2026.10.09 | GP | Cloud | Azure & AWS Enterprise Demand Check

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Moderator: David Guo (DG)

Mike Lagger (ML), Vice President of Enterprise Solutions - GHA Technologies

SUMMARY

Overview

An enterprise cloud sales expert discussed third-quarter momentum across Azure, AWS, Google Cloud, and Oracle Cloud. The conversation covered cloud migration, Microsoft licensing, early AI adoption, infrastructure constraints, and upcoming enterprise budgets. The expert primarily serves mid-sized manufacturing, healthcare, and financial-services organizations.

Azure is benefiting from Microsoft 365 integration and continued migration away from on-premises infrastructure. AWS remains strongest for established DevOps and security-focused development workloads. AI adoption is still preliminary, with most customers testing Copilot and simple automation rather than deploying sophisticated production agents.

Key Insights

Azure is the clear demand leader within the expert’s customer base because most clients already use Microsoft 365 and related workloads. Traditional cloud migration currently contributes more demand than AI. Manufacturing organizations are finally retiring aging on-premises systems. AWS retains a meaningful advantage in DevOps and DevSecOps because developers are familiar with its environment and resist unnecessary platform changes. Healthcare customers show strong AI interest but remain constrained by privacy, governance, and regulatory requirements. Microsoft E7 adoption is limited. Most E5 customers currently prefer renewing existing plans, although bundled identity, security, and AI capabilities could improve E7’s appeal. Rapidly changing cloud prices and short quote-validity periods are damaging customer trust and complicating procurement. Some customers are returning backup and cold-storage workloads to on-premises infrastructure because public-cloud economics have become less predictable. The moderator pursued the expert’s views on pricing instability, Copilot consumption, E7 adoption, and cloud workload repatriation.

Competitive Landscape

10/12/2026 at 05:59 AM UTC

Provider

Positioning

Advantages

Pressures

Azure

AWS

Leading platform in the expert’s accounts

Microsoft 365 integration, enterprise identity, security bundles, migration demand

Pricing volatility, capacity limits, complex AI consumption

Second-largest presence

Established DevOps and DevSecOps ecosystem

Less attractive for Microsoft- centric workloads

Google Cloud

Occasional alternative

Competitive pricing and development-oriented capabilities

Roughly 10% win rate in contested opportunities; switching friction

Oracle Cloud

Limited presence

Longer consideration periods may help procurement

Rarely selected within the customer base

On-premises

Selectively recovering

Greater cost control for backup and cold storage

Higher hardware costs and operational responsibility

Quantitative Insights

Metric

Detail

Typical customer size

500–1,000 employees

Historical quote validity

Approximately 30–45 days

Current shortest validity

As little as 72 hours

Example cloud quote increase

From $50,000 to $55,000–$57,000 after expiration

Microsoft licensing increase observed

Approximately 7%–8%

Additional monthly Copilot credits

$343 for one user in the example

Budget contingency recommendation

35%–40% above current hyperscaler quotes

VMware license increase cited

More than 300% for some customers

Cloud commitment preference

Generally no longer than one year

DG: Hello everyone, this is David from Guidepoint. I will be your moderator today. On the phone with us today is Mike Lagger. Our discussion today will be around the Azure and AWS enterprise momentum in the third quarter 26, Microsoft Licensing and Migration Incentives, Enterprise AI Adoption from pilot to production across Copilot, Bedrock, and custom deployments, and then some early 2027 budget conversation as well. So thanks, Mike, for

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joining us. Why don't you give us a brief introduction to your background to start with?

ML: My name is Mike Lagger. I've been managing sales and marketing teams across North American enterprise sales for over 25 years now. I've helped take a couple organizations from 0 to north of $100 million in revenue. And I've also helped a Danish software company, Public, which was listed on the NASDAQ, not the NYSE, but the NASDAQ Nordic in Stockholm, Sweden. I've been in the Microsoft ecosystem for approximately the last 15 years, dealing with cloud before we called it cloud. So I'm excited to talk to you guys today, and I think we'll have a productive conversation. Would you like me to unpack anything else about my background?

DG: No, that's all good. Thanks, Mike. Just a quick disclaimer, please limit the discussions to your own observation in the industry. Don't share any material or non-public information about any public companies, including any released product roadmaps, unannounced earnings figures, or confidential customer contract terms. Okay?

ML: Absolutely.

DG: Great. And then for the audience, if you have anything you want to add to the conversation, please send them to ask@guidepoint.com and we will get your questions. So Mike, I guess just quickly on the third quarter, demand for Azure and AWS. Looking at the deals that you closed from July through September, which hyperscaler was more of that new enterprise workload? Is it Azure or AWS? Can you walk us through some recent examples that you have?

ML: Yes, absolutely. From my purview, which again is fairly unique with my business section, it's definitely more Azure- based from my vantage point. I'm seeing very strong demand from an Azure perspective. There's just more in my business segments for my clients. There's just more Microsoft workloads than there are applicable AWS workloads. And as you guys are probably aware, some of those Microsoft workloads don't work as optimally in AWS for obvious reasons, right? So I'm seeing very, very strong Azure demand. Again, I don't want to minimize AWS, but just for my clients, which are in kind of that 500 to 1,000 employee headcount perspective, that's where the bulk of my clients are. It's definitely being driven by everybody being in an Office 365 environment, and as a result, we speak about Azure and not AWS, if that helps.

DG: Got it. Understood. So I guess where have you seen AWS beating Azure this quarter, if there's any, or the strengths of Azure and what tips the decisions that you have? And then if there's any conversation regarding the Bedrock model or the Trainium pricing or the Copilot, any of those factors that's changed over time for the past quarter?

ML: Sure. So let me unpack a couple different aspects of your question, and I apologize, I might have to have you repeat them. Let me take some notes here. So it was specifically about the workloads that I'm seeing within AWS and Azure, and is that driving that demand, right? That was one of them.

DG: Right.

ML: And then, I'm sorry, could you rephrase the Copilot question so I can intelligently answer that one too?

DG: Right. So I guess just the Copilot as a result, there's a lot of new development and they have added models during the past quarter, making ML: Yep.

DG: Copilot more versatile. So any of those as a factor that you want to comment on the momentum that you've seen for Azure over the past quarter?

ML: Absolutely. Let me talk about AWS first. So AWS remains very, very strong from a DevSecOps type of

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environment perspective. So if it's a customer where I'm dealing with their dev teams specifically around DevOps environments, for whatever reason, those seem to gravitate towards AWS, even though GitLab and there's other compelling reasons to use Azure for that. But those specific customers that are mainly DevOps and DevSecOps focused, they do prefer the AWS environment. I think it's mainly just an experience thing because that's where some of their existing workloads are today. So they're not interested in standing up a net new Azure environment. This is clearly from my perspective where AWS has the competitive advantage just because they've been, now I think it's going on over 10, 12 years, the clear leader going back. So a lot of these guys have familiarity with that environment and they don't want to take those workloads to Azure. Pivoting to your Copilot question, yes, virtually every Azure demand is being driven at least partially from a knowledge transfer perspective about what the new Copilot SKUs are doing and how they're being... and I realize it's happening in real time... but my clients are very, very interested in understanding what changes are happening and how they can take some of those Copilot, rudimentary AI, agentic workloads into Azure and what those pricing tiers look like at the 500 to 1,000 employee headcount. My customers are probably in the bottom of the first, top of the second inning when it comes to an AI adoption strategy point of view. So, with all of them being default Microsoft 365 users, it's kind of just a natural progression of maturation with what I'm using Azure today, what additional bells and whistles are becoming available as they continue to get into that very, very baseline AI Copilot workload. Does that help unpack that question? Or I can go into more details of that if you need me to.

DG: Yeah, that definitely helps. And then I guess if you have to rank in your accounts the consumption for Azure, is it coming from AI workloads or SAP migrations or traditional infrastructure moves? If you would have to rank those as a growth factor, how would you rank them?

ML: Yeah, really, believe it or not, I think a lot of the adoption is coming from the point of view... so I have a lot of manufacturers. I'm in Chicago and kind of the industrial Midwest. And in that manufacturing environment, believe it or not, I still have some hybrid, on-premises customers, and a lot of the demand has been facilitated by finally we're getting to the point where people are going more cloud and eliminating on-premises in those manufacturing environments. It's only taken 25 years for this to happen. And I could speak to what I see being the primary driver of that within manufacturing from my perspective. I think it's related to the big, beautiful bill from a tax incentive perspective. There's some reasons for those folks to pull those workloads forward. And so anyway, the trickle-down adoption is just getting to the point where I think people do realize that on-premises is going to go away from a Microsoft workload perspective. And that's actually what's front-ending a lot of the Azure demand from my client's perspective.

DG: Mm-hmm.

ML: You know, as I go into my healthcare customers and my financial services customers, it's a different dynamic, of course. Healthcare is probably the most mature in terms of wanting to understand the capabilities within Azure of what they can do from an immediate, baseline AI adoption point of view. Again, pivots back to Copilot. So I think that's been the primary driver within my healthcare clients. Financial services, I don't want to misrepresent myself. I only have a couple of those. And it's mainly they continue to scale and just need more overall Azure cloud space in general. But those are kind of the 3 major market segments that I see every day with my clients in this space.

DG: Gotcha. Okay. And I think on the flip side, both Microsoft and AWS are saying that the demand is still currently exceeding supply and there's supply constraint effectively. So have you seen any of the capacity limits causing your customers to delay projects, or change regions, or split workloads across different cloud providers? Any specific examples or dynamic changes that you have seen over the past quarter?

ML: Yeah, it's actually pretty fascinating because the other thing that I have that is very interesting to kind of see in real time is I do have a client that's actually in the data center building business, if that makes sense. So they literally have

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2,000 contractors that are going around building these different data center projects. And to your point, their business is obviously booming. I mean, they're literally selling the pickaxes and shovels for the gold rush and are very, very busy. But to translate that to your question, yes, it does remain very, very strong and elevated. There are capacity constraints. The first thing that we're disclosing in our quoting and in our sessions with Microsoft is obviously there continues to be a DRAM shortage and a memory shortage. And so everything is... I guess the best way to put it is... look, let me just tell this short anecdote. If I was talking to the same clients 12 months ago, it would be very, very clear from a pricing and from a forecasting perspective, "Okay, Mr. Customer, here's your price. It's now October of 2025. This quote is good till November 30th of 2025." So usually the grace period with quotes a year ago was around 30 to 45 days where that quote would remain valid. And it's just not that way anymore. So I literally sometimes get into a situation where it's like, "Yes, this quote is good for 72 hours, at which point in time we have a right to totally redo that quote." And so that does create a lot of operational challenges for some of these customers, because if you could imagine a situation, and this has happened to me, by the way, where literally it's a larger company, so in order to physically get the PO from an approval perspective, it takes at least 7 days or sometimes longer. But I think you guys see where the disconnect is. So let's say, let's just make the math easy. Let's say this new Azure spend is going to be approximately $50,000, which is still kind of a smaller environment of an increase, or whether it's net new. I physically get the PO after the 72 hours when the quote is good, and now it's no longer $50,000, it's $55,000 or it's gone up as high as $57,000. So there's some pricing elasticity there that the customers, they get it, they're intelligent and they're hearing about the shortages and certainly they're experiencing that with their laptops and their server spend. But for Microsoft to only be able to validate those quotes for, in some cases as little as 72 hours, it does create some operational challenges just from physically getting the order in hand, if that makes sense. So yeah, it's definitely challenging. And the first thing I do when I'm dealing with my customers, especially if they're not new to this dynamic, is I just tell them, "Hey guys, the quote that I'm going to show you, just understand it's not going to be the same price 2 weeks, let alone 30 days from now. So if you want to move, we do have to convey some urgency there." DG: Just to help answer the question. Yeah, absolutely. So I guess what alternative conversations or alternative choices have been showing up in your enterprise deals now, or conversations like how often, for example, Google Cloud is showing up in your conversation and in any of which use cases is pulling your workloads away from Azure or AWS?

ML: Yeah, so again, full transparency with my book, I do have some Google Cloud customers. I've got one or two Oracle Cloud, but relative to the AWS, which by the way is... so again, ranking, just so everybody on the call knows... it's clearly Azure, AWS, Google, and then Oracle for me, in terms of customer tenants. So I run into those occasionally. I think the workloads are getting more compelling from a pricing perspective within Google. Where I'm presenting that to a lot of my customers, remember when I talked about AWS being primarily like a DevSecOps, DevOps type of environment? So that matches up really, really well with Google Cloud from what my customers are saying and all the research that they're doing as well. Again, very savvy customers understanding where these workloads perform best. So that becomes a natural migration. So yeah, we will, again, I'm agnostic. I rep all of these companies. So if somebody wants a competitive bid, if they're looking at an AWS environment, I can and do sometimes facilitate the Google Cloud quotes as well for that opportunity. I would say win rate for that is probably 10%. It's nothing significant, again, because the customers are still used to that existing environment. That's what they're using every day. So they really don't want to have the overhead of the net new learning of what... because there's some nuances there that are clearly different from AWS within Google Cloud. Does that help? And then again, DG: Yeah.

ML: Overall demand is very, very strong on the Azure side, for sure. Oracle, I think when we run into some of those, "Oh yeah, you know, we can't potentially onboard this or if somebody is not cool with their bid going up significantly after 72 hours," I might lob a quote over to them just so they can see something different. Not that it's any different. At the end of the day, Oracle's locking in a longer term for them to be able to ponder that. It's all... let me read to you what the caveat is, which I think is just fascinating right now. All these guys basically have words to the same effect.

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One second, because I have it literally in my quote tool here and I think this encapsulates the challenge. Okay. "Pricing notice: Due to ongoing market volatility, manufacturer pricing and availability may change. Provider quotes are subject to adjustments in accordance with manufacturer updates." All that is just a fancy way of saying this quote's no longer valid after the time specified, right? And every single one of these guys has words to that effect of what they're saying when they quote this to me. So all I do is I tell them, "Hey guys, this is good for whatever time frame that hyperscaler gives me, but after that, there's no guarantees." So there is clearly that disconnect in the market, for sure.

DG: Understood. So with that momentum in mind, and especially for Azure, as you mentioned, I want to delve into the pricing dynamic as well, because Microsoft raised the E3 and E5 listed prices on July 1st, which is the beginning of this quarter. So how did the customers react to this renewal so far into this new fiscal year for Microsoft? And did anyone trim the E3s or downgrade tiers or use it as a trigger to move to E7?

ML: Yeah, so what I think is happening, and by the way, as mentioned at the start of the call, I work for a Microsoft Gold provider for many years, so I'm very, very familiar with what's happening right now. And I think Microsoft's doing a fairly good job of not just hitting them with the upgrade, but also including some additional SKUs, additional workloads within those SKUs. So it kind of obfuscates the lift. What I mean by that directly is a lot of the SKUs are now including add-ons like Intune and Defender as part of the native. It's very difficult to get that off of the bid if that makes sense. So the bundling has changed. Clearly, the narrative is that Microsoft wants to sell E7 now, but what they're doing with the existing E3 and E5 is they're creeping that price up to be so the delta's not as great when you go to E7 by doing those bundles with Intune, with Defender, with some other SKUs there. Has that been noticeable, to your point, after July 4th? Absolutely. Having those carryover quotes that came... if it didn't close at the end of Q2, I think it was like 7% to 8%, right? So very noticeable. Tried to get some people grandfathered in at the start of July after the Fourth of July holiday. And again, those quotes were no longer valid. And DG: Right.

ML: Had to convey the bad news on that front. So does that help specifically answer your question?

DG: Yes, absolutely. So with those renewal price rates, how does the early demand look for the E7? What type of customers are buying it ML: Yeah, DG: And what is the main reason?

ML: Yeah. So I think, and again, this is anecdotal to just my book, but I think the E7 remains. I don't want to say a bridge too far, but there's definitely some uncertainty around immediate graduation to it. In other words, all my E5 customers are still sticking with E5 from a renewal point of view for at least the next year. And then I think as they continue to disseminate information into what's going to be different from an E7 perspective, then it's going to continue to seep into the channel. In other words, they're not immediately upgrading. So I can explain more if you need me to.

DG: Sounds like it's still pretty early stage, right?

ML: It is. And having seen this now for a couple iterations, for the E3 to E5, it was the same thing there. Of course, we had some early adopters that wanted to take advantage of those specific bundles, at that point in time, if you look back historically, that's when Microsoft started to introduce the Defender SKUs during that time. So, of course, I had some people that took advantage of that and the pricing discount, but it's hard to make the leap right now to E7, at least what I'm seeing from my clients.

DG: Understood. So I guess there are also reports in September saying that Microsoft approved like 30 to 50% of Copilot discounts for larger commitments. Have you seen any of that in your deal or how is it changing what the

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customer is buying?

ML: Well, I can tell you this, anecdotally, so I use it every day and it just changed for me personally. I'm now out of credits consistently because they now seem to be governing the credits that are allotted. So it's whereas before I think I got away with a little bit more queries than certainly maybe I was supposed to, but now it's very, very regimented. By the way, this just happened just going into October for me personally, whereas before I probably did as many queries as I did in September. But now I'm out of credits here in early October. So my customers have been experiencing the same thing and they're pinging me about that. I think the token utilization of just the amount of how that continues to evolve is very, very confusing to people, to be clear. And obviously, again, there's dynamic pricing there where it seems to be changing every week, depending on who I talk to. So I think that's the big takeaway with the push into E7 is that those AI capabilities and that agent governance becomes part of what they're trying to do. What they're trying to talk about during that sales motion when we're early, trying to get somebody to upgrade. And I guess, again, take it for what it's worth with my clients. More selling to do for sure with that. I can go into a little bit more specifics if you'd like me to. Apologies if you're speaking. I don't hear anything. You might be on mute. I don't know if there's a connection issue thing going on at this point, guys, but if you'd like to give me a call back, I will answer. I'll hang out on this bridge too. But again, if you're speaking, I don't hear anything. Sorry. Assuming they're still being recorded, I think the one thing that's to go back to the E3, E7 conversation, again, from my manufacturing base, this could potentially fill some time while we're working out the mute issue potentially for you guys. I think the biggest momentum that we're seeing is when I talk about those on-premises hybrid workloads, Entra and Entra ID are obviously very pivotal from an identity perspective and seeing those be kind of included in that E7 price versus the E5, manufacturing is the first. I'm sorry, they're the last to be the bleeding edge tech guys. Usually they like to see some maturation of the market, but that's very, very compelling. And I think, again, as that message starts to get into some of these manufacturers, they're definitely taking a look at it just because the add-on price for adding on for ID from an E5 perspective where it's included in the bundle of E7 does make that sales motion a little bit easier because they know they have that challenge, right, as they're looking to move from an on-premises Exchange or something like that. I mean, just to get full transparency, it wasn't too long ago that I had these same clients and Microsoft Identity Manager on-premises, so we're talking about significantly technical debt with some of these manufacturers. Again, they're not bleeding edge guys. My financial services guys give me visibility into probably the most bleeding edge technology leaders in the space, and those are the guys that are very interested in making a leap to E7, if that helps.

DG: Understood. So I guess Microsoft offers Copilot as a pay-as-you-go alongside of the per-seat licenses, and there's a change to the... or there's an addition to the consumption-based model as well as our customers are shifting to consumption billings, and then how is the change to deal size and the budget forecasting to the overall budget for Copilot and Azure?

ML: Like I said, I see this challenge every day. And just to give you guys visibility into my own consumption, because I just had my admin approve it here where I work. And just for me singularly to get more credits, let me pull that up exactly because I couldn't believe it. But for me to get back into being able to do basic queries in Copilot was an additional $343 for the month of October, right? So that add-on is, if that truly is an all-you-can-eat in E7 currently. People get that. I mean, that's real. So imagine your enterprise being a couple hundred people, if everybody's running out of these, and now that's obviously not a forecasted budget thing, and that can be alleviated. People are going to get the message really, really early that E7 is going to be the way to go. Unfortunately, DG: Hmm ML: Like you said, we're just within the first quarter of that kind of changing. And specifically, I saw the changes, to be clear, just this last month. But as that continues to evolve, I think it will strengthen the wood behind the arrow of the E7 value proposition for sure.

DG: Got it. So I guess in your conversations, it's hard to see how CEOs or CFOs are measuring the ROI on the Copilot

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or Bedrock deployments today. Like what specific metrics that are new and then are deciding whether the product is renewed or expanded or cut?

ML: I think that's a snowflake answer, unfortunately, where everybody's a little bit different. I don't have a unifying opinion on DG: Mm-hmm.

ML: That just simply because every single Azure environment is a little bit different, of course, depending on what they're doing. But related to the consumption of O365 licenses and those pricing tiers, we're early in that adoption, right? So clients absolutely understand that this is coming, again. From my perspective, we're in the bottom of the first inning heading into the second inning where they know they have these challenges and these blockers. And now we're starting to talk about, "Okay, it's the top of the second, guys. We know there's another 7 innings coming. What are we going to do to prepare your enterprise for the next year, let alone the next 3 years in this category?" And by the way, again, I'm not seeing a lot of overly sophisticated use cases on the agentic AI workload. We're just talking about basic things there, right? Give me some kind of a customer service type of agent. Give me somebody that helps me do very, very basic workloads within the Microsoft stack. That's the extent of where these kind of small, medium- sized businesses are from my perspective in the overall adoption of this growing tech.

DG: Understood. I guess how are the hyperscalers... are any of your customers choosing to run AI inference on- premises or co-locations instead of on public cloud? What is driving that and what's the transition that you have seen over the past quarter?

ML: Yeah, so it's interesting, and I think there are some of these large language models, as you know, that can be kind of, and then you just download the next iteration of that large language model. So I have some of my more sophisticated clients that are doing stuff like that, that still like to see blinking lights in their data center, and they still like to have a lot of the equipment on-premises, but those DG: Mm-hmm.

ML: are by far the minority of my clients in that 500 to 1,000 headcount. So definitely, the financial services guys are probably investigating that and are the furthest along. Manufacturing is the last and healthcare is somewhere in the middle, but they have other challenges in healthcare from my client perspective, and really it comes around the governance with these agentic models relating to HIPAA and PII data. So they're wanting to get into the weeds of what this does and doesn't cover and how they can still be in compliance with obviously some of the big government regulations like HIPAA. So there's no first adopters in healthcare is I guess what I'm saying either. A lot of people are kicking tires, DG: Mm ML: but nobody's followed through on that yet.

DG: Understood. Okay. So yeah, I guess whether or not we are actually 3 months into 27. So ML: Right.

DG: I guess it's an initial budget conversation that you have in terms of how are the total budget trending versus 26 for your typical enterprise customers or which categories are getting more and which are seeing them. I'm going to take a phone call.

ML: I think I have the idea of your question. You did break up there a little bit at the end, but I think I get what you're saying. And again, it goes to where I tell people, as we're going into 27, certainly we have things that are budgeted. A lot of my clients have an annual budget where their dollars become unlocked in January, right? And I'm just telling them early, "Hey guys, I've been doing this for a long time and what I've seen in the last 8 to 12 months. So I'm going

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to give you a Microsoft Azure quote right now that's going to be for $100,000. I don't want you to put that number into the budget, though. I want you to put $140,000 into it. And let's go 40% higher and then you're going to be a hero if I come in less than that." Because that's the type of insanity that we're dealing with right now, right? So I'm just trying to coach my customers as well as I can. And who knows, by the way, if it goes up more than that, then obviously we're torpedoed. But I'm coaching all my customers as we go into fiscal Q1 27, like, "Hey, you have this quote from a hyperscaler for me right now. I don't care what the amount is. I don't care who the provider is. Let's go 35% to 40% higher than that when you're asking for budgetary dollars." And then if I come in less than that, which by the way, there's no guarantees and I have no control of that, by the way, then you'll be a hero instead of the guy that gets punched in the face by your CFO when you're asking for more money for this project, right? Clearly, just clear kind of blocking and tackling with under promise and over deliver is what I try to do and try to coach my clients with that and they get it, man, they're seeing this every day when they're ordering new laptops from me and servers. I mean they get it. Any of my customers who haven't experienced this kind of pricing elasticity it just hasn't happened to anybody yet. Everybody's familiar with this movie that we're seeing right now. The question is how long the movie is going to continue. And if I had the answer to that, I would be a multi-billionaire on my own private island at this point in time. I've been wrong all of 2026, by the way, with my personal portfolio. I didn't think it was going to last this long, but I've been wrong. So we'll see.

DG: Got it. Yeah. So I guess with this even increasing budget for 27, as you're envisioning, when basically they're finding this new spend on this transformation and the AI adoption and everything, where does money come from? Are you seeing they're pulling away from any other application software or services or hardware refreshing budgets? Any conversation that you have to see what has been cannibalized?

ML: Yeah. So, again, long way around the bar of the conversation is this. When AWS first came out, before I was selling it before it was called cloud, there was a really, really compelling price point that they had from an on-premises perspective. In other words, I'm looking at just cold storage, long-term storage that I'm going to need access to very infrequently. Okay, my choice is either I'm going to buy some kind of a SAN or some kind of a NAS device where I'm going to have that storage on-premises, or I'm going to put it to the cloud. And AWS was very savvy back in the day and they started to price things where it was a clear advantage to have it be cloud-based, eliminate that kind of CapEx spend and have it move to OpEx. That was great. But as you know, the paradigm has shifted now where I'm honestly with some of my clients, I'm seeing a return to on-premises from a native backup perspective. And what I mean by that is the math has actually gotten more expensive for some of these cloud workloads where my sophisticated customers are actually going in and breaking down like, "Okay, you know what, even with the increased cost of memory right now and storage, it makes sense for us to put this server back on-premises to do this basic kind of backup stuff." And again, we have a DR environment with our data center and we have 2 or more points where those backups are taking place on-premises. That's really happening right now just because the pricing elasticity with the hyperscalers is getting so crazy. For AWS to their credit, those DevSecOps type of dynamic environments, those aren't being put back on-premises just because the nature of that work, but for anything that's longer in nature with I need cold storage or I need something like that, there's been a renaissance of on-premises gear that facilitates that now. And even with the heightened demand of those prices going up exponentially in the last 12 months too, a lot of my customers are still pulling the trigger on that because at least they know they control it and that's their biggest fear is, "Okay, I'm going to knock down this one-year term on this Azure spend or this AWS spend." Nobody's committing longer term than that because they know full well... and keep in mind, these same clients have been burned by Broadcom, they've been burned by every single major OEM out there, melting their face off... and they're very nervous about Microsoft or Amazon coming back and just melting their face off with what Broadcom did with VMware. Some of my clients had over a 300% increase in their VMware licenses, and they're really worried that that's going to become their...

DG: David Guo, Guidepoint.

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ML: ...AWS spend in a year from now or because there's no power in the US. We have all these delusions of grandeur that we can put all these workloads in the cloud in these data centers and we're building them, but there's no power. So the savvy customers get it, and as a result, they're trying to control their own destiny a little bit more, and they're moving stuff where it makes sense for them to do that back to on-premises.

DG: Got it. Understood. Okay. Yeah, those are all the questions that I have for you today. So anything we haven't mentioned that you think will be significant for our customer to know regarding the trend into the year-end for hyperscalers?

ML: Yeah, I guess I could sum it up with this. It's the Wild West, and it's a terrible time from a customer trust perspective right now. If I've been working with some of my clients for a long time, obviously they know me and they appreciate my approach where all I'm doing is just being totally transparent. There's nothing that I'm doing that's unusual. But if I have a newer client and they start to see that the Charlie Brown analogy of Lucy pulling the ball away at the last possible moment and your pricing going up in 1 day after that 72-hour window of going up significantly, it makes me look like a used car salesman, man. And that's not a really good feeling. And so there are definitely challenges there. And I think people get it, but I'm getting a lot of lip service with, "I can't freaking believe this is happening." You know, are you kidding me? Again, I had the 1 customer that just physically to get a PO, they were interested in knocking down that Azure new environment. And it's like, are you kidding me? My quote expired yesterday and it's already gone up this amount in 24. So I try to fight, I joust at the windmills and try to get my Microsoft rep to validate that pricing and make the exceptions, but there's just no ability to do that. So for those newer clients that I'm trying to gain the trust of, it's difficult right now. It's difficult. It's unsettling. So I think that kind of sums it up. So if this ever gets out to those hyperscalers, and I know they're in a difficult situation and there's dynamic surge pricing going on, but please try to have your quotes be good for at least 10 days. 72 hours is just not enough in my experience. Nobody can move that fast.

DG: Hmm.

ML: So I guess I'll sum it up that way.

DG: That's great. Yeah, it's all the questions that I have for you today. Thank you for joining us today. And this is really insightful discussions that we have with Mike, as always. So let's stay in touch, okay?

ML: Absolutely. Take care, guys. Bye-bye.

DG: Great. Thank you. Bye-bye.

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10/12/2026 at 05:59 AM UTC