Breaking Analysis: Enterprise Technology Predictions 2024
from the cube studios in paloalto and Boston bringing you datadriven insights from the cube and ETR this is breaking analysis with Dave valante predictions about the future of Enterprise Tech have never been more uncertain predictions become even more challenging when you try to make forecasts that are measurable me generally our belief is that we should be able to look back a year from now and say with some degree of certainty whether the predictions that we're sharing with you today came true with some quantifiable evidence to back that up hello and welcome to this week's the key research insights powered by ETR in this breaking analysis my friend Eric Bradley of ETR and I update our Enterprise technology predictions for 2024 we're going to cover the macro it spending environment the state of gen AI aii cyber security m&a data quality governance skills momentum and from momentum for legacy players and 2024 Tech technology priorities Eric Bradley welcome good to see you again always good to see you too Dave I enjoy being on the show every time I get the chance thank you all right so check this out I have again like every year over a thousand inbounds from companies from BC firms from Friends predictions for 2024 I have been through every one of them with a highlighter for those that I feel like are inspiring and where possible I'll give credit to those I mean there were so many good ones in a way I feel like a VC getting all these inbounds and you know only only you shouldn't tell everybody that you read everyone Dave you're GNA get five times more next year now I know but I do I go through them I scan them I've been doing it for weeks now and uh I print them all I'm sorry I'm killing trees here but it's really the only way I can manage it I I was thinking this year ER of using AI to to try to prioritize and sift but I just you know the the the the the input range range was just too big but any rate huge huge uh in inbound we have a Graphic on this to to help you understand it relative to last year so I I I bucke tized them as best I could obviously a big jump in AI uh cyber secur is down but it's still huge and the cloud and data center we even got some predictions around liquid cooling which I'm not going to use but I love that uh liquid cooling's back remember the old Mainframe days it was all liquid cooling had a smattering of devops again and digital and digital was actually you you know sort of down but still some stuff in there SASS and some other tin bits um so and then let's just do a quick rundown with the next slide of this year's predictions okay um and then then we'll really get into it we're going to talk about tech spending like we always do uh geni you know we got this Roi Focus here and can sort of see here I'm not going to go through each one because we're going to go deep uh but but Eric I'm I'm super excited to to be with you and and really want to get into it so let's start with the macro the first uh prediction you see on this first slide uh number one Tech spending increases if you bring that slide up Alex Tech spending increases nope next one uh Tech spending increases four to 5% in 2024 so when you take a look at this data so what I did here Eric is I took all the macro drill downs and the expectations for the F year spending increase and I plotted them here so we exited the isolation economy very enthusiastic people thought their Tech budgets were going to increase 7 and a half percent we know what happened Ukraine fed tightening and all through 2022 we saw those expectations for the year go down and then we saw that through even even after the FED stopped tightening we saw it flatten out at 2.9% we actually ended up at 3.4% in 2023 and you can see the forecast for 2024 is 4.3% but it's backloaded um so that's you know a little bit Eric of a of a of a concern you got 2.4% and 3.1% in q1
and Q2 of 2024 respectively so we got some work to do to get to 4.3 Eric yeah there's a lot of takeaways on that slide I feel like we could probably do whole post on that but one of the main things I think we have to stay positive about and optimistic is there does seem to be a thaw in the spending of what we went through over the last you know six quarters uh where where the spending got a bus low at Fortune 500 at one point was less than half a percent it got down to 0.3 um and one of the things I like here is not just the overall spend Rising but the largest companies are starting to participate and getting closer to the mean now it's still small companies that are leading the way at about 6.5% but Fortune 500 for example has gone from 1% to 3% rise in budgets uh just since July so we're starting to see the world's largest organizations participate as well which is really optimistic yeah and and that said you you still have SMB significantly ahead of you know the the global 2000 almost double the rate so you know that's something that we're watching I think generally Eric organizations are just there's a lot of uncertainty I I think people are waiting for earnings I think people afraid that earning earnings estimates are are maybe a little bit too high so they're just going to take it quarter by quarter yeah there's some positive signs but the trepidation isn't over not not even close um you know there's still people wondering if there's going to be a soft Landing or hard Landing or even if we're just going to continue to grow at all but as you said in that slide you know the FED still kind of controls the Reigns here and uh it's a wait and see game with them but one of the things that is positive is in speaking to our it decision makers and our community the cloud audit seems to be over they spent an entire year just answering to their CEO and CFO about where their spend was and that seems to be easing uh we're also seeing in the macr survey data that new IT projects are on the rise so there's a lot of optimistic signs we're seeing uh increase Net score spending and IT consulting and and services which is always a leading indicator so uh based on the data I am cautiously optimistic that this spend and this rise will continue throughout the year okay let's bring up the next prediction number two uh AI is not a rising tide that lifts All Ships look there's this narrative out here that AI is going to benefit everybody um we don't think so we think AI is a two-edged sword in some cases you know it's helpful uh and and you know you see companies obviously like open Ai and some others that are really taking advantage of it notably you know some of the cloud vendors but 40% of customers say that their their AI budgets are coming from elsewhere so this chart is just selective here it's shows uh uh Net score or spending momentum on the vertical axis and the overlap in those 1700 accounts so it's it's plotted by the end so it's a measure of sort of presence in the data set here um and we just selectively plotted some companies and that red line at 40% indicates a highly elevated uh spending level and our premise here is that there's going to be halves and there's going to be Have Nots there's going to be some me2 AI that lags and so you can see U this is from the January data it's the spending momentum in 662 ML and AI accounts so you can see where there's AI Affinity obviously Microsoft with Azure and AWS up and to the right and well above that 40% line notably Google is below it uh give despite their AI chops and again this is selective you got service now you got you got data bricks you got snowflake you got crowd strike all either data companies or well positioned it looks like in Ai and it's really interesting here Eric you got you got laptops Dell laptop and Apple laptops and and we're hearing a lot of talk about Ai and laptops and and and you know gpus and more costeffective uh npus and laptops uh you got some we we added uh an sas player like workday you got uip path that two-edge sword you got some other observability and and security companies like zscaler and Cloud flare in there you got a data company and then you got some of the Legacy guys that we're going to talk about sap Dell VMware Oracle Cisco uh and and HP now you know these guys are going to be able to take advantage of AI selectively either because of their Market leadership or because they have acquired Assets in the case for instance Cisco and moroi right HP is acquiring Juniper because of of of the Mist Ai and so you really have I think a mixed bag here it's not just oh yeah throw your glove on the field and AI is going to save you we don't believe that narrative ER Eric what do you think again so much there to unpack the hyperscalers clearly are the ones that are benefiting the most at the moment and then of course when you have sophisticated data companies like snowflakes and data bricks uh also very important at this point in the journey in AI I thought your comment around Cisco moroi was interesting Dave because when I just recently did the the quarterly report for Cisco and moroi by far was the the the bright spot in that data set really shining in not only networking but also in unified endpoint management so I think it's really interesting your case uh J is certainly not lifting all boats and I think the biggest Battleground right now is an RPA really kind of curious to watch and monitor that and see what happens you know you would think that geni would boost RPA but it could also just sort of piggyback it and just kind of jump right over it and gen and in itself it's embedded properly could end up just basically Al taking RPA out of the market and just do it itself I think that's the Battleground I'm most intrigued to watch this year it was interesting you and I talked um this week actually about the open AI alignment and you guys have a data set on that we're not going to show it because it's a little too sophisticated for you know half hour show like this but but what you saw with the with the RPA guys and the automation guys is the the three leaders of power automate uip path and automation anywhere had strong alignment and Affinity to open Ai and the others not so much and so there was some seem to be some spending momentum around that you know we'll see but I mean I think generally our sentiment is that market leaders are going to be the AI leaders if they embed AI they Embrace AI they apply it they don't AI wash they partner and they execute Mike Finley CTO of answer rocket said he sent in the prediction in the quote me two AI vendors will sink okay let's go to the the the next prediction number three 2024 is a year of AI Roi but payback is not assured this is a chart from one of et's drill Downs it asks how soon after the initial deployment did your organization achieve or does your organization hope to achieve Roi on gen 57% expect Roi inside of a year 40% inside of six months uh but you you look at things like data quality skill sets uh legal and privacy concerns those remain you know challenges and headwinds and look if payback may not be high enough to fund massive budget growth we've seen AI you know stealing from other areas we've seen some compression as Eric was just pointing out it's a two-edged sword and some sectors and you you should expect push back on co-pilot seat pricing ETR has some data on that as well which I saw in the in the data set Eric very interesting that some of the customers are saying you know what we don't we don't want to pay all that extra per seat per per per co-pilot yeah it depends on how widely you're going to roll it out right if you're just going to allow it to be in a couple of departments no big deal but if you're going to use it at Enterprise wide that that's a lot of uh you know lot of licenses to add $30 per seat to right now I think in the testing phase there isn't too much push back on pricing but when it goes into full scale implementation I think you're right it's going to be difficult we'll see how they handle that there um just in general we've been doing a lot of work on generative AI if anybody wants to hop into our data and our our custom surveys I'd be happy to go through it but I think it's amazing to watch the evaluation rates only 25% of our itdm communi say that their organization isn't evaluating at all I haven't seeing a technology ramp up this fast uh it's really incredible but as you said you know over a quarter of these people aren't sure there's any Roi at all that's still a high number that's a little scary um the other thing I think that's interesting is where is the budget coming from to fund this right now it's split about half of our organizations are saying that they're funding this with new money the other half saying they're stealing it from somewhere else and where it's being stolen from is common sources include non-it departments and productivity applications so it's interesting to see as this continues I want to watch the evaluation rates go into actual use cases and I want to see where the money is coming from I'll give you another stat on that when we I was digging into some of the RPA data because that is kind of the obvious two-edged sword area and only 7% of the customers said they're stealing from the RPA budget but two other points there one is would you look at certain industries like financial services and and uh and Manufacturing and Industrials the figure doubled so that was a bit of a concern and when you just you just mentioned it's coming from other budgets like non-it budgets and line of business budgets and other sort of productivity budgets many of those could be automation related so you know those categories aren't necessarily mutually exclusive yeah agreed and and anecdotally I've had a we did a a panel on this and and one CIO laughed at the push back on the pricing and he said what do I care about $30 per license if it saves me a 100 full-time employees so it's really a wait and see game um if the promise of gen actually delivers I think the pricing demand is going to be pretty strong okay let's uh take a look at number four uh the next prediction P the power law begins to take shape in 2024 now let's explain this because it's really nuanced the power law really describes it it it's it takes an example from the uh the music industry where you had a very hard right angle where just a few labels dominated the industry and you know you had this kind of long tale of of of of of of music producers uh and we see something similar with geni but different we see the Torso sorso the cloud guys you know dominating and we we we take Liberties by the way with the term power law we've got here in the dimensions uh the vertical Dimension is size of model the horizontal Dimension is model specificity and we've identified some Industries where we think we're going to see specific models and and potentially on-prem models or likely on-prem models emerging we we're already seeing some of that and the idea being the cloud guys and the big uh uh AI uh llm vendors they're going to they're going to have very large models and they're going to initially they're the ones that are dominating they're getting all the discussions but you've got this open source this red line pulling the torso up and to the right llama 2 is the vious one but you've got some other Independents and other third party and and open source players that are pulling that up to the right and then the longtail is the specialized U AI so Cloud continues to outpace on Prem no question but we're seeing that privacy use cases are emerging and open source pulling that torso up based on the ETR data just playing around with some of it I can I can infer that about 30% of the Llama 2 deployments appear to be on Prem meta has indicated it could be as high as 50% and I don't think Eric that in ETR you're surveying you know three-letter government agencies so they're probably doing a lot of stuff on Prem and we're also seeing the emergence initial emergence of model integration um like private model Gardens think things like Bedrock but you're building your own Bedrock so right now it's sort of a very mixed environment we I guess the prediction really is that you're going to start to see signs of this power law emerge in 2024 what are your thoughts here Eric yeah it's a very interesting model and theory that we're kind of rolling out on this one I I do still think that um there's a little bit of a bifurcation of what's happening and I think it's too early to tell but very clearly there's going to be a long tale to this where we forget how early we are in this it was just a year ago that open ey came out open AI excuse me there's a lot more to come I think the most important thing that you said there for me is the data that we're seeing right now in cloud is not not just public Cloud we're seeing a real Resurgence on the hybrid cloud with a strong leaning towards private and uh we're hearing this a lot from our cios as well we just recently did a series of eight interviews on 2024 top trends and private Cloud was You Know spoken about by six out of eight of those cios and I do think there's a lot of data concern there's a lot of regulatory concern still around geni and being you know in control of that data and having that sovereignty in your own private cloud is one way to handle that yeah and you think about companies that have you know competitive data and they're trying to use uh Foundation models to give access to their internal sales teams on things like knockoffs and and and other sort of competitive information pricing information and they want that to be available they're very nervous about putting that in the cloud they're very nervous about bringing in other data sources they're nervous about the legal requirements and so it's going to take as well they should be too as well they should be well they should be it's way too early for people to to just be going around and throwing that data around and trusting where it's going to end up just some quick hits from some of the other predictions that came in some of the Thousand John Rose uh from Dell he's the CTO of Dell he's said the Gen dialogue is going to move from Theory to practice is going to focus more on inference uh Quenton Clark from General Catalyst BC predicts the specialized AI will take shape and open source models will emerge that's consistent with the power law burnt griender who's the CTO of dinat trce predicts that hyper modal AI which combines different AIS with other data sources will emerge and and much of that is going to happen on Prem in our view it's interesting we sometimes forget there's more AI than just gen aai and Brian Harris is the CTO at SAS predicts that Genai has to be viewed as a feature of Industry Solutions not a solution in it of itself again we agree that these domain specific AIS are going to see that long tale Patrick mcfaden of data Stacks predicts that we're headed more toward a gen Monopoly so that's sort of counter to the long taale we hope not but we kind of agree that hyperscalers right now are in the driver's seat uh he predicted actually back in November that Regulators are going to come raining down on these big internet companies and that prediction has already come true through with Lena Khan this week taking recent actions okay let's get one quick thing to add da if I can on that I think it's really interesting in the recent gen study that we did it's split 50/50 between people saying that they're going to develop their own AI Solutions using open source whether it's anthropic or open Ai and the other 50% are still hoping that it'll become embedded in their already trusted vendors and those vendors they've got a window but it's not that large of a window they need to real really start rolling that out and start embedding AI into their offerings if we're going to see that continue I just thought it was a interesting data point that came from the study I wanted to sneak in I'm glad you said that five years ago I I predicted and and worked with collaborated with my my friend uh David michella who wrote he's an author and and we kind of predicted pulled out his prediction that AI you're gonna you're G to buy it you're not going to build it and then of course gen AI comes out and it becomes wow this stuff is actually pretty easy even though there's still some some barriers and skills issues but like for instance the qbi you go to the q.com you can see our our rag
our retrieval augmented generation model that we built um and your and most people haven't done that you know we got a development team but you're going to see rag out of the box and you're going to be able to point that at your data sets and so it's going to become easier uh and you to build your own AI so I don't know how much of of that embedded versus build your own is simple rag stuff that you're going to do out of the box versus intense AI you know we'll see it's going to be interesting okay let's bring up number five Back to Basics in cyber security you know AI getss all the headlines um but it's going to be embedded into cyber and it's going to support these areas shown um we're we're seeing identity single signon vulnerability management endpoint network security these are the areas of information security that are the highest priority in in organizations and it's a lot of the same stuff and we think that consolidation trend is going to continue uh we also think that the the the the VCS going to keep funding uh cyber security you know startups because it's still broken um so that's counter but but the consolidation trend is going to favor the consolidators paloalto network crowd strike uh zscaler even though consolidation uh of vendors of redundant vendors was the number one method of reducing costs last year and it's way way down there's a premise that we're putting forth here that that is not going to hit as hard in cyber security because of the the crowd the the the crowded space um the identity crisis remains in play and is a major challenge uh pun intended and again AI is going to be embedded and begin to change the sock analyst experience we saw this at at at crowdstrike with the announcement of Charlotte their llm which is you know very very powerful um Eric your thoughts on this data yeah it it's very interesting what we're seeing right now in the security space that everyone is is really progressing we're seeing all these vendors roll out different feature sets really pushing the envelope and at the same time we're seeing consolidation happen and there's so many startups and my szo friends are much more likely to take a look at a startup than my CIO friends uh they're just always looking for an edge and and an advantage so they're willing to test out those series a through C companies where sometimes you don't see it in the rest of technology I think we're going to just continue to see importance and explosion of new new technologies new features in this space and I think some of the bigger players are going to have to get a little bit more m&a uh active if they're going to keep up uh we're seeing that a little bit but I think we're going to see more of it I think that environment's thawing out the other thing I want to point out is anecdotally and I speak to a lot of Security Experts their focus this year is not so much on the tool set you know we used to talk all the time about I want best to breed I want layers of Defense I need this tool I need that tool right now all they're talking about is employee training penetration testing Asset Management vulnerability patching they really are getting back to the basic hygiene of security and that's where their focus is going into this year and it's not just one it it's almost everyone I speak to so I think it's going to be an interesting year and I like the way you phrase that and Back to Basics and security I agree 100% yeah thanks for that that's uh that's some good good data points and perspective just some predictions and Trends from the marketpl again the the inbounds at Dell's annual data protection survey that Rob emsley and Michael Wilkey shared with me says 65% of organizations are not confident that their organ not very confident their organizations could fully recover from a data loss incident uh the VH data protection Trend report found that 52% of production data is backed up on tape still so everybody says tape is dead no it's not and 61% of production data is also backed up in the cloud uh Dave Russell and Jason Buffington presented these stats you know to me recently um let's see voice is going to become the new fingerprint according to Aron England CPO and CTO of rev and Nick Schneider of Arctic Wolf predicts that overhype tools driving the need for security operations uh which of course uh are driving the need for security operations of course which arctic wolf provides as a managed service so um some some thank you for sending those stats in everybody okay number six private Market shifts m&a and IPOs pick up uh you know here's a chart this is all private companies from the the the emerging technology survey ET Ts that uh ETR does I believe it's quarterly um again spending momentum in the vertical axis uh actually sorry net sentiment which is intent to engage have do you know the company and you're going to do anything with them are you're going to evaluate them are you going to deploy them are you going to deploy them further so intent to engage on the vertical axis and then M share you know about this company on the horizontal axis and then we've just picked and and chosen some names here um that showed up on like the top top names in in an IND each axis um so you can see here you know open AI off the charts Docker figma which I guess you know was was supposed to be acquired by Adobe and they canceled that acquisition data bricks uh one trust Beyond trust uh you got net scope in there we've talked about them you got grafana sneak uh reddis database company uh whiz very hot security company DBT Labs the overlay on you know to try to pull metrics out of out of data platforms cohere U an llm player anthropic has uh gained a lot of VC and other investments from the likes of of of Amazon in particular four billion dollar investment also Google you got hugging face in there that a lot of people are doing work with so we also think you're going to see more smaller seed rounds great time to start a company and VC's love it too because they don't have to put as much in all this AI hype and you can do more with AI we think cyber and AI are going to continue to get all the attention just like all of our inbounds and we think m&as and IPOs accelerate potentially data bricks sneak arctic wolf Beyond trust last year I think there were probably I want to say 150 IPOs down from the previous year we think we're going to see more IPOs and more IPO action this year but we're not going to get back to 2021 levels where we saw a thousand IPOs Eric your thoughts I completely agree on the private Equity side particularly they had a lot of money heading into this recessionary period where the headlines got bad and they stopped spending but they still had the cash uh and I think that environment's really warming up where we're seeing a lot on the private Equity side I mean heck New Relic got taken private for Dr and ping are about to be joined and probably rolled back out again I think you're still going to see a ton of happening on the private side and I think yes IPOs are finally going to warm up again it's just crazy when you think about a company like you know rubric or or data bricks uh still being private so I definitely think we're going to see some IPOs and as far as that m&a activity there's some names on that list that are just right for the picking I mean Co here hugging face uh particularly on that side I I can't believe they're there and we're constantly seeing whiz and sneak incredible data for young companies really strong growing their provision growing their mind share the you need to take a look at these if you're a large company and you want to secure up your your security portfolio there's a lot of names out there like an arctic wolf a whiz a sneak they need to be looked at and Mark Sasson of pinpoint Search Group shared that I believe this was just at Cyber only 437 funding rounds and m&a transactions with 8.6 billion billion dollars raised over 346 rounds of 91 total Acquisitions last year so we'll keep an eye on that okay let's go on to the next one number seven data quality and governance concerns favor trusted ecosystems let's talk about this um this chart uh from ETR asks which aspects of the organization's data and analytics programs are your your organization prioritizing um the most to support gen a goals select up to two options data quality data Lakes data diversity data literacy data Integrations governance metadata management and we think these this favors trusted platforms that have ecosystems to support these these types of activities AWS Azure obviously Google the hyperscalers even though AWS and Azure are well ahead of of Google Cloud but Snowflake and data brecks even Oracle it's a trusted platform it's got transactions you know when you start to think about the sixth data platform that we've talked about moving beyond just separating compute from Storage separating compute from data uh actually unifying metadata you know this this gets complicated because of all these other factors as well when you have different data types like transaction data and unstructured data and distributed data and different query types U and when you're bringing together transactions and analytics at scale you got to throw an Oracle in there because they're the the the company with the the transaction data I would throw in IBM as well we're going to talk about them a little bit later uh but so you've got some interesting activity going on here where people are really focused on you know data quality improving and you know we think I don't know if you agree Eric that this is going to favor some of those established platforms without it doubt and the data we're going to get to it in a minute so I don't want to kind of you know steal the headline but you know I love that you're bringing up Oracle IBM Dell that their data set looks fantastic heading it to 2024 something I haven't been able to say in quite some time but when we talk about this particular aspect it all comes down to data quality that's what we're hearing I don't care who you are if you want to use a large language model any sort of AI at all it comes down to your data quality we run a data company and I know for a fact it's garbage in garbage out you have to have good quality data after that it's about the ecosystem it's about your etls your pipes and then you can finally get into analysis and getting it to your hands of your business users but I still think we're at the stage of data quality um I think it's utmost import and you could see in our data set I think it was you know two to one favored uh any other aspect in that answer option in that survey okay great thank you let's bring up number eight renewed importance of new data literacy and skills uh and yes code which I'll explain but this came came in from Eric Bradley I just read it forba of gen as well as more business user friendly self-service capabilities like low code no code RPA and gen UI tools code generated from screen grabs that's my little addition bring with it new sets of skills that will be in demand in the market watch for the rise and offerings from IT training companies like plural site skillsoft LinkedIn learning uh corsera Etc that focus on things like gen prompt management or ethical responsible use of gen Etc we'll start to see new roles like I love this gen prompt engineering Eric you're right on on that in the market as more orgs let gen proliferate there will need to be more data literacy training in general across the workforce so that the outputs from gen are used properly and gen hallucinations are seen with a critical eye or minimized and yes code is Gen plus frontend tools equal generative UI that's from Lee Robinson VP of product at burel But Eric this is this is your wheelhouse you shared this prediction with me thanks for doing that maybe you could elaborate yeah sure first of all I got to give all credit to my senior analyst Dr Darren braam this was uh this was him he's the one who leads all data uh aspects for us here at ETR and he's fantastic so I'm going to give him credit before he sees that and gets mad at me so uh this was Darren but I completely agree with him and one of the things I want to add anecdotally which I find really interesting is I'm seeing geni prompt as a skill set listed in job descriptions and even in resumés that we're getting uh I've never seen that before that's something that's just new in the last month or so but basically what this comes down to is there's a lot of non-technical business users that need to become more data literate and develop those skills just to stay relevant in their own jobs whether it's me at age 49 or whether it's somebody young you have to figure this out and there's a lot of forces that are happening whether it's low code no code apps or the rise of gen it's all converging to make sure that the business users themselves can actually handle this type of workflow and you have to become data literate it's not going to be difficult because the vendors are making it easy but you do have to make a little bit of an effort to actually stay relevant in the today's world and as we're seeing the majority of the budget for AI right now is coming from the business departments themselves non-it related so I think this is a trend that's here to stay I would urge any young people out there to go ahead and make sure you get yourself at least a little data literate great thank you for that uh Eric and Darren okay let's bring up number nine Legacy rebound powered by AI laptops cloud and acquired assets so this is really interesting so first of all we're showing you a chart it's a shared Net score on the vertical axis and overlap which is plotted it's it's informed by the N uh so it's really a measure of presence and overlap within that 1700 1,766 n in the accounts and we plotted Eric I just I I I I picked you know some Legacy companies some some and Legacy I guess is a derogatory term it's a perjorative but to me it's not I mean you build a legacy exactly I got a friend who has a a legacy yeah he calls it Legacy I mean he's been in business 30 years he's he's a he's a very successful financial planner anyway um you got Cisco on here Oracle IBM Dell HP but IBM IBM Watson sap Hana really one of the few up over that 40% Mark but what's in moroi we talked about before red hat which is the asset Aruba which is an acquired asset the most interesting thing here is the momentum that we're seeing in the market on laptops and we know there's a new windows cycle coming there's a a laptop ref fresh cycle Apple has had npus in its systems for a long long time Dell laptops you know I think are going to power that company you know this year Cisco acquiring uh uh morocc really doing more with that asset now acquiring Splunk IBM getting its act together with Watson you saw it its recent earnings announcement looks like Arvin Krishna really has that company on the right track it's got the the red hat acquisition so you're seeing these these Legacy companies these established companies um in a case of Oracle investing they've certainly done a lot of R&D work they they making huge Acquisitions like Cerner uh and and whereas in the old days you you had situations where the the big established companies would poo poo the next wave you know we saw that with the decks the primes the wangs the dgs companies that young people in this audience have never even heard of they were High Flyers Sun Microsystems they were the hottest companies going they're gone now because they poo pooed the Future these leaders today they don't dismiss the future they invest in it and because they're paranoid only the paranoid survive as Andy Grove said uh but I'll throw it to you this is something that you put on my radar what are you seeing in the ETR data and what makes you sanguin about some of these Legacy companies yeah I haven't been excited about these companies in a very long time the data looks incredible across the board and it's amazing the bread of the the rebound we're seeing in their spending trajectory it's not just one area it's coming from cloud it's coming from the data side um in the instance of IBM May Red Hat anible they're just doing fantastic you know M where what's happened there with broadcom going away from their Channel partner was just stupid I don't know what else to say and what we're seeing right now is so much share shifting away from that to some of these other people and they're trusted they're already entrenched in an organization and what happened at least what I'm hearing anecdotally is a couple of years ago people were saying I'm sorry Oracle IBM Dell you know sap you guys are great but you didn't keep up and I'm really going to shift over to the cloud I'm going to take a look at this and then what happened the world kind of paused spending paused and they didn't do it now two years later I'm talking to them and they're saying you know what these things kind of got a little bit better they caught up I actually think it's a pretty good product now and is it really a priority for me to spend all this time and capital and resources to shift off what's an improving product to go to the cloud and at the same time they just went through a cloud audit and found out the Cloud's not always as cheap as you think it is so what we're seeing right now is that these these companies were all given a second life without a and we're seeing the data broadly improve for them in many areas and it's going to be great to see what they do with it they've gotten a second chance and and I hope that they just continue investing using R&D wisely and you know going after some m&a and just keeping their footing because you know no one wants to see a world where it's just Microsoft and AWS and the Enterprise yeah so I'll share as well just some U some pros from a recent um report you guys just put out don't call it comeback they've been here for years ET data rebound on Legacy companies like IBM Oracle and Dell working thesis the recessionary environment and budget crunch stopped the planned lift and shift of core emission critical apps to Cloud providers giving these companies time to catch up now coming out the other side the existing functionality is good enough in replacing them no longer is the top priority you let's see what they do with this second chance as you just mentioned and the Legacy names that we just talked about asserting their presence back in the cloud race like Oracle with OC uh you know IBM sort of in a different way really focusing on the hybrid Cloud which seems to be working Dell as well it's got you know it's it's its cloud in the form of Apex HP uh with with its Green Lake asserting their presence back in the cloud race going to be something to watch this year uh and with with that comes other renewals of Legacy software Footprints Hardware refreshes software server storage Etc and then as we saw in that chart laptops and we're going to see laptop refresh cycle uh we think we we heard it in Intel's Intel had you know very disappointing earnings but they did point to uh growth in future quarters really due to uh to PC sales okay yeah the data real quickly the data on that is is very strong I I easily we could have put a a full Hardware refresh cycle into this prediction post um I think maybe just it might be a little bit well known so we chose not to but the data across the board in all areas of of Hardware not just the laptops PCS but we're also seeing in storage and servers um there's definitely a refresh cycle coming in the hardware space and that's good news for these companies and and and look there's so much territory that we could cover on these what we try to do and and thank you again everybody who sending in these literally thousands and thousands and thousands of inbounds we really appreciate it we try to find predictions that a can be Quantified so we they're kind of binary did we were we right or wrong and B does it align with some data that we have we can actually actually go back and and do that look back but so thank you again okay the last one let's bring up number 10 Tech priorities cyber analytics AI collaboration Cloud networking and automation Remain the top Tech priorities um look you know this chart we you guys run this this is an N of 890 cyber has always been the top priority yeah it's it's maybe down a little bit but no matter what industry you look at no matter what geography you look at it's right up there analytics holding strong data warehousing data matters you know and and even given all the geni hype uh which you can see is on a nice steep uptick here it's still people got to get their data act together before they can really take advantage of that collaboration was obviously top dog or a top dog during the pandemic you know still important you know Cloud yeah it's tapered off a little bit uh Cloud optimization was a big thing last year but cloud is still where a lot of the The Innovation is happening the optionality in Cloud the ecosystems in Cloud are still really powering Innovation networking becomes more important in the world of of AI it's like the new bottleneck and you know we we' we've talked about RPA it's it's been a hot market for a long long time so it makes the cut here um and as you can see it's picking up a little bit it's the classic two-edged sword Eric with with RPA your thoughts on this I think the most interesting aspect in that and and we do run this all the time and it doesn't change that often so even a small integer movement is actually of interest and that cloud migration number that's a big drop uh to me that's the main takeaway when I when I first ran this study and we looked at it I always expect security to be the number one I was not shocked by the movement and machine learning and artificial intelligence Cloud migration was so after we ran the survey I did eight interviews uh top Trend series which I'll be releasing that on Tuesday it's an amalgamation of all the findings and we asked people about this why is cloud migration show slowing and they said basically that everyone always anticipated their Cloud workloads to get to 60 70 80% but it's happening much much slower than they ever anticipated it's still happening it's just not happening as fast and the majority of the people I interviewed again were talking more about building out private Cloud assets they wanted more of a hybrid model not directly going to Cloud migration in the public Cloud yeah this is interesting because I I think that is a somewhat of a concern I been forecasting we saw last quarter Amazon's growth rate the deceleration of that growth rate stabilized and I'm expecting an uptick this quarter not a huge but an uptick maybe a couple points in growth really from geni I would expect the same for Azure and we saw a little Azure action or gen action last quarter from uh from Microsoft Microsoft announced I think on the 30th and or Amazon shortly thereafter I think you're right I think well a couple things is I think the prevailing uh narrative that 90% of the work remains on Prem a big chunk of that is Telco and that Telco and that whole Telco Market that Communications Market is probably as big as the traditional it market so if you take that out a much higher percentage of the workloads are actually already in the cloud so it's not so much a story of migration anymore it's a battle for new work new workloads new spending much of that AI work is being done in the cloud today but because of the reasons that we mentioned before and the whole discussion that we had talked about around the long tale of the Gen power law and the fact that budgets just aren't going through the roof like they were in 2020 and 2021 people have to make choices and they have to make tradeoffs I'll give you the last word on that Eric yeah very interesting on that I agree I also I just wanted to point out your comment about AWS anyone that actually follows our data you wouldn't have been surprised in the slow down on AWS in the cloud you really wouldn't I I'm looking at my chart right now just going straight down to the right you know went from 70% down to 40% uh over the course of J of 2022 and 2023 uh what we are seeing now however was a really significant rebound so uh that cloud audit does seem to be over anecdotally when I speak to people uh and I do think comment was spoton it's not anymore about the migration of it's just actually you know what work is being done there and it's going to have a very longtail we the digital transformation is not over it's a longtail game and I still think cloud is healthy but uh you can't really keep those growth rates up forever yeah that's that's definitely the new way it's not about Cloud migration anymore that lift and shift occurred we squeezed a lot of juice from that lemon there's maybe some left but now it's all about Innovation and I think a lot of that is coming from gen we've noticed I've noticed just an otally looking at the data um from the the drill downs and the ETR data that when a company announces a gen and it and it goes of GA you get a big uplift we saw this with vertex um in at at at at Google Cloud next we certainly saw this at Microsoft I would expect we're going to see this with uh with bedrock going GA I think it went GA late last summer maybe September maybe even October time frame so I would expect expect to see that in the Q4 numbers yeah but hey as always Eric appreciate your time and we're going to be here tracking this on an ongoing basis you guys do tremendous work really appreciate the collaboration this is our these our third predictions right third year third year in a row y I always enjoy it so thanks again okay that's it for now thanks to Alex Myerson and Ken schiffman on production and Alex also manages the podcast Kristen Martin and Cheryl Knight help get the word out on social media and in our newsletters and Rob ho is our EIC over at silicon angle.com thank you all remember these episodes are all available as podcasts wherever you listen just search breaking analysis podcast I publish each week on the cube research.com formerly wik Bond and silicon angle.com and you can email me at david. balante silicon angle.com or
DM me at Dante comment on our LinkedIn post and definitely check out et. not only do they have the best survey data in the business we're going to Market together you know we're working very closely with the cube research analysts and the ETR data so check that out this is Dave bante for the cube research in insights powered by ET thanks for watching we'll see you next time I'm breaking [Music] analysis
2024-02-03 00:14
