Breaking Analysis with Dave Vellante

Latest Episodes:

Snowflake has Momentum with AWS & Microsoft…Why Google may not be Next Aug 26, 2023

Show notes

Recent earnings prints from Amazon and Snowflake, along with new survey data, have provided additional context on top of the two events that Snowflake and Databricks each hosted last June. Specifically, we believe that the effects of cloud optimization are still being felt but are nearing the end of peak negative impact on cloud companies. Snowflake’s recent renewal with Microsoft better aligns sales incentives and should improve the company’s traction with Microsoft Azure, a platform that has long favored Databricks. Google however remains a different story as its agenda is to build out its own data cloud stack, rather than supporting Snowflake’s aspirations.

In this Breaking Analysis, we clarify some of our previous assumptions around Snowflake economics. We’ll dig into the three U.S. based hyperscale platforms with ETR data to better understand the footprint that key data platforms have in those cloud accounts; and, ahead of Google Cloud Next, we’ll preview how we believe Google is evolving its cloud and data stacks to compete more effectively in the market.

Snowflake Investor Day Deck

https://investors.snowflake.com/events-and-presentations/event-details/2023/Snowflake-Investor-Day-2023/default.aspx

Snowflake proof points on Snowpark vs. Spark

https://www.snowflake.com/en/resources/report/snowpark-customer-results/

MP4 download of Snowpark data as narrated by CFO Scarpelli:

https://video-cube365-net-east.s3.amazonaws.com/uploads/clip-mp4/947379-hardsub.mp4

VMware's Future - Navigating Multi-cloud Complexity & GenAI Under Broadcom's Wing Aug 19, 2023

Show notes

The FTC continues to drag its feet on approving Broadcom’s acquisition of VMware. Ironically, in our view, these delays only hurt the very competitive environment the FTC claims to be protecting. The AI era is accelerating at a breakneck pace and the big 3 hyperscale cloud vendors already have a sizable lead on legacy incumbents. If preserving competition is truly the agenda of the U.S. government, it should recognize that VMware, its enterprise ecosystem and market forces have the potential to neutralize cross cloud complexity and give customers a viable alternative to increasingly powerful public cloud players.

In this Breaking Analysis and ahead of VMWare Explore 2023, we revisit our views on Broadcom’s rationale and likely actions post acquisition. We’ll share current ETR survey data to place VMware’s position in context to the major cloud players, speculate on its AI agenda and give a preview of next week’s VMware Explore. To do so we welcome CUBE analyst Rob Strechay and friend of theCUBE, Zeus Kerravala, principal of ZK Research.

EU Commission approves Broadcom VMware

https://www.broadcom.com/company/news/financial-releases/61306#:~:text=SAN%20JOSE%2C%20Calif.%20%2C%20July,(NYSE%3A%20VMW)

Hock Tan blog post on VMware’s future:

https://www.broadcom.com/blog/keeping-customers-at-the-center-of-everything

Broadcom VMware Deck:

https://investors.broadcom.com/static-files/232c0cd2-02d9-4704-bb7b-5659cef67fae

Silverlingings article on VMware Broadcom’s slow progress:

https://www.silverliningsinfo.com/multi-cloud/broadcoms-61b-vmware-deal-slowly-makes-progress

Broadcom VMware merger will hatch a new Supercloud:

https://www.silverliningsinfo.com/multi-cloud/broadcom-vmware-merger-will-hatch-new-supercloud

FT interview with Hock Tan:

https://www.ft.com/content/0a4013b6-b3b9-49fd-87a9-bd0da5e229b1

Cloud vs. On-Prem Showdown: The Future Battlefield for Generative AI Dominance Aug 12, 2023

Show notes

The data from enterprise customers is clear but conflicted. While 94% of customers say they’re spending more on AI this year, they’re doing so with budget constraints that will steal from other initiatives. As well, the choice of where customers plan to run generative AI is split almost exactly down the middle in terms of public cloud vs. on-premises/edge. Further complicating matters, developers report the experiences in the public cloud with respect to feature richness and velocity of innovation has been outstanding. At the same time, organizations express valid concerns about IP leakage, compliance, legal risks and cost that will limit their use of the public cloud.

In this Breaking Analysis we’ll share the most recent data and thinking around the adoption of large language models and address the factors to consider when thinking about how the market will evolve. As always, we’ll share the latest ETR data to shed new light on key issues customers face balancing risk with time to value.

Google memo - we have no moat and neither does OpenAI

https://www.semianalysis.com/p/google-we-have-no-moat-and-neither

Janelle Teng - AI in the Cloud article on Substack:

https://nextbigteng.substack.com/p/ai-model-layer-the-new-frontline-of-cloud-wars

A16z on the economics of AI:

https://a16z.com/2023/08/03/the-economic-case-for-generative-ai-and-foundation-models/

Wall St Journal Article citing AWS, Google, MSFT, Dell & HPE POV

https://www.wsj.com/articles/the-ai-boom-is-here-the-cloud-may-not-be-ready-1a51724d?reflink=mobilewebshare_permalink

Technalysis GenAI study of 1,000 ITDMS:

https://www.technalysisresearch.com/downloads/TECHnalysis%20Research%20Generative%20AI%20in%20Enterprise%20Survey%20Highlights.pdf

AWS Outposts at the edge with Sagemaker - Circa 2021

https://aws.amazon.com/blogs/machine-learning/machine-learning-at-the-edge-with-aws-outposts-and-amazon-sagemaker/

Spearing Tech Stocks Beyond the Magnificent Seven Aug 05, 2023

Show notes

After a tough 2022, the first half of 2023 has shown impressive strength and many technology bets have paid off. For sure investors in the so-called Magnificent Seven, i.e. Apple, Alphabet, Amazon, Meta, Nvidia and Tesla have been rewarded. But sharp investors have sought alpha beyond these issues, riding the wave of secular trends in AI, cybersecurity, cloud infrastructure and software as well as other emerging spaces like cleantech and robotics. As we enter the second half of 2023, the runup in tech combined with macro uncertainty has many investors taking a cautious posture. But we believe the long term outlook for firms that can capitalize on the AI wave remains extremely attractive as an unstoppable force.

Hello and welcome to this week’s Wikibon CUBE Insights, Powered by ETR. In this Breaking Analysis we’re pleased to have back, founder and Chief Investment Officer of Spear Invest, Ivana Delevska to assess the current state of the market and explore how this investor is playing AI’s rising tide.
Spear Investment Deck

https://19544476.fs1.hubspotusercontent-na1.net/hubfs/19544476/Spear%20Alpha%20Investment%20Case%20Approved.pdf

Spear Advisors Fund Letter from its CIO

https://seekingalpha.com/article/4599648-spear-advisors-q1-2023-fund-letter

Platformonomics Repatriation Index

https://www.platformonomics.com/2023/05/platformonomics-repatriation-index-q1-2023-surfs-up/

Revised Wikibon Cloud Forecast

https://wikibon.com/breaking-analysis-what-leaked-court-docs-tell-us-about-aws-azure-google-cloud-market-shares/

What Leaked Court Docs Tell us About AWS, Azure & Google Cloud Market Shares Jul 29, 2023

Show notes

Recently leaked court documents during the Microsoft Activision hearing require us to revisit our cloud forecasts and market share data. The poorly redacted docs, which have since been removed from public viewing, suggest that Microsoft’s Azure revenue is at least 25% lower than our previous estimates. As a result, we’ve cut and revised our Azure revenue figures which in turn increases AWS’ big 4 hyperscale cloud market share. Our new estimates show that AWS maintains a greater than 50% share of revenue through 2023. While the change also helps Google Cloud, its market share is only modestly affected.

In this Breaking Analysis we update our hyperscaler cloud revenue estimates and market share data. We’ll also explain how the ETR data on cloud should be interpreted in this context and look forward to potential catalysts for cloud growth, including acceleration in Q4 attributable to generative AI.

Microsoft annual 10K:

https://microsoft.gcs-web.com/static-files/e2931fdb-9823-4130-b2a8-f6b8db0b15a9

Wikibon repatriation report:

https://wikibon.com/breaking-analysis-desperately-seeking-cloud-repatriation/

SiliconANGLE article on leaked court documents with Azure revenue data:

https://siliconangle.com/2023/06/29/court-filing-shows-microsoft-azure-generated-lower-expected-34b-revenue-2022/

Constellation report on cloud optimization:

https://www.constellationr.com/blog-news/private-cloud-compelling-option-cios-insights-new-research

AI gives cyber attackers the advantage for now Jul 21, 2023

Show notes

Cloud complexity, tools sprawl and the AI awakening further tip the balance in favor of cyber attackers. Combined with corporate inertia, AI-washing, LLM inconsistency and the pace of change, we believe for now anyway, adversaries have the advantage over defenders. Moreover, macro spending headwinds continue to force organizations to make budget tradeoffs, not the least of which is how to fund AI experiments and deployments. Notably, however, 45% of organizations are using LLMs in production for use cases that may very well improve the productivity of SecOps teams in the long run and accelerate the cat and mouse game back to a state of quasi-equilibrium.

In this Breaking Analysis we share key takeaways from Supercloud 3 – AI meets cloud security – and put forth new spending data from the latest ETR survey that shows which security firms are best positioned in the AI race to capitalize on the wave.

Cybersecurity in the AI age: The power, the promise, the peril

https://siliconangle.com/2023/07/03/cybersecurity-ai-age-power-promise-peril/

How organizations can combat AI-equipped attackers

https://siliconangle.com/2023/07/03/organizations-can-combat-ai-equipped-attackers/

Supercloud 3 - AI meets Cloud Security

Supercloud.world

AI won’t be a winner takes all market Jul 15, 2023

Show notes

The AI heard ’round the world has put the machine intelligence sector back in the spotlight. But when you squint beyond the press hype, the data shows that artificial intelligence is now the number one sector in terms of relative spending velocity in the ETR taxonomy. Normally market hype leads deployments, but the data suggests that spending activity and market penetration for AI are coinciding with the hype. While hyperscale cloud players are reaping the rewards, we think this is a rising tide that’s going to lift all AI ships, those both plainly in sight and others that may not be so visible.

In this Breaking Analysis we dig deeper into the AI space with spending data from ETR and one of the best minds in tech generally, and AI specifically, Jeff Jonas, CEO, founder, and chief scientist at Senzing.

Connecting the dots on the emerging Databricks tech stack Jul 08, 2023

Show notes

The recent Databricks Data+AI Summit attracted a large audience and, like Snowflake Summit, featured a strong focus on large language models, unification and bringing AI to the data. While customers demand a unified platform to access all their data, Databricks and Snowflake are attacking the problem from different perspectives. In our view, the market size justifies the current enthusiasm seen around both platforms but it’s unlikely that either company has a knockout blow for the other. This is not a head on collision. Rather Snowflake is likely years ahead in terms of operationalizing data. Developers can build applications on one platform, like Oracle when it won the market, that perform analysis and take action. Databricks likely has a similar lead in terms of unifying all types of analytic data – e.g. BI, predictive analytics & generative AI. Developers can build analytic applications across heterogeneous data, like Palantir today. But they have to access external operational applications to take action.

In this Breaking Analysis we follow up last week’s research by connecting the dots on the emerging tech stack we see forming from Databricks. With an emphasis on how the company is approaching generative AI, unification and governance…and what it means for customers. To do so we tap the knowledge of three experts who attended the event, CUBE analysts Rob Strechay and George Gilbert and AI market maven Andy Thurai of Constellation Research.

Connecting the Dots on Snowflake's Data Cloud Ambitions Jul 01, 2023

Show notes

Over the past several months we’ve produced a number of in-depth analyses laying out our mental model for the future of data platforms. There are two core themes: 1) Data from people, places, things, and activities in the real world drives applications, not people typing into a UI; and 2) Informing and automating decisions means all data must be accessible. That drives a change from data locked in application silos to application logic being embedded in a platform that manages an end-to-end representation of an enterprise in its data.

This week’s Snowflake Summit further confirmed our expectations with a strong top line message of “All Data / All Workloads” and a technical foundation that supports an expanded number of ways to access data. Squinting through the messaging and firehose of product announcements, we believe Snowflake’s core differentiation is its emerging ability to be a complete platform for data applications. Just about all competitors either analyze data or manage data. But no one vendor truly does both. To be precise, managing data doesn’t mean running pipelines or serving analytic queries or AI/ML models. It means managing operational data so that analytics can inform or automate operational activities captured in transactions. With data as the application foundation, the platform needs robust governance.

In this week’s Breaking Analysis, we try to connect the dots between Snowflake’s high level messaging and its technical foundation to better understand the core value it brings to customers and partners. As well, we’ll explore the ETR data with some initial input from the Databricks Data + AI Summit to assess the position and prospects of these two leaders along with the key public cloud players.

HPE wants to turn supercomputing leadership into gen AI profits Jun 24, 2023

Show notes

HPE’s announcement of an AI cloud for large language models highlights a differentiated strategy that the company hopes will lead to sustained momentum in its high performance computing business. While we think HPE has some distinct advantages with respect to its supercomputing IP, the public cloud players have a substantial lead in AI with a point of view that generative AI is fully dependent on the cloud and its massive compute capabilities. The question is can HPE bring unique capabilities and a focus to the table that will yield competitive advantage and ultimately, profits in the space?

In this Breaking Analysis we unpack HPE’s LLM-as-a-service announcements from the company’s recent Discover conference and we’ll try to answer the question: Is HPEs strategy a viable alternative to today’s public and private cloud gen AI deployment models, or is it ultimately destined to be a niche player in the market? To do so we welcome to the program CUBE analyst Rob Strechay and Vice President / principal analyst from Constellation Research, Andy Thurai.
World’s Top Performing Supercomputers:

https://twitter.com/wholemarsblog/status/1671721744623874048?s=46&t=AqnHczjrru-dQaVNpPGp7w

HPE’s Slingshot interconnect architecture:

https://www.nextplatform.com/2022/01/31/crays-slingshot-interconnect-is-at-the-heart-of-hpes-hpc-and-ai-ambitions/

How Cray makes Ethernet suitable for HPC:

https://www.nextplatform.com/2019/08/16/how-cray-makes-ethernet-suited-for-hpc-and-ai-with-slingshot/

The generative AI stack according to Andreesen Horowitz:

https://a16z.com/2023/06/20/emerging-architectures-for-llm-applications/

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