts. So the beauty of the ETR platform is you can cut data a million different ways. So we cut it and we said, okay, give us the cloud platforms inside Dell accounts. How are they performing? Now, this is a two-dimensional graphic. You got net score or spending momentum on the vertical axis and what ETR now calls overlap, formerly called market share, which is a measure of pervasiveness in the survey. That's on the horizontal axis. That red dotted line at 40% represents highly elevated spending on the Y. The table insert shows the raw data for how the dots are positioned. Now the first call out here is Snowflake. According to ETR, quote, after 13 straight surveys of astounding net scores, Snowflake has finally broken the trend with its net score dropping below the 70% mark among all respondents. Now, as you know, net score is measured by asking customers, are you adding the platform new? That's the lime green in the bar that's pointing from Snowflake in the graph. And are you increasing spend by 6% or more? That's the forest green. Is spending flat? That's the gray. Is your spend decreasing by 6% or worse? That's the pinkish. Or are you decommissioning the platform, bright red, which is essentially zero for Snowflake. Subtract the reds from the greens and you get a net score. Now, what's somewhat interesting is that Snowflake's net score overall in the survey is 68, which is still huge just under 70%. But it's net score inside the Dell account base drops to the low 60s. Nonetheless, this chart tells you why Snowflake, it's highly elevated spending momentum combined with an increasing presence in the market over the past two years makes it a perfect initial data platform partner for Dell. Now, and in the Ford versus Ferrari dynamic that's going on between the likes of Dell's Apex and HPE's GreenLake database deals are going to become increasingly important beyond what we're seeing with this recent Snowflake deal. Now, notice by the way HPE is positioned on this graph with its acquisition of MapR, which is now part of HPE Esmeral. But if these companies want to be taken seriously as cloud players, they need to further expand their database affinity to compete, ideally spinning up databases as part of their super clouds. We'll come back to that, that span multiple clouds and include edge data platforms. We're a long ways off from that, but look, if there's Mongo, there's Couchbase, MariaDB, Cloud Air, or Redis, all of those should be on the shortlist in my view. And why not Microsoft? And what about Oracle? Look at that's to be continued on maybe as a future topic in a breaking analysis, but I'll leave you with this. There are a lot of people like John Furrier who believe that Dell is playing with fire in the Snowflake deal because he sees it as a one-way ticket to the cloud. He calls it a one-way door sometimes. Listen to what he said this past week. I would say that that's a dangerous game because we've seen that movie before, VMware and AWS. Yeah, but we've talked about this, don't you think that was the right move for VMware? At the time, but if you don't nurture the relationship, AWS will take all those customers, ultimately from VMware. Okay, so what does the data say about what John just said? How is VMware actually doing in cloud after its early missteps and then its subsequent embracing of AWS and other clouds? Here's that same X, Y graphic, spending momentum on the Y and pervasiveness on the X and the same table insert that plots the dots. And in the breakdown of Dell's net score granularity, you see that at the bottom of the chart in those colors. So as usual, you see Azure and AWS up and to the right with Google well behind in a distant third, but still in the mix. So very impressive for Microsoft and AWS to have both that market presence and such elevated spending momentum. But the story here in context is that the VMware cloud on AWS and VMware's on-prem cloud like VMware cloud foundation VCF, they're doing pretty well in the market. Look at HPE gaining some traction in cloud. And remember, you may not think HPE and Dell and VCF are true cloud, but these are customers answering the survey. So their perspective matters more than the purest view. The bad news is the Dell cloud is not setting the world on fire from a momentum standpoint on the vertical axis, but it's above the line of zero. And compared to Dell's overall net score of 20, you could see it's got some work to do. Okay, so overall, Dell's got a pretty solid net score, you know, positive 20. They say their cloud perception needs to improve. Look, Apex has to be the Dell cloud brand, not Dell reselling VMware. And that requires more maturity of Apex. It's feature sets, it's selling partners, it's compensation models, and it's ecosystem. And I think Dell clearly understands that. I think they're pretty open about that. Now, this includes partners that go beyond being just sellers, has to include more tech offerings in the marketplace and actually, they got to build out a marketplace like cloud platform. So they have a lot of work to do there. And look, you've got Oracle coming up. I mean, they're actually kind of just below the magic 40% in the line, which is, wow, it's pretty impressive. And we've been telling you for years, you can hate Oracle all you want. You can hate its pricing, its closed system, all that. Red stack, sure. You can say it's legacy. You can say it's old and outdated, blah, blah, blah. You can say Oracle is irrelevant and in trouble. You are dead wrong. When it comes to mission critical workloads, Oracle is the king of the hill. They're a founder led company that knows exactly what it's doing and they're showing cloud momentum. Okay, the last point is that while Microsoft, AWS and Google have major presence, as shown on the X axis, VMware and Oracle now have more than 100 citations in the survey. You can see that on the insert in the right most column. And IBM had better keep the momentum from last quarter going or it won't be long before they get passed by Dell and HP in cloud. So look, John might be right. And I would think Snowflake quietly agrees that this Dell deal is all about access to Dell's customers and their data so they can hover it into the Snowflake data cloud. But the data right now anyway, doesn't suggest that's happening with VMware. Oh, by the way, we're keeping an eye close eye on NetApp who last September inked a similar deal to VMware cloud on AWS to see how that fares. Okay, let's wrap with some closing thoughts on what this deal means. We learned a lot from the cloud generally in AWS specifically, two pizza teams working backwards, customer obsession, talk about flywheels all the time. And we've been talking today about marketplaces. These have all become common parlance and often fundamental narratives within strategic plans, investor decks and customer presentations. Cloud ecosystems are different. They take both co-operative and partnerships to new heights. You know, when I look at as-a-service offerings like Apex, GreenLake and similar services and I see the vendor noise or hear the vendor noise that's being made around them, I kind of shake my head and ask, you know, which movie were these companies watching last decade? I really wish we would have seen these initiatives start to roll out in 2015, three years before AWS announced Outposts, not three years after, but hey, the good news is that not only was Outposts a wake-up call for the on-prem crowd, but it's showing how difficult it is to build a platform like Outposts and bring it to on-premises. I mean, Outposts isn't currently even a rounding era in the marketplace. It really doesn't do much in terms of database support and support of other services and, you know, it's unclear where that is going and I don't think it has much momentum. And so the hybrid cloud vendors, they've had time to figure it out, but now it's game on. Companies like Dell, they're promising a consistent experience between on-prem, into the cloud, across clouds and out to the edge. They call it multi-cloud, by the way, my view has really been multi-vendor. Chuck Whitten, who's the new co-COO of Dell, called it multi-cloud by default. That's really, I think, an accurate description of that. I call this new world super-cloud. To me, it's different than multi-cloud. It's a layer that runs on top of hyperscale infrastructure, kind of hides the underlying complexity of the cloud. It's APIs, it's primitives and it stretches not only across clouds, but out to the edge. That's a big vision and that's going to require some seriously intense engineering to build out. It's also going to require partnerships that go beyond the portfolios of companies like Dell, like their own proprietary stacks, if you will. It's going to have to replicate the cloud operating model and to do that, you're going to need more and more deals like Snowflake and even deeper than Snowflake, not just in database, sure, you'll need to have a catalog of databases that run in your on-prem and hybrid and super-cloud, but also other services that customers can tap. I mean, can you imagine a day when Dell offers and embraces a directly competitive service inside of Apex? I have trouble envisioning that. Not with their historical posture, you think about companies like Nutanix or Cisco, where they really, those relationships cooled quite quickly, but look, think about it, that's what AWS does. It offers, for instance, Redshift and Snowflake, side-by-side, happily, and the Redshift guys, they probably hate Snowflake, I wouldn't blame them, but the EC2 folks, they love them. And Adam Salipsky understands that ISVs like Snowflake are a key part of the cloud ecosystem. Again, I have a hard time envisioning that occurring with Dell or even HPE, maybe less so with HPE, but what does this imply? That the edge will allow companies like Dell to do a reach-around on the cloud and somehow create a new type of model that begrudgingly accommodates the public cloud, but drafts of the new momentum of the edge, which right now to these companies is kind of mostly telco and retail. It's hard to see that happening. I think it's got to evolve in a more comprehensive and inclusive fashion. What's much more likely is companies like Dell are going to substantially replicate that cloud operating model for the pieces that they own, pieces that they control, which admittedly are big pieces of the market, but unless they're able to really tap that ecosystem magic, they're not going to be able to grow much beyond their existing install bases. You take that lime green we showed you earlier, that new adoption metric from ETR as an example. By my estimates, AWS and Azure are capturing new accounts at a rate between three to five times faster than Dell and HPE. And in the more mature US and EMEA markets, it's probably more like 10X. And a major reason is because of the cloud's robust ecosystem and the optionality and simplicity of transaction that that is bringing to customers. Now, Dell for its part is a $100 billion revenue company and it has the capability to drive that kind of dynamic if it can pivot its partner ecosystem mindset from kind of resellers to cloud services and technology optionality. Okay, that's it for now. Thanks to my colleagues, Stephanie Chan who helped research topics for breaking analysis. Alex Meyerson is on the production team. Kristen Martin and Cheryl Knight and Rob Hoef on editorial, they helped get the word out. And thanks to Jordan Anderson for the new breaking analysis branding and graphics package. Remember, these episodes are all available as podcasts wherever you listen, all you do is search breaking analysis podcasts. You can check out ETR's website at ETR.ai. We publish a full report every week on wikibon.com and siliconangle.com. You wanna get in touch, you can email me at davidotvolante at siliconangle.com. You can DM me at dvolante. You can make a comment on our LinkedIn posts. This is Dave Vellante for theCUBE Insights, powered by ETR. Have a great week, stay safe, be well and we'll see you next time.