 From theCUBE Studios in Palo Alto in Boston, bringing you data-driven insights from theCUBE and ETR. This is Breaking Analysis with Dave Vellante. After a two-year epic run in tech, 2022 has been an epically bad year. Through yesterday, the NASDAQ composite is down 30%. The S&P 500 is off 21% and the Dow Jones industrial average 16% down, and the poor hodlers of Bitcoin have had to endure a nearly 60% decline year to date. But judging by the attendance and enthusiasm, it made major in-person tech events this spring. You'd never know that tech was in the tank. Moreover, walking around the streets of Las Vegas, where most tech conferences are held these days, one can't help but notice that the good folks of Main Street don't seem the least bit concerned that the economy is headed for a recession. Hello and welcome to this week's Wikibon Cube Insights, powered by ETR. In this Breaking Analysis, we'll share our main takeaways from the first half of 2022 and talk about the outlook for tech going forward and why, despite some pretty concerning headwinds, we remain sanguine about tech generally, but especially enterprise tech. Look, here's the bumper sticker on why many folks are really bearish at the moment. Of course, inflation is high. Other than last year, the previous inflation high this century was in July of 2008, it was 5.6%. Inflation has proven to be very, very hard to tame. You got gas at $7 a gallon, energy prices, they're not gonna suddenly drop. Interest rates are climbing, which will eventually damage housing. It's gonna have that ripple effect, no doubt. We're seeing layoffs at companies like Tesla and the crypto names are also trimming staff. Workers, however, are still in short supply, so wages are going up. Companies in retail are really struggling with the right inventory and they can't even accurately guide on their earnings. We've seen a version of this movie before. Now, as it pertains to tech, Crawford Del Prett, who's the CEO of IDC, explained this on the Cube this very week. And I thought he did a really good job. He said the following. I think, Matt, you have a great statistic that 80% of companies used COVID as their point to pivot into digital transformation and to invest in a different way. And so what we saw now is that tech is now where I think companies need to focus. They need to invest in tech, they need to make people more productive with tech, and it played out in the numbers. Now, so this year, what's fascinating is we're looking at two vastly different markets. We got gasoline at $7 a gallon. We've got that affecting food prices. Interesting fund fact recently, it now costs over $1,000 to fill an 18-wheeler. All right, based on, I mean, this just kind of can't continue. Do you think about it? Don't put the boat in the water. Yeah, yeah, yeah, good luck if you do it. If you, yeah, exactly. So a family has kind of this bag of money, right? And that bag of money goes up by maybe 3, 4% every year depending upon earnings. So that is sort of sloshing around. So if food and fuel and rent is taking up more, gadgets and consumer tech are not, you're gonna use that iPhone a little longer. You're gonna use that Android phone a little longer. You're gonna use that TV a little longer. So consumer tech is getting crushed. You know, really, it's very, and you saw it immediately in ad spending. You've seen it in Metta, you've seen it in Facebook. Consumer tech is doing very, it's tough. Enterprise tech, we haven't been in the office for two and a half years. We haven't upgraded whether that be campus Wi-Fi, whether that be servers, whether that be commercial PCs as much as we would have. So enterprise tech, we're seeing double digit order rates. We're seeing strong, strong demand. We have combined that with a component shortage. And you're seeing some enterprise companies with a quarter of backlog. I mean, that's, you know, really unheard of. At higher prices, which also- And therefore that drives, that drives their price. And this is a theme that we've heard this year at major tech events. They've really come roaring back. Last year, the Cube had a huge presence at AWS re-invent, the first re-invent since 2019. It was really well attended. Now this was before the effects of the Omicron variant, before they were really well understood. In the first quarter of 2022, things were pretty quiet as far as tech events go. But the Cube has been really busy this spring and early into the summer. We did 12 physical events as we're showing here in the slide, Coupa, we did women in data science at Stanford, it was Coupa Inspire, it was in Las Vegas. Now these are both smaller events, but they were well attended and beat expectations. San Francisco summit, the AWS San Francisco summit was a bit off, frankly, because of the COVID concerns, they were on the rise that then we hit Dell Tech World, which was packed, it had probably around 7,000 attendees. Now, DockerCon was virtual, but we decided to include it here because it was a huge global event with watch parties and many, many tens of thousands of people attending. Now the Red Hat summit was really interesting, the choice that Red Hat made this year. It was purposefully scaled down and turned into a smaller VIP event in Boston at the Western, a couple of thousand people only. It was very intimate with a much larger virtual presence. Veeamon was very well attended, not as large as previous Veeamon events, but again, beat expectations. CubeCon and CloudNativeCon was really successful in Spain, Valencia Spain and PagerDuty Summit was again a smaller intimate event in San Francisco. And then MongoDB World was at the new Javits Center and really well attended over the three day period. There were lots of developers there, lots of business people, lots of ecosystem partners. And then the Snowflake Summit in Las Vegas, it was the most vibrant from the standpoint of the ecosystem with nearly 10,000 attendees. And I'll come back to that in a moment. Amazon Remars is the Amazon AI robotic event. It's smaller, but very, very cool, a lot of innovation. And just last week, we were at HPE Discover. They had around 8,000 people attending, which was really good. I've been to over a dozen HPE or HPE Discover events within Europe and the United States over the past decade. And this was by far the most vibrant, a lot of action. HPE had a little spring in its step because the company's much more focused now, but people was really well attended and people are excited to be there, not only to be back at physical events, but also to hear about some of the new innovations that are coming and HPE is a long way to go in terms of building out that ecosystem, but it's starting to form. So we saw that last week. So tech events are back, but they are smaller. And of course now our virtual overlay, they're hybrid. And just to give you some context, the Cube did, as I said, 12 physical events in the first half of 2022. Just to compare that in 2019 through June of that year, we had done 35 physical events, yeah, 35. And what's perhaps more interesting is we had our largest first half ever in our 12 year history because we're doing so much hybrid and virtual to complement the physical. So that's the new format is Cube plus digital or sometimes just digital, but that's really what's happening in our business. So I think it's a reflection of what's happening in the broader tech community. So everyone's still trying to figure that out, but it's clear that events are back and there's no replacing face to face or as I like to say, belly to belly, because deals are done at physical events. All these events we've been to, the salespeople are so excited, they're saying, we're closing business. Pipelines coming out of these events are much stronger than they are out of the virtual events, but the post virtual event continues to deliver that long tail effect. So that's not gonna go away. The bottom line is hybrid is the new model. Okay, let's look at some of the big themes that we've taken away from the first half of 2022. Now, of course, this is all happening under the umbrella of digital transformation. I'm not gonna talk about that too much. You've had plenty of DX Kool-Aid injected into your veins over the last 27 months, but one of the first observations I'll share is that the so-called big data ecosystem that was forming during the hoop and around the Hadoop infrastructure days and years, then remember it dispersed, right? When the cloud came in and kind of, you know, not wiped out, but definitely dampened the Hadoop enthusiasm on-prem, the ecosystem dispersed, but now it's reforming. There are large pockets that are obviously seen in the various clouds, and we definitely see an ecosystem forming around MongoDB and the open source community gathering in the Databricks ecosystem, but the most notable momentum is within the Snowflake ecosystem. Snowflake is moving fast to win the day in the data ecosystem. They're providing a single platform that's bringing different data types together, live data from systems of record, systems of engagement together with so-called systems of insight. These are converging, and while others, notably Oracle, are architecting for this new reality, Snowflake is leading with the ecosystem momentum. And a new stack is emerging that comprises cloud infrastructure at the bottom layer, data, a PAS layer for AppDev, and is enabling an ecosystem of partners to build data products and data services that can be monetized. That's the key, that's the top of the stack. So let's dig into that further in a moment, but you're seeing machine intelligence and data being driven into applications and the data and application stacks that are coming together to support the acceleration of physical and to digital. It's happening right before our eyes in every industry. We're also seeing the evolution of cloud. It started with the classification of the enterprise where organizations realized that they didn't have to run their own software on-prem and it made sense to move to SaaS for CRM or HR, certainly email and collaboration and certain parts of ERP. And early IS was really about getting out of the data center infrastructure management business, call that cloud 1.0, and then 2.0 was really about changing the operating model. And now we're seeing that operating models spilt into on-prem workloads. Finally, you know, we're talking about here about initiatives like HPE's GreenLake, which we heard a lot about last week at Discover and Dell's Apex, which we heard about in May in Las Vegas. You know, John Furrier had a really interesting observation that basically this is HPE's and Dell's version of Outposts. And I found that interesting because Outpost was kind of a wake-up call in 2018 to in a shot across the bow at the legacy enterprise infrastructure players. And they initially responded with, you know, these flexible financial schemes, but finally we're seeing real platforms emerge. Again, we saw this at Discover and at Dell Tech World, early implementations of the cloud operating model on-prem. I mean, honestly, we're seeing things like consoles and billing similar to AWS circa 2014, but players like Dell and HPE, they have a distinct advantage with respect to their customer bases, their service organizations, their very large portfolios, especially in the case of Dell, and the fact that they have more mature stacks and know how to run mission critical enterprise applications on-prem. So John's comment was quite interesting that these firms are basically building their own version of Outposts. Outposts obviously came into their wheelhouse and now they've finally responded. And this is setting up cloud 3.0 or super cloud, as we like to call it, an abstraction layer that sits above the clouds that serves as a unifying experience across a continuum of on-prem, across clouds, whether it's AWS, Azure or Google, and out to both the near and far edge, near edge being a Lowe's or a Home Depot, but far edge could be space. And, you know, that edge, again, is fragmented. You've got the examples like the retail stores at the near edge, outer space maybe is the far edge. And IoT devices is perhaps the tiny edge. No one really knows how the tiny edge is going to play out, but it's pretty clear that it's not going to comprise traditional x86 systems with a cool name tossed out to the edge, rather it's likely going to require a new low cost, low power, high performance architecture, most likely ARM-based that will enable things like real-time AI inferencing at that edge. Now we've talked about this a lot on breaking analysis, so I'm not going to double click on it, but suffice to say that it's very possible that new innovations are going to emerge from the tiny edge that could really disrupt the enterprise in terms of price performance. Okay, two other quick observations. One is that data protection is becoming a much closer cohort to the security stack where data immutability and air gaps and fast recovery are increasingly becoming a fundamental component of a security strategy to combat ransomware and recover from other potential hacks or disasters. And I got to say, from our observation, Veeam is leading the pack here. It's now claiming the number one revenue spot in a statistical dead heat with Adele's data protection business, that's according to Veeam, according to IDC. And so that space continues to be of interest. And finally, Broadcom's acquisition of Adele, it's going to have ripple effects throughout the enterprise technology business. And there, of course, there are a lot of questions that remain, but the one other thing that John Furrier and I were discussing last night, John looked at me and said, Dave, imagine if Veeamware runs better on Broadcom components and OEMs that use Broadcom run Veeamware better. Maybe Broadcom doesn't even have to raise prices on Veeamware licenses. Maybe they'll just raise prices on the OEMs and let them raise prices to the end customer. Interesting thought, I think because, you know, Broadcom is so P&L focused that it's probably not going to be the prevailing model, but we'll see what happens to some of the strategic products, projects rather like Monterey and Capitola and Thunder. We've talked a lot about Project Monterey and the others, you know, we'll see if they can make the cut. You know, that's one of the big concerns because it's how OEMs like the ones that are building their versions of outposts are going to compete with the cloud vendors, namely AWS in the future. Okay, I want to come back to the comment on the data stack for a moment that we were talking about earlier. We talked about how the big data ecosystem that was once coalescing around Hadoop dispersed. Well, the data value chain is, it's reforming and we think it looks something like this picture where cloud infrastructure lives at the bottom. We've said many times that cloud is expanding and evolving and if companies like Dell and HPE can truly build a super cloud infrastructure experience, then they will be in a position to capture more of the data value. If not, then it's going to go to the cloud players and there's a live data layer that is increasingly being converged into platforms that not only simplify the movement and ELT-ing of data, but also allow organizations to compress the time to value. Now there's a layer above that that we sometimes call it the super pass layer, if you will, that must comprise open source tooling. Partners are going to write applications and leverage platform APIs and build data products and services that can be monetized at the top of the stack. So when you observe the battle for the data future, it's unlikely that any one company is going to be able to do this all on their own, which is why I often joke that the 2020s version of a sweaty Steve bomber running around the stage screaming developers, developers, developers and getting the whole audience into it is now about ecosystem, ecosystem, ecosystem, because when you need to fill gaps and accelerate features and provide optionality, that list of capabilities on the left-hand side of this chart, that's going to come from a variety of different companies and places. We're talking about catalogs and AI tools and data science capabilities, data quality, governance tools. And it should be of no surprise to followers of breaking analysis that on the right-hand side of this chart we're including the four principles of data mesh, which of course were popularized by Jamak Tagani. So decentralized data ownership, data as products, self-serve platform and automated or computational governance. Now whether this vision becomes a reality via a proprietary platform like Snowflake or somehow is replicated by open source remains to be seen. My history generally shows that a de facto standard for more complex problems like this is often going to emerge prior to an open source alternative. And that would be where I would place my best, although even that proprietary platform has to include open source optionality, but it's not a winner take all market. There's plenty of room for multiple players and ecosystem innovators, but winner will definitely take more in my opinion. Okay, let's close with some ETR data that looks at some of those major platform plays who talk a lot about digital transformation and kind of world changing impactful missions and they have the resources really to compete. This is an X, Y graphic. It's a view that we often show. It's got net score on the vertical axis. That's a measure of spending momentum and overlap or presence in the ETR survey. That red, that's the horizontal axis. The red dotted line at 40% indicates that the platform is among the highest in terms of spending velocity, which is why I always point out how impressive that makes AWS and Azure, because not only are they large on the horizontal axis, the spending momentum on those two platforms rivals, even that of Snowflake, which continues to lead all players on the vertical axis. Now, while Google has momentum given its goals and resources, it's well behind the two leaders. We've added service now in Salesforce, two platform names that have become the next great software companies, joining lights of Oracle, which we show here and SAP, not shown, along with IBM, you can see them on this chart. We've also plotted MongoDB, which we think has real momentum as a company generally, but also with Atlas, it's managed cloud databases as a service specifically and Red Hat with trying to become the standard for app dev in Kubernetes environments, which is the hottest trend right now in application development and application modernization. Everybody's doing something with Kubernetes. And of course, Red Hat with OpenShift wants to make that a better experience than do it yourself. The DIY brings a lot more complexity. And finally, we've got HPE and Dell, both of which we've talked about pretty extensively here and VMware and Cisco. Now, Cisco is executing on its portfolio strategy. It's got a lot of diverse components to its company and it's coming at the cloud, of course, from a networking and security perspective that's their position of strength. And VMware is a staple of the enterprise. Yes, there's some uncertainty with regards to the Broadcom acquisition, but one thing is clear, vSphere isn't going anywhere. It's entrenched and will continue to run lots of IT for years to come because it's the best platform on the planet. Now, of course, these are just some of the players in the mix. We expect that numerous non-traditional technology companies, this is important to emerge as new cloud players. We've put a lot of emphasis on the data ecosystem because to us, that's really gonna be the main spring of digital, i.e. a digital company is a data company. And that means an ecosystem of data partners that can advance outcomes like better healthcare, faster drug discovery, less fraud, cleaner energy, autonomous vehicles that are safer, smarter, more efficient grids and factories, better government and a virtually endless litany of societal improvements that can be addressed. And these companies will be building innovations on top of cloud platforms and creating their own super clouds, if you will. And they'll come from non-traditional places, industries, finance that take their data, their software, their tooling, bring them to their customers and run them on various clouds. Okay, that's it for today. Thanks to Alex Meyerson who is on production and does the podcast for breaking analysis. Kristen Martin and Cheryl Knight, they helped get the word out and Rob Hoth is our editor-in-chief over at SiliconANGLE who helps edit our posts. Remember, all these episodes are available as podcasts wherever you listen. All you gotta do is search, breaking analysis podcasts. I publish each week on wikibon.com and siliconangle.com. You can email me directly david.volante at siliconangle.com or DM me at dvolante or comment on my LinkedIn posts and please do check out etr.ai for the best survey data in the enterprise tech business. This is Dave Vellante for theCUBE Insights powered by ETR. Thanks for watching, be well and we'll see you next time on breaking analysis.