With Andy Thurai, VP & Principal Analyst, Constellation Research

A decade of big data investments combined with cloud scalability, the rise of more cost effective processing and the introduction of advanced tooling has catapulted machine intelligence to the forefront of technology investments. No matter what job you have, your operation will be AI powered within five years and machines may be doing your job in the future. 

Artificial intelligence is being infused into applications, infrastructure, equipment and virtually every aspect of our lives. AI is proving to be extremely helpful at controlling vehicles, speeding medical diagnoses, processing language, advancing science and generally raising the stakes on what it means to apply technology for business advantage. 

But business value realization has been a challenge for most organizations due to lack of skills, complexity of programming models, immature technology integration, sizable up front investments, ethical concerns and lack of business alignment. Mastering AI technology and a focus on features will not be a requirement for success in our view. Rather figuring out how and where to apply AI to your business will be the crucial gate. That means understanding the business case, picking the right technology partner, experimenting in bite sized chunks and quickly identifying winners to double down on from an investment standpoint. 

In this Breaking Analysis we update you on the state of AI with a focus on interpreting the latest ETR survey data around ML/AI and data. We’ll explore what it means for the competitive environment and what to look for in the future. To do so we invite into our studios Andy Thurai of Constellation Research. Andy covers AI deeply, he knows the players and the pitfalls of AI investment.

Nailing technology predictions in 2022 was tricky business. Projections on the performance of markets, identifying IPO prospects and making binary forecasts on data, AI, the macro spending climate, along with other related topics in enterprise tech, carried much uncertainty. 2022 was characterized by a seesaw economy where central banks were restructuring their balance sheets, the war in Ukraine fueled inflation, supply chains were a mess and the unintended consequences of digital acceleration are still being sorted. 

In this Breaking Analysis we continue our annual tradition of openly grading our previous year’s enterprise tech predictions. You may or may not agree with our self-grading system but we give you the data to draw your own conclusions. 

Palo Alto Networks has earned a reputation as the leader in security. You can measure this in revenue, market cap, execution and, most importantly, conversations with CISOs. The company is on track to double its revenues to nearly $7B in FY23 from FY20. This despite macro headwinds which will likely continue through next year. Palo Alto owes its position to a clarity of vision and strong execution of a TAM expansion strategy bolstered by key acquisitions and integrations into its cloud & SaaS offerings.  

In this Breaking Analysis, and ahead of Palo Alto Ignite, we bring you the next chapter on top of last week’s cybersecurity update. We’ll dig into the ETR spending data on Palo Alto Networks, provide a glimpse of what to look for at Ignite and posit what Palo Alto needs to do to stay on top of the hill.

While by no means a safe haven, the cybersecurity sector has outpaced the broader tech market by a meaningful margin. That is up until very recently. Cyber security remains the number one technology priority for the c-suite but as we’ve previously reported, the CISO’s budget has constraints; just like other technology investments. Recent trends show that economic headwinds have elongated sales cycles, pushed deals into future quarters and, just like other tech initiatives, are pacing cybersecurity investments and breaking them into smaller chunks. 

In this Breaking Analysis we explain how cybersecurity trends are reverting to the mean and tracking more closely with other technology investments. We’ll make a couple of valuation comparisons to show the magnitude of the challenge and which cyber firms are feeling the heat, and which aren’t as much. We’ll then show the latest survey data from ETR to quantify the contraction in spending momentum and close with a glimpse at the landscape of emerging cybersecurity companies that could be ripe for acquisition, consolidation or disruptive to the broader market.

The ascendency of AWS under the leadership of Andy Jassy was marked by a tsunami of data and corresponding cloud services to leverage data. Those services mainly came in the form of primitives – i.e. basic building blocks that were used by developers to create more sophisticated capabilities.

AWS in the 2020s, led by CEO Adam Selipsky, will be marked by four high level trends in our view: 1) A rush of data that will dwarf anything previously seen; 2) Doubling down on investments in the basic elements of cloud – compute, storage, database, security, etc; 3) Greater emphasis on end-to-end integration of AWS services to make data accessible to more professionals and further accelerate cloud adoption; and 4) Significantly deeper business integration of cloud, beyond IT, as an underlying element of organizational transformation.

In this Breaking Analysis we extract and analyze nuggets from John Furrier’s annual sit down with the CEO of AWS. We’ll share data from ETR and other sources to set the context for the market and competition in cloud and we’ll give you our glimpse of what to expect at re:Invent 2022. 

A better than expected earnings report in late August got people excited about Snowflake again but the negative sentiment in the market has weighed heavily on virtually all growth tech stocks.  Snowflake is no exception. As we’ve stressed many times, the company’s management is on a long term mission to simplify the way organizations use data. Snowflake is tapping into a multi-hundred billion dollar total available market and continues to grow at a rapid pace. In our view the company is embarking on its third major wave of innovation, data apps, while its first and second waves are still bearing significant fruit. For short term traders focused on the next 90 or 180 days, that probably doesn’t matter much. But those taking a longer view are asking, should we still be optimistic about the future of this high flier or is it just another over-hyped tech play? 

In this Breaking Analysis we take a look at the most recent survey data from ETR to see what clues and nuggets we can extract to predict the near future and the long term outlook for Snowflake.

Over the past decade, Cloudflare has built a global network that has the potential to become the fourth U.S.-based hyperscale-class cloud. In our view, the company is building a durable revenue model with hooks into many important markets. These include the more mature DDoS protection space, but also extend to growth sectors such as zero trust, a serverless platform for application development and an increasing number of services such as database and object storage. 

In essence, Cloudflare can be thought of as a giant, distributed supercomputer that can connect multiple clouds and act as a highly efficient scheduling engine– allocating and optimizing resources at scale. Its disruptive DNA is increasingly attracting novel startups and established global firms looking for a reliable, secure, high performance, low latency and more cost effective alternative to AWS and legacy infrastructure solutions. 

In this Breaking Analysis we initiate deeper coverage of Cloudflare. While the stock got hammered this past week on tepid guidance, we are optimistic about the company’s future. In this post, we’ll briefly explain our take on the company and its unique business model. We’ll then share some peer comparisons with both a financial snapshot and some fresh ETR survey data. Finally we’ll show some examples of how we think Cloudflare could be a disruptive force with a supercloud-like offering that, in many respects, is what multi-cloud should have been. 

Have you ever driven on the highway and traffic suddenly slows way down? And then after a little while it picks up again and you’re cruising along thinking…ok that was weird but it’s clear sailing now…only to find out in a bit that that traffic is building up again, forcing you to pump the brakes as the traffic patterns ebb and flow? Well welcome to the seesaw economy. The Fed induced fire that prompted a rally in tech is being purposely extinguished by that same Fed and virtually every sector of the tech industry is having to reset its expectations – including the cloud. 

In this Breaking Analysis we’ll review the implications of this week’s earnings announcements from the big 3 cloud players. The growth of AWS and Azure slowed while Google Cloud Platform’s growth accelerated. We’ll explain why GCP’s growth is still not fast enough. We’ll update you on our quarterly IaaS forecasts and share the latest cloud survey data from ETR.

The overall technology spending outlook is deteriorating. And yet there are positive signs making things unpredictable. The negative sentiment is of course being driven by macroeconomic factors and earnings forecasts that have been coming down all year while interest rates keep rising. Making matters worse is many people think earnings estimates are still too high. It’s understandable why there’s so much uncertainty. Technology continues to boom. Digital transformations are happening in earnest. Leading companies have momentum and long cash runways. Moreover, the CEOs of these leading companies are still really optimistic. But strong guidance in an environment of uncertainty is risky and makes navigation more challenging. 

In this Breaking Analysis we try to put some guardrails on the market by sharing takeaways from from ETRs latest spending survey, which was released to their private clients on the 21st of October. Today we’re going to review the macro spending data, convey where CIOs think their cloud spend is headed, look at the actions organizations are taking to manage uncertainty and then review some of the technology companies that have the most positive and negative outlooks in the ETR data set. 

This past week, we saw two of the “Big 3” cloud providers present an update of their respective cloud visions, business progress, announcements and innovations. The content at these events had many overlapping themes including modern cloud infrastructure at global scale, applying advanced machine intelligence, end-to-end data platforms, the future of work, automation and a taste of the metaverse/Web 3.0. And more. 

Despite the striking similarities, the differences between these two cloud platforms, and that of AWS, remain significant with Microsoft leveraging its massive application software footprint to dominate virtually all markets; AndGoogle doing everything in its power to keep up with the frenetic pace of today’s cloud innovation which was set into motion a decade and a half ago by AWS. 

In this Breaking Analysis, we unpack the immense amount of content presented by the CEOs of Microsoft and Google Cloud at Microsoft Ignite and Google Cloud Next. We’ll also quantify with ETR survey data, the relative position of these two cloud giants in four key sectors – Cloud IaaS, BI analytics, data platforms and collaboration software.