I suspect that many of you have looked at the title of this video and immediately thought that I was just being silly and provocative. And, generally speaking, you would be right as I do enjoy a fair amount of silly and provocation every now and then. However, in this case, even though I do admit that this video is just fun for me to make, there are some solid points that we need to be aware of that could potentially reshape the Business Intelligence and Analytics industry as we know it.
Obviously, if things stay status quo, Snowflake is not in direct competition with the entire spectrum of Power BI’s capabilities although there is some overlap from the cold data storage perspective. I know I am stretching it a little bit, but you could think of Dataflows as a cloud data warehouse in some respect. However, as a standalone product, Snowflake probably mostly competes with Microsoft Synapse Analytics than just about any other product in Microsoft portfolio.
Now that I hope I have somewhat convinced you that I am not totally divorced from reality, I would still like to make a claim that Snowflake could be the biggest disruptor in the BI and Analytics space and this is why.
We do not need to work very hard to see who Gartner thinks the biggest competitors to Power BI are, all we need to do is take a look its latest Magic Quadrant for BI and Analytics
Tableau and Qlik are the only remaining players in the Leaders corner, Google’s Looker, cannot seem to ever make it out of Challengers corner and SAP deservingly is disappearing faster than toilet paper in a pandemic. Well, obviously, Snowflake is nowhere to be found at all on this diagram so why am I still talking about it???
Well, I think that the big threat and the unfortunate for Microsoft disruption can occur if and when Snowflake stock price takes a dive, so that it becomes and acquisition target for Salesforce.
We know that Salesforce has been on an acquisition spree. It has already acquired Tableau and, recently, Slack. The only thing that is missing that prevents Salesforce from being a legitimate BI & Analytics powerhouse is its lack of a data management platform, a void that Snowflake can fill easily. Currently, there is only one company in the world with a sophisticated BI, collaboration, and data management capabilities and that is Microsoft. If Salesforce manages to acquire Snowflake, it will have just as strong of a story to tell and maybe in some sense, with respect to the purely analytical cloud workloads, it might have a stronger story than Microsoft.
Data Management and Analytics are a big part of Microsoft cloud strategy, but let us be honest, it is not the only part. When a customer wants to move its data into cloud environment, with Microsoft, Amazon or Google, there is a lot of cloud infrastructure considerations to be made with respect to storage, subscription, resource group and security management. With Snowflake, these considerations are significantly simplified.
I think the case for why Salesforce with Snowflake would be a force to recon with is pretty self-evident now, so the real question is why would not Salesforce just acquire Snowflake now? Well, the problem is that Snowflake is just way too expensive. Snowflake is sitting on 77B of market Cap while its trailing twelve months revenue less than 500M. Now, we can obviously see that the revenue is growing very well, so perhaps this valuation is not quite as crazy as it seems at the first glance, but here is what I have to ask myself. In the era of companies moving away from best-in-class technology strategy and towards a platform buy, how long can Snowflake sustain this growth before the lack of a data visualization capabilities and collaboration becomes a major factor in companies purchasing decisions.
Is it crazy to speculate that in the era of “Stonks” one or two bad quarters for Snowflake could negatively impact its stock price causing an avalanche of disrupting events in our industry? I think not, there is a probably a reason why Salesforce Com Inc bought over two million shares of Snowflake as recently as November of 2020. I think that Salesforce has its eyes on Power BI analytics hegemony, and it is playing a long game to get there.
I wish Snowflake nothing but the best and I hope that its revenue and earnings grow at a healthy pace. However, I will keep an eye on this potential development, and I hope Microsoft does too.