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Protocol | Enterprise
Your guide to the future of enterprise computing, every Monday and Thursday.

The Snowflake effect

Snowflake

Welcome to Protocol Cloud, your comprehensive roundup of everything you need to know about the week in cloud and enterprise software. This week: why this is going to be a good winter for Snowflake, Googlers question the intelligence of its AI leadership and how the lingering effects of World War II knocked a data center offline.

The Big Story

Data is the new (frozen) water

Snowflake was one of the biggest stories in the cloud this year, setting a record for the most funding raised by a software company IPO. If Snowflake capitalizes on its promise of becoming the first huge cloud database company, it will have a profound impact on how cloud providers think about their own database strategies, and we're starting to see how that might shake out.

Last Thursday, overshadowed by a busy week in enterprise tech, Microsoft launched its biggest attempt yet at curbing Snowflake's momentum. Azure Synapse Analytics is now widely available and the company also introduced a new service called Purview, both of which are designed to make it easier for Azure customers to find, analyze and share internal corporate data. That's … exactly what Snowflake is selling.

Snowflake investors don't appear to be worried about Microsoft or AWS though. As of Tuesday's close, Snowflake's stock was priced at $390, more than triple its initial listing price of $120.

  • Some of those gains can surely be attributed to the pandemic-induced frenzy for cloud stocks this year. The closely watched Bessemer Venture Partners cloud stock index is up 53% since Snowflake's IPO day.
  • But Snowflake revealed last week that it's also sitting on a lot of unrecognized revenue thanks to long-term contracts. It recorded a 119% jump in third-quarter revenue compared to last year, at $159.6 million, and has $927.9 million in future contracts that it will recognize over time.

Why the lack of concern? The stock market is an imperfect measure of, well, everything, but it does suggest that recent data service launches from Microsoft and AWS have not changed the trajectory of Snowflake's momentum.

  • AWS announced several new features during the first week of re:Invent that will help shore up Amazon Redshift, its most direct competitor to Snowflake. But none of those enhancements would appear to vault Redshift past Snowflake.
  • Likewise, Azure Synapse Analytics and Purview appear to be designed to catch up to capabilities already provided by Snowflake rather than to overtake it.
  • It's a tricky position for the cloud providers: They make money from the cloud compute services used by Snowflake customers on AWS, Azure and Google Cloud, but they'd also love to capture some of that market.
  • Snowflake also has a built-in advantage if the world embraces multicloud computing, as its service allows companies to share and replicate data across different cloud providers.

This could be the start of a trend. Data is the lifeblood of any application, and once data enters a cloud service, it's hard to move. That's one reason why the companies built around the explosion of database innovation over the last decade have become so valuable, and why companies like Oracle and SAP continue to stay afloat thanks to the enormous amount of data still stored and managed the traditional way.

  • Snowflake is one of the first of these companies designed exclusively for the cloud, and as the year winds down, it certainly has everyone's attention.
  • Competing with your customers is fraught with danger, yet an undertaking that all the major cloud providers do to one extent or another.
  • But this might be harder to do over the next decade of cloud infrastructure, which could see the same dynamic that revolutionized the enterprise SaaS market a decade ago play out.

Will companies focused on a single discipline produce better products and services than platform companies focused on building a portfolio of infrastructure services? Now, where have I heard this question before...

A MESSAGE FROM VMWARE

VMware

Learn how VMware Cloud on AWS helps organizations survive and thrive in today's dynamic and uncertain times.

This Week On Protocol

APAC shuffle: Salesforce's top executive in the Asia-Pacific region, Ulrik Nehammer, is leaving the company along with three other prominent executives in the region, Protocol's new enterprise reporter Joe Williams reported on his first day on the job.

Ethically challenged: After Google's artificial intelligence leaders fired legendary ethics researcher Timnit Gebru last week — apparently for questioning whether or not Google's AI guidelines sufficiently protected against discrimination in a research paper — the fallout continued into this week. Thousands of Googlers have expressed support for Gebru and several have gone on record to point out that the publication protocols Gebru supposedly violated were unevenly enforced.

Long-range forecast: We wrapped up our latest Protocol Manual, The New Enterprise, with a contribution from another new Protocol employee, researcher Hirsh Chitkara, on the nine companies that will define the future of enterprise computing. You'll recognize a few of them, and the others will make you think about what it really means to be an enterprise company.

Five Questions for...

Kevin Dallas, CEO, Wind River

What's the best piece of advice you could give to someone starting their first tech job?

Most of what you learned at university is now obsolete: Follow your passion and be prepared to learn with a growth mindset.

What was the first computer that made you realize the power of computing and connectivity?

I'm aging myself here, but Atari exposed me to computing; Motorola Razr exposed me to connectivity and mobility.

What was the biggest reason for the success of cloud computing over the past decade?

The industries Wind River serves, such as aerospace, defense, industrial and telecommunications now extensively use private cloud computing as a core platform to enable business success. This evolution has been driven by the desire to move away from proprietary hardware solutions, enable faster time to market for applications, lower operating and capital expenses and provide dynamic flexibility for new services.

What will be the biggest challenge for cloud computing over the coming decade?

The movement is now to take cloud technology to the edge of networks and devices, enabling new advancements in telemedicine, augmented reality, automated factories, machine learning, autonomous vehicles and more. As applications move to the edge, there's a need for ultra-low latency and high availability, as well as additional operational requirements for management of geo-distributed cloud infrastructure. Enabling the development, deployment, operation and servicing of these new applications is both a huge challenge and a tremendous opportunity.

Will the pandemic usher in a new era of remote working, or will we all come back together when it is safe to do so?

We're seeing that the pandemic has given companies the opportunity to reimagine and redefine what the modern future workplace looks like, which is definitely the case for Wind River. I think we will see many companies move to a hybrid model, which provides the flexibility for employees to work at both the office and home, so they can thrive, collaborate effectively with their colleagues and enjoy achieving company objectives, while maintaining a healthy work-life balance.

AWS

This week in AWS re:invent, round two

Around the Cloud

A MESSAGE FROM VMWARE

Vmware

Agility in business has always been important. Markets are dynamic. New competitors and requirements are continuously emerging. Businesses must react appropriately, and quickly, especially this year amid COVID-19. Each business must define its own IT ready position. Read more for three places to start.

Learn more

Thanks for reading — see you next week.

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