Breaking Analysis with Dave Vellante

With a nearly $60B revenue run rate, growing at 14% and throwing off over $5B in operating cash last quarter, Cisco has an awesome business. But customers are vocal about the complexity of Cisco’s portfolio and if not addressed head on, the company risks encountering friction beyond just economic headwinds. We believe Cisco’s challenges are most decidedly not product breadth and depth, rather the company’s mandate is to integrate the piece parts of its intricate offerings to create more facile and seamless experiences for customers. In this Breaking Analysis and ahead of Cisco Live US, we dig deeper into Cisco’s business and double click on three key areas of its portfolio including: 1) Security; 2) Networking; and 3) Observability. With spending data from ETR and a guest appearance from SiliconANGLE contributor and market watcher Zeus Kerravala, principal at ZK Research. Is Cisco a buy? https://www.investors.com/news/technology/cisco-stock-buy-now/Gartner MQ on observability & APM:https://www.honeycomb.io/gartner-magic-quadrant-apm-observability-2022Cisco’s most recent earnings transcripthttps://www.fool.com/earnings/call-transcripts/2023/05/17/cisco-systems-csco-q3-2023-earnings-call-transcrip/Cisco financial slide deckhttps://seekingalpha.com/article/4605527-cisco-systems-inc-2023-q3-results-earnings-call-presentation

The era of AI everything continues to excite. But unlike the Internet era, where any company announcing a dotcom anything immediately rose in value, the AI gods appear to be more selective. Nvidia beat its top line whisper number by more than $300M and the company’s value is rapidly approaching one trillion dollars. Marvell narrowly beat expectations this week but cited future bandwidth demand driven by AI and the stock was up more than 20% on Friday. Broadcom was up nearly 10% on sympathy with the realization that connect-centricity beyond the CPU is what the company does really well. Meanwhile, other players like Snowflake, which also narrowly beat earnings Wednesday and touted AI as a future tailwind, got hammered as customers dial down cloud consumption. In this Breaking Analysis we look at the infrastructure of AI examining the action at the silicon layer specifically around Nvidia’s momentum. Since much of AI is about data, we’ll also look at the spending data on two top data platforms, Snowflake and Databricks to see what the survey data says and examine the future of real time data and automation as a catalyst for massive productivity growth in the economy. To do so we have a special Breaking Analysis panel with John Furrier and David Floyer. How Nvidia plans to own the data centerhttps://wikibon.com/breaking-analysis-how-nvidia-plans-to-own-the-datacenter-with-ai/ What Pat Gelsinger has to do to save Intelhttps://wikibon.com/breaking-analysis-pat-gelsinger-must-channel-andy-grove-recreate-intel/Nvidia earnings: https://siliconangle.com/2023/05/24/nvidias-stock-soars-strong-sales-forecast-amid-surging-demand-ai-chips/Snowflake earnings & Neeva acquisitionhttps://siliconangle.com/2023/05/24/snowflakes-stock-falls-guidance-miss-confirms-plans-acquire-neeva/Databricks faces key strategic decisions…https://wikibon.com/breaking-analysis-databricks-faces-critical-strategic-decisionsheres-why/

AI will now add superpowers to every triggering buzzword, hence the title of this week’s post. Look past the buzz and you’ll find substance somewhere. The spring conference season is kicking into high gear, so it’s a time to get serious and extract the signal from the event noise. This week we’ll see Microsoft Build, which will no doubt volley shots back from the messaging at Google I/O.  Two other big events will take place this week, Red Hat Summit / Ansible Fest in Boston and the annual Dell Technologies World in Las Vegas. theCUBE will be covering both of these shows and we want to take this opportunity to update you on the state of hybrid multi-cloud…what we call supercloud. In this Breaking Analysis we examine some of the key infrastructure players in hybrid multi-cloud with a focus on Red Hat and Dell Technologies, two firms that increasingly are partnering with each other as VMware’s future evolves. We’ll share recent ETR survey data on the position of several other hybrid / cross-cloud players including Cloudflare, Equinix, HPE, IBM, Oracle, VMware and others. We’ll also share what we expect to hear at Red Hat Summit and Dell Technologies World this year. Fitzy’s cloud repatriation index:https://www.platformonomics.com/2023/05/platformonomics-repatriation-index-q1-2023-surfs-up/Percent of workloads in the cloud (Statistica): https://www.statista.com/statistics/1266602/workloads-cloud-organizations-worldwide/Red Hat project Wisdom:https://www.redhat.com/en/engage/project-wisdomNugget on reddit about Ansible Lightspeedhttps://www.reddit.com/r/ansible/comments/12pnl2b/ansible_lightspeed/GitHub clue on Ansible AIhttps://github.com/ansible/vscode-ansible/releasesWhat to expect at Red Hat Summit 2023https://siliconangle.com/2023/05/10/expect-red-hat-summit-join-thecube-may-23-24-rhsummit/What to expect at Dell Tech World 2023:https://siliconangle.com/2023/05/11/expect-thecubes-coverage-dell-technologies-world-join-thecube-may-22-24/

The AI gold rush is on. The paths to monetization are seemingly endless but the most obvious converge on making humans more productive or supercharging existing business models like search advertising or subscription licenses. Much of AI adoption in enterprise IT is hidden. Our research shows a very high overlap (around 40-60%) between AI adoption in enterprise tech and embedded AI inside software from the likes of Salesforce, ServiceNow, Workday, SAP, Oracle and other major players. But the rapid advancements of tools from AI leaders and an emerging group of independent firms is causing customers to think differently. Catalyzed by the OpenAI Microsoft partnership, organizations are rapidly trying to figure out how to apply these tools to create competitive advantage. Every firm on the planet wants to ride the AI wave. Virtually overnight, investment capital has shifted to fund early stage AI startups with much less funding required relative to previous boom cycles. In this Breaking Analysis we review ETR data to quantify the state of AI spending in the enterprise and look at the positions of several key players in the space that offer AI tools and platforms. To do so we invite Andy Thurai, CUBE contributor, VP and principal analyst at Constellation Research. Andy will help us unpack the hits and misses from this past week’s Google IO conference and give us his perspectives on what it takes to catch the AI wave and avoid becoming driftwood. Constellation research hits and misses from Google IOhttps://www.constellationr.com/blog-news/google-s-generative-ai-strategy-google-io-2023-hits-and-missesRecap of Google IO announcements:https://t.co/yx6POoLRLG https://twitter.com/rowancheung/status/1656564347290746880?s=51&t=AqnHczjrru-dQaVNpPGp7wMicrosoft eyes search deal with Firefox as Bing search sputters:https://www.theinformation.com/articles/microsoft-eyes-firefox-search-deal-as-bing-chatbot-gains-sputter?rc=nxigdxWatson beats Ken Jenningshttps://www.youtube.com/watch?v=Sp4q60BsHoYIBM Watsonxhttps://www.infoworld.com/article/3695951/ibm-takes-on-aws-google-and-microsoft-with-watsonx.html

While we’ve been skeptical about repatriation as a notable movement, anecdotal evidence suggests that it is happening in certain pockets. Even though we still don’t see cloud repatriation broadly showing in the numbers, certain examples have caught our attention. In addition, the potential impact of AI raises some interesting questions about where infrastructure should be physically located and causes us to revisit our premise that repatriation is an isolated and negligible trend. In this Breaking Analysis we look at a number of sources, including the experiences of 37signals, which has documented its departure from public clouds. We’ll also examine the relationship between repatriation and SRE Ops skill sets. As always we’ll look at survey data from our partners at ETR, a recent FinOps study published by Vega Cloud and revisit the Cloud Repatriation Index, which we believe is breaking a three-year trend. The cost of cloud, a Trillion Dollar Paradox: https://a16z.com/2021/05/27/cost-of-cloud-paradox-market-cap-cloud-lifecycle-scale-growth-repatriation-optimization/IDC Repatriation Report: https://img1.wsimg.com/blobby/go/a76227cd-a662-4f4e-9b26-1a6fdca9f0fd/downloads/1cnptggfe_976725.pdfThe connection between cloud repatriation and SRE Ops by Lori MacVittie: https://devops.com/the-curious-connection-between-cloud-repatriation-and-sre-ops/#disqus_threadSnowflake March 2023 10K: Read the notes! https://d18rn0p25nwr6d.cloudfront.net/CIK-0001640147/ba7caf53-f000-4fc0-b8a3-ef379d21b99d.pdfWhy we’re leaving the cloud (37signals) https://world.hey.com/dhh/why-we-re-leaving-the-cloud-654b47e0Sovereign clouds (37signals): https://world.hey.com/dhh/sovereign-clouds-661eb5e4The Platformanomics Repatriation Index: https://www.platformonomics.com/2022/11/introducing-the-platformonomics-repatriation-index/Vega Cloud Optimization Report: https://www.vegacloud.io/_files/ugd/e67781_49124f7bd58d4b358ddd0845aac33cff.pdfThe cost of cloud, a Trillion Dollar Paradox: https://a16z.com/2021/05/27/cost-of-cloud-paradox-market-cap-cloud-lifecycle-scale-growth-repatriation-optimization/The true cost of scale out file storage [The Cloudcast Podcast] https://www.thecloudcast.net/2023/03/scale-out-cloud-storage.html

The big three US cloud players all announced earnings this past week and, as expected, cloud growth is slowing. But don’t kid yourselves. Hyperscale clouds remain the epicenter of innovation in tech and foundation models like GPT will only serve to harden this fundamental fact. Our data suggests the deceleration in cloud spend is a function of two related factors: 1) Cautious consumption patterns; and 2) Aggressive cloud optimization, which is being promoted by the big three cloud vendors in an attempt to lock in customers to longer term commitments. There is still no clear evidence in the numbers that repatriation is a factor. Rather, the ability to quickly dial down spending and pause projects is an attractive feature of cloud computing and one that, until now, has never really been seen on a broad market basis.In this Breaking Analysis we try to explain the implications of this seemingly simple but nuanced dynamic. We’ll review the latest hyperscale cloud data for the big three players, share our analysis of certain comments made by cloud executives and show you the latest ETR data on spending and market presence in the cloud. 

RSA Conference takes place in the last week of April this year at a time when the industry is at a crossroads. Once hopeful that the security industry would be shielded from macroeconomic conditions, the past year has been painful for many investors with some exceptions – most notably those investors who stuck with Palo Alto Networks and Fortinet. That said, Q1 saw a rebound in tech but for the most part cyber lagged. The tech rally was largely attributable to an uptick in semis, a leading indicator in normal times. But these aren’t normal times and RSA gives us a nice opportunity to assess the situation in the market.In this Breaking Analysis we’ll update you on the latest trends in the market and what to expect at RSA this year. We’ll also share the latest ETR spending data and drill into the areas of cybersecurity that are seeing the most action. As always we’ll highlight those companies with the strongest (and weakest) momentum and close with a look at some of the emerging technology players in security that might be ripe for acquisition. To do all this we once again welcome in our colleague Erik Bradley from ETR. 

On Tuesday, April 4, HPE invited a number of industry analysts to participate in HPE GreenLake Storage Day. Notably, HPE declared 2023 the year of storage. While the company made several storage-related announcements, perhaps even more interesting was what the event tells us about HPE’s culture, its strategy and the future direction of the company.In this Breaking Analysis we’ll share our takeaways from HPE’s event, held in Houston, Texas, which included attendance at Antonio Neri’s quarterly all-hands meeting. We’ll try to emphasize areas that have not necessarily been the focus of most press and industry analyst write ups to date. We’ll also take a look at the latest ETR survey data to put HPE’s market position in context across several of its major segments.Best articles:Nice analysis by Steve McDowell on Forbes:https://www.forbes.com/sites/stevemcdowell/2023/04/06/hpe-kicks-off-its-year-of-storage-with-help-from-vast-data/?sh=6a548ee45b3bChris Mellor’s summary has all the newshttps://blocksandfiles.com/2023/04/04/hpe-greenlake-vast-data/CRN’s channel perspective emphasizing the consumption model:https://www.crn.com/news/storage/alletra-storage-mp-puts-hpe-far-ahead-of-competitors-in-hybrid-cloud-storage-management-battle?itc=refreshSiliconANGLE writeup by Paul Gillin:https://siliconangle.com/2023/04/04/hpe-greenlake-gets-hybrid-block-file-storage-expanded-data-protection/TechTarget article w/ quotes from Marc Staimer, Ray Luchessi & Scott Sinclair w/ an emphasis on how well Vast is doing:https://www.techtarget.com/searchstorage/news/365534832/Vast-dips-into-HPE-GreenLake-with-new-file-storage-serviceVast Data press release that emphasizes AI workloads:https://www.businesswire.com/news/home/20230404005358/en/VAST-Data-Announces-Strategic-Partnership-with-Hewlett-Packard-Enterprise-to-Provide-Software-for-HPE-GreenLake-for-File-Storage

A rebound in semiconductor stocks has many investors asking if this is a harbinger of good news for the broader enterprise tech sector. Indeed the SOXX semiconductor ETF is up nearly 30% year to date as of this posting, as are bellwether fab suppliers like Applied Materials and Lam Research. Nvidia is up over 90% YTD and AMD over 50%. Even the beleaguered Intel is up 22%. But key enterprise software names have not yet rebounded and according to this week’s guest, the divergence between semis and B2B software is getting hard to ignore. In this Breaking analysis we examine the the bifurcation between the performance of semis and broader enterprise tech. And we’ll try to answer the question: Is the uptick in semiconductors an early indicator of a broader enterprise tech recovery, or is this a false signal that warrants continued caution? To examine these issues we welcome back Ivana Delevska, the founder and chief investment officer of SPEAR Invest. All statements made regarding companies or securities are strictly beliefs, points of view and opinions held by SiliconANGLE Media, Enterprise Technology Research, other guests on theCUBE and guest writers. Such statements are not recommendations by these individuals to buy, sell or hold any security. The content presented does not constitute investment advice and should not be used as the basis for any investment decision. You and only you are responsible for your investment decisions.Disclosure: Many of the companies cited in Breaking Analysis are sponsors of theCUBE and/or clients of Wikibon. None of these firms or other companies have any editorial control over or advanced viewing of what’s published in Breaking Analysis.