from the cube studios in Palo Alto in Boston bringing you data-driven insights from the cube and ETR this is breaking analysis with Dave vellante the conference season is kicking into high gear it's a big week for events including Microsoft build which will no doubt volley is shot back from the messaging that we saw at Google I O and it's a time of year to get serious and extract the signal from the event noise and two big events will take place this week Red Hat Summit slash ansible Fest in Boston and the annual Dell Technologies World in Las Vegas the cube will be covering both of these shows and we want to take this opportunity to update you on the state of hybrid multi-cloud and what we call supercloud hello and welcome to this week's wikibon Cube insights powered by ETR in this breaking analysis we examine some of the key infrastructure players in hybrid multi-cloud the focus on red hat and Dell Technologies to firms that increasingly are partnering with each other to create more choice in the market now here's a quick snapshot of some key players that over the past decade have worked hard to create their own version of cloud platforms these firms have different levels of cloud maturity and varied strategies but they're all impacted by the public cloud and are working to both complement and compete with the hyperscalers as well as each other this chart shows Net score on the vertical axis which is etr's proprietary measure of spending momentum within that platform and then the horizontal axis shows the overlap and presence within 1171 accounts in the ETR survey that self-select as cloud computing customers we've drawn a red dotted line you see that red dotted line at 40 percent that indicates a highly elevated Net score and we've purposefully excluded the hyperscalers from this data let me start with Oracle their presence is notable they were the probably the the first to introduce that notion of same same architecture for on-prem and public Cloud VMware cloud is also prominent you know once they've figured out their Cloud strategy customers really started to lean in now note this excludes VMware Cloud on AWS and only signifies vmware's hybrid and private Cloud offerings like VCF we've highlighted equinix because they're a leader in the data center co-location space and they're a go-to partner for virtually any and all infrastructure players and as we'll see later they're a leading indicator of hybrid Cloud activity cloudflare they're really not a hybrid Cloud play it's more like they're like the everywhere Cloud they'll front end hybrid clouds and and secure connections across the super cloud in fact we would say that cloudflare in many ways is what multi-cloud should have been note that in this group they are the cloudflare is the only player above the 40 Net score line so when we when we talk but let's bring back that slide when we talk about uh Red Hat we're going to talk about them next but notice that 40 percent line only cloudflare is just slightly above it let's talk about red hat we highlight here they're openstack and open shift offerings and we'll talk about ansible later on red hat openshift is a super cloud enabler in that it it helps enable consistent experiences between on-prem to any cloud and across clouds whereas openstack is more of a private Cloud play but as we heard during super Cloud 2 with Walmart's triplet model from Jack Greenfield it definitely can support hybrid operations now of course Walmart super cloud is purpose-built that openstack instance they built themselves they built it by Walmart they've got the skills but a lot of telcos use red hat openstack to manage their internal clouds next we're highlighting Dell and hpe these two companies have launched their versions of cloud Dell with Apex and hpe with Green Lake and from the survey data they still they haven't gained the prominence that the marketing would lead you to believe and marketing usually you know is ahead of the actual progress but they're now on the radar of customers and they're showing up in the ETR data progressing to the right as you can see the spending velocity is still not there but be aware this is not Pure Play Apex and Green Lake data those platforms are growing you know fast from their smaller bases but they're they're both becoming more meaningful businesses so in the in the data where it's a mix of you know anything the customer sees as clouds not specifically surveying for Apex in Green Lake hpe has said that Green Lake surpassed a billion dollar run rate they think they announced this last year and it continues to put all the wood behind that Green Lake Arrow Dell is more balanced and approached and as such as not focused solely on as a service the way HP is hpe is you know we'll talk about more on this later and you can see here that we've sprinkled in some other names in the mixes they're either supporting players like hashicorp dxc which provides a lot of cloud services at digital Realty which is another Colo that competes with equinix and we've plotted IBM's Cloud which is really only a special situations Cloud it's like a Mainframe Cloud if you will now a couple weeks back we shared that we felt the platform economics repatriation index was breaking a three-year Trend and that's exactly what happened our friend Charles Fitzgerald tracks this he he gets a lot of grief he wrote about this he gets a lot of grief for such as taking such a simple approach I.E he takes the combined revenue of equinix and digital Realty and he divides that by the revenue of AWS but we like that simple metric it's an indicator and It reversed the trend this past quarter as the growth rates of AWS they're dropping and these colos are growing in the low to mid teens so the question is this a blip or is it a long-term Trend and our premise is that the market is approaching a sort of equilibrium State it's not there yet and we expect Cloud to continue to outpace on-prem and hybrid but there are some wild cards and opportunities and assumptions that we think are worth revisiting now not to beat a dead horse but we shared this a while back it's data from an ETR survey asking customers their percent of usage between public and private Cloud over time well over half the customers said most of their workloads are on-prem but that number averages out to 57 percent and it's expected to drop to under 50 percent by 2025 so it's nowhere near the 90 percent figure that we hear thrown around all the time and the other tell on this chart is only 14 percent of customers say they're all in on public cloud and that number is sticky so one has to question this claim that 90 of today's workloads are still on customer premises we hear this repeated over and over and it's really more in our view more Cloud marketing that suggests there's plenty of upside left in the cloud and there is but we think it's going to come from new innovation new workloads new industry Solutions rather than lifting and Shifting the remaining on-prem workloads that was kind of the low hanging fruit of the past 10 years in fact we think it's going to become harder and harder for hyperscalers to move the work that hasn't moved yet some of that mission critical work that's running on-prem and is running just fine in the business case isn't necessarily there to move it here's some data from statistica that further supports this assertion it shows the percent of customer workloads running in the cloud now note that this is data from statistica we don't have a subscription anymore we're not cheaping out we just we don't spend the 50 bucks a month anymore we're not trying to to to to to hold out on you we just weren't using it enough maybe we'll start again and this this also was based on 2021 data uh forecast through the latter part of 2022. so it is somewhat dated but with that caveat the data sends a strong message that 60 of organizations in 2021 had more than 25 percent of their workloads in the cloud and that number jumps to over 80 percent in the forecast period so that was you know late 2022 and even back then well over half expected to have most of their workloads in the cloud by now and the other checksum on this data is you think about it if if the the four big hyperscalers are approaching 200 billion dollars in annual revenue it's like 190 something at a 10 penetration rate that would suggest the market for on-prem infrastructure is approaching two trillion dollars and it just that just doesn't hold water the market for Server storage networking database and paths is just not that large currently it isn't now by the way this isn't and I Told You So moment for what Fitzy calls the repatriates I.E those folks who believe
the cloud has failed and customers are retreating from the cloud and droves they're not Cloud churn rates for AWS Microsoft and Google are two percent one percent and four percent respectively so customers are staying put they may be doing a little rebalancing but we think cloud will continue to meaningfully outpace on-prem however there are growth opportunities in cross-cloud services and Edge that incumbent vendors are in a better position we think to attack than the hyperscalers here's the perspective of one it decision maker who heads I.T for a medium-sized city in the United States quote we made sure that we adopted a multi-cloud provider strategy we set up with a number of key players Microsoft Azure AWS Google cloud and Oracle so we have the ability to use any of those for pretty much anything that we need to use them for based on a set of requirements and evaluation criteria so essentially this individual is talking about horses for courses we can tap best to breed where we need to so that's the good part but there is a flip side so then he says if if you do the balance on the people he's talking about the people skills many organizations like ours can't have experts and Senior People in three or more Cloud Technologies so we have to pick probably two that we want to focus on and really gear our investments toward mainly from a skill set perspective those two more than anything okay so this person is basically saying we like having multiple clouds to tap best to breed and hedge their bats presumably but at the same time it's too complicated so they really can't take full advantage to the degree that they like without engaging outside Talent that's an opportunity that is super cloud I.E a mesh of multiple clouds that are interconnected and managed as a single entity and that should include on-prem and hybrid in our view and we think this is an opportunity for the likes of red hat and Dell Technologies and other players with an on-prem Heritage including VMware hpe Cisco IBM Oracle and many others so while these companies don't use the term super cloud well cloudflare actually does but they all have cross-cloud Ambitions they believe correctly in our view that the sentiments of that individual that we quoted earlier suggest that cross cloud simplification is needed and will deliver business benefits in terms of getting more done with less faster now let's take a look at Red Hat's position in infrastructure software and then we're going to take a look at Dell's portfolio which is obviously more Hardware Centric since they spun out VMware here's that same XY chart with the Net score and the vertical axis and overlap with the 1171 Cloud accounts in the ETR data set so we filtered on those Cloud accounts and said Okay show us the infrastructure software within those accounts and you can see the dominant position of red hat generally on the far right the presence of ansible relative to Chef and puppet and openshift as well all three red hat offerings are leading the pack and while none of them is over the red dotted elevated 40 percent line they're all pretty respectable and we threw in turbonomic IBM acquisition in the mix Just for kicks let's take a look at a different View at Dell's portfolio we're choosing a view here that we've not shown before which is Dell's net score across a selected portion of its portfolio over time relative to the overall Net score in each sector that we show so starting in the left Dell's net score in laptops relative to the survey average for laptops over the three survey periods April 2022 January 23 and April 23. so it's nuanced here well laptops are down we know in the market the sort of PCS are suddenly in the tank Dell's position in the sector is up significantly with that ratio of Dell's net score to the average net score jumping from 180 percent which is very strong to over 230 percent then next you can see vxrails relative momentum has dropped but it's still well above the average and then storage which was well below the average last year and we've reported on this and Dell was struggling in its storage business but finally got it back on track and then look now it jumped 140 percent in this last survey which is always going to be good for margins and meanwhile servers is eking out a slightly above average relative Net score performance now Dell's cloud is presumably it's like I said earlier it's a mix of Apex and whatever else customers think of when they think of Dell's Cloud so as you can you can infer from this data in the previous charts that we showed Dell has some work to do in terms of you know customers really understanding its apex strategy and customers they're going to want proof points that it's a safe and reliable bet that they should make and we threw in Dell's desktop relative Net score as well which which is below average okay let's end by taking a quick quick look at what we expect to hear at the combined Red Hat Summit and ansible Fest and then we'll look at what we think is going to happen at Dell tech world AI enablement is going to be a big theme of course and since red hat is all about Cloud native and enabling hybrid environments we think that will be an important theme ansible will also be a big area of focus as John Furrier has pointed out many times red Hat's acquisition of ansible has paid off as they took over the top spot years ago from chef and puppet who when they came out they had all the all the momentum ansible is you know dominated since then and and so you know very very strong obviously at IBM think earlier this month red hat and IBM tipped their hand and showed Watson X and the ansible Watson code assistant you may have heard of ansible's project wisdom which is a red hat initiative developed with IBM research to inject AI into ansible you can think of this as ansible's version of GitHub co-pilot for devops we talked to Rob streche who's hosting Red Hat Summit with John Furrier and he he feels like this is a clear direction that makes sense for the company and really is the next gen automation powered by AI now let me just take an aside here for a moment um when you do some poking around you'll find some Reddit references that talk about this there's also some references in in GitHub so this thing's out there of course Red Hats you know they're open source so and a lot of committers and people are playing around with this stuff how do I turn off this Ai and ansible so it's out there if you poke around okay coming back and of course openshift as we showed you earlier it's in a strong position and following up on red Hat's acquisition of stacked rocks last year we fully expect to hear a lot about container security and shift left it's always a Hot Topic at kubecon and we'd expect some Focus from Red Hat next week on security it's the number one topic of course as we've reported amongst cios and csos and organizations and okay finally let's take a look at what to expect next week at Dell tech World 2023 you got to believe Dell will be aggressive about sharing its point of view on generative AI Michael Dell is an industry luminary and he's not going to miss a chance to convey his views in front of nearly a thousand customers he'll be sharing his thoughts on this topic no doubt but it's going to be interesting to hear how Dell will apply AI to its infrastructure business how it will help customers do the same and finally what the infrastructure of AI and data of the future will look like that's something that we're going to be probing on the cube now as we said Apex needs some proof points and maturity and there's a little doubt that Dell will make some news here hpe with Green Lake got out to the lead and Dell is still playing catch-up and we saw that earlier in the numbers the hpe was a little bit ahead of Dell and the market really hasn't sorted out you know again these are sort of trailing indicators from a survey standpoint but it's a good indicator of what the fat middle of the market thinks now this is a harder task for Dell because you know hpe's Antonio Neri essentially hpe burned the bridge on the past and and removed all the uncertainty as to where the company's Focus lies whereas Dell's position is we're moving with the market we're letting customers tell us how they want to consume and Dell's mapping to that yeah that both strategies can win it's just one is more focused regardless Dell is serious about Apex and we'll kick that into high gear we think next week they have to now last year Dell announced project Alpine which we called a storage supercloud our words not theirs but it's a cross-cloud abstraction layer that creates a consistent experience for customers so will they announce Alpine as a product or like many EMC projects of the past will it get buried so EMC had a bad habit of doing that you know Dell is better at doing what it says than EMC has been in the last 10 years so we would expect more clear progress not veiled references it's kind of ironic in the early days of EMC they would never announce before a product was ready and in the tail end that's all they did is announce products that really either never saw the light of day or never succeeded anyway I digress same thing with project Frontier which is Edge infrastructure management and application orchestration it got a lot of reference at Mobile World Congress mwc 23 in February and Dell has hired an army of folks to go after Edge in Telco so with that type of investment they have to get product to Market and as ha and has it has has been the trend we expect to see more and more ecosystem partner Affinity Beyond just VMware we've seen Dell do deals with red hat we saw this at mwc and we continue to expect you know more as as alternatives to VMware as vmware's now spun out and we've been encouraged to see Dell move up the stack with Partnerships with the likes of snowflake and Starburst and data management we'd like to see more Dell's data management strategy is still unclear and we think they're still trying to figure it out it's pretty clear they're still trying to figure it out so a good way to do that is to partner with like-minded companies and go to market sell some stuff and learn and no doubt you're going to hear a lot about sustainability in ESG look 100 billion dollar companies like Dell not only understand that ESG is good business and increasingly a customer mandate but it's also the responsibility of a large player like Dell to set an example and you can bet they will as will the cube will be at both events Red Hat Summit in Boston John Furrier Rob stretche and Paul Gillen will be covering that show well Lisa Martin and I will be on the show floor all week broadcasting from The Mandalay Bay in Las Vegas so if you're at either of these events please do stop by and say hello to your friends at the cube all right that's a wrap for today many thanks to Alex Myerson who's on production and manages the podcast Ken schiffman as well Kristen Martin and Cheryl Knight helped get the word out on social media and in our newsletters and Rob Hof is our EIC over at siliconangle.com does some great editing thank you remember all these episodes are available as podcasts wherever you listen all you got to do is search breaking analysis podcast I publish each week on wikibon.com and siliconangle.com
and you can email me at david.velante at siliconangle.com or DM me at divalante or comment on our LinkedIn post please do check out etr.ai for the best survey data in the Enterprise Tech business this is Dave vellante for the cube insights powered by ETR thanks for watching everybody and we'll see you next time on breaking analysis [Music] thank you
2023-05-26