Breaking Analysis: Cloud Momentum Building for the Post COVID Era

From the keep studios in Palo Alto in Boston connecting without leaders all around the world. This is a cute conversation is from company, earnings reports and customer survey data continues to show that Microsoft Azure and gcp are closing the gap on AWS, Cloud dominance. Now, while reporting definitions of the cloud remain, fuzzy is very clear. That clouds steady March into the stronghold of on-premises, computing continues. The global coronavirus pandemic has only

strengthened the clouds position in the overall Marketplace. Now, as you might recall, we reported last week, the story of The Haves and the Have Nots and that's playing out in several sectors. And then this braking analysis, we're going to take a closer look at the big three Cloud players and we'll do a brief investigation of a w s specifically in a short drill down. Welcome everyone to the Cuban sites, powered by ET are today, we're going to try to really accomplish three things. First, we want to quantify how the cloud is impacting the on-prem business.

As we enter this decade. Let's take a snapshot of some of the vendors that are well-positioned and maybe some of those that are facing greater headwinds. The second thing we want to do is it want to update you on the latest market share data for the Big 3 Cloud players. And then finally I want to dig into the business of a w s in a little bit more depth to see where they're seeing the most strength and where perhaps maybe there's some cracks in their substantial armor. What's one of the it landscape where we are in 2020? The first

data point that we want to share really tells a familiar story and really drafts off the theme that we've set for the past several weeks, which is the bifurcation in the marketplace. Love you. Take a look at this chart with really showing is it's the EGR version of the, the Gartner magic quadrant. What are uses survey data to plot the vendors to on the y-axis, is the metric of a nit score, which is a measurement of spending momentum to review each quarter, each our surveys more than 1,200 cios and I to professionals and ask them. A lesson in particular supplier

subtract the less from the more and the remainder is the Nets score put soda like NPS and I'll go into that a little bit later. But that's the vertical axis and x axis is called market. Share like IDC measures, whether it's a market, a measure of pervasiveness. In the survey calculated by dividing, the mentions of a particular company by the total mentioned in the overall survey and Laxus. To several points here that I want to know whose number this is April survey data. So look

for more than $1,200. And you can see, we plotted several companies, including the big tree Cloud players. You got Microsoft news in the upper, right? And Google with much lower presents, but decent spending momentum. And we plotted a number of other enter plot Enterprise players including several on Plymouth and leaders like Dell EMC, IBM Oracle in Cisco and we've also included some of the companies that are showing real promise from a momentum standpoint and penetration music business models that we like they include snowflake. Do you know where the database disrupter uipath

who's the RP? A specialist and crowdstrike really killing it in security and date a dog who provides a cloud monitoring services and he's going to see. We superimpose in the upper right, a table, showing the net scores and market, share of for each of the, the companies and the story here, very clearly quantifies. The cloud is winning, and we think it's likely to continue to grow fast and penetrate the Enterprise Now, as we reported many times downturns tend to be good for cloud but the all-time leaders as you can see,

by Cisco's position, for example, that I roll over and we'll be covering winning strategies for legacy players and open a later segment if your customer with a lot of on-prem infrastructure and your building out data centers. Unless you're a big cloud provider, you're probably going to be in the wrong side of History here. Okay. Let's take a closer look at the big 3 update. You on there, I asked and Paz numbers as best we can. All three recently reported earnings and this chart shows the data for each of the companies, you can see each of them

has substantial businesses with a w. S by far, the largest gcp is growing. The fastest with notable, is it a divorce in 2018 with 2.7 x larger than Azure and today, that Delta is under to act based on our q1 estimates and it's just about to Exxon the trailing 12-month basis. I got to caution you that the AWS numbers are the cleanest a divorce reports religiously and easy-to-understand revenue and operating profit number for its Cloud business. Every quarter, Microsoft and Google or a much easier. If you

read through Microsoft, NK reports, and you'll see that they're intelligent. Cloud Revenue comprises public, and private clouds, hybrid sequel, server, Windows Server, system center, GitHub, Enterprise, support, and Consulting Services it. Oh yeah, azure. So we have the estimate how much of that hairball is actually comparable directly to a w s a Google. Similarly just started breaking out. Its Cloud Revenue in bundles more than just us and pass into its Cloud numbers. Nothing said that

both Microsoft and Google. Thank you give little tidbits. Like Hansel and Gretel of guidance in the form of growth rates are commentary on growth rates in their respective is in pass business, as I as you're in gcp. So this is our best estimate given. All that is reported and what we know from survey data, Now, I also want to point out that that these clouds are there really different in quality and their different fits, and for different use cases. For example, Microsoft is building out of cloud, really? The support of huge install base of customers

and really make it easy for them to tap into the Microsoft cloud services. But it may not be the most robust Cloud as has been widely, reported in analyzed in the Press. Your Microsoft is struggling to provide adequate capacity for its customers. It's kind of using the covid-19. Pandemic is a bit of a heat shield on this issue. Microsoft put out a blog post. Essentially saying it'll, it'll prioritize First Responders health workers and essential businesses during the covid-19 pandemic and teens customers. So that's one of those Caveat Emptor

situations if you're not one of these camps, frankly maybe if you are but it's unquestionable that Microsoft has strong momentum across its vast portfolio including cloud and then lie. That's what I want to get into next. So let's take a look at some data. We've been reporting for quite some time based on the EGR surveys. Did the big cloud players? You know him very very strong momentum as measured by Net scores. So this chart shows is the most recent survey results, again, more than 1280 buyers, 1269 to be exact

and you can see broadly that all the big three or four Will Roma green fournette scores as we should show in the upper right-hand box and well over 50%. Net scores for all three and Microsoft Azure is in the 70% range. So very, very strong demand across the board. Remember, I was asking bars to comment on the areas with which they are familiar. So buyer might be interpreting Cloud to include all those things in Microsoft and Google that may not be directly comparable to the AWS responses. But doesn't matter the point is they all have momentum and you can see her even

though there's a slight dip in the most recent survey you know which ran during the peak of the shutdown in the US. Other parts of the survey cloud is very, very strong. Now, let's dig into the to the data, a bit more and take a look at the Fortune 500 real down. So of course, this is an indicator of of a of a larger companies and you can see your text as you're in this segment by a small margin. Denoting, the same caveat that I mentioned earlier but the strength of the NIT scores for all three as meaningful as they all increased within the

larger buying bases. No settling this next chart. We extend that cut to include the fortune 1000. You can see here. That all three companies again continue to show strength. But you know there's a convergence which really says to me that this multi-cloud picture that's emerged in in the cio's are a really now starting to see that whether it's through m&a or maybe we shall I T or whatever. They're faced with a variety of choices that are increasingly viable and and despite my previously and sometimes narky comments, that multi-cloud has been more of a

symptom of multi-vendor, versus a clear CIO strategy that maybe is perhaps beginning to change, especially as they're asked to clean up what I've often called as the crime scene. No, I want to close by taking a little bit of a closer look at the AWS business specifically. I want to come back to this notion of Nets corn, explain it. A little bit here on this wheel chart is really a breakdown of responses across more than 600 AWS customers in the April survey at the height of the lockdown. The US. It's a global survey. Well, over a hundred responses outside

of the United States Really what's relevant here is the strength of the AWS business over all this chart shows how netspor is essentially Drive, adopting new, are you increasing spend meaning increasing by 6% and more? Are you keeping spending flat or you decreasing spending by more than 6%? Or are you checking the platform ID replacement? So what it is, we're talking about nearly 70% of customers spending more in 2020, on a w, s then they spent last year and only

4% are spending less. That's pretty impressive for a player with a 38 billion dollar business. Now, the next day, the point I want to share really shows where the action is across the AWS portfolio. So let's take a look at this. The charger shows responses from an end of more than 700 and the Nets score or spending momentum across the AWS portfolio with the comparison of a cross to resurvey dates last April, January 2020, and April 2020 and then you can see that they're very elevated spending momentum across. Most of the AWS key business lines, including

Cloud function data warehouse, which is e, d w, Etc, Ai and machine learning work spaces with the work-from-home pivot. And, you know, there are some areas that may be less robust but nothing in the Red Zone. In red-zone meeting, your net scores would be like below. Let's say, 25%, Net score, and you can see there's really nothing close to that in the eighth of us portfolio. So you're saying you're very, very strong momentum for a w s in specifically. And of course the cloud in general, now they said the pandemic has been Good

for clogged downturn and generally are our tale went. So if you're building data centers, it's probably not a good use of capital and also server Huggers beware Does an attractive this more so than ever with this covid-19. Pandemic of that dial up, dial down service, watch for software companies, starting to use that model. Where is today, they often try to lock you into a 1-year or 2-year or 3-year license, increasingly were seeing companies investigate, and actually go to market with a true cloud model.

Okay, thanks for watching this episode of the Cuban sites, powered by ETR. Remember, these segments are all available as podcast with their weekly. They have all the news. I also publish on Wickham on, so don't forget to check out, ER. Plus as well, get in touch with me at the Volante or you can email me at David. Volante, siliconangle.com everybody and we'll see you next time.