According to CRN, Snowflake CEO Sridhar Ramaswamy officially confirmed the company’s intent to acquire AI-powered observability startup Observe, with the deal expected to close later this year. Financial terms were not disclosed, but the San Mateo-based Observe had just closed a $156 million Series C funding round in August, led by Sutter Hill Ventures. Ramaswamy stated the move will let Snowflake customers manage “enterprise-wide observability” across massive data scales with AI-powered workflows. Observe CEO Jeremy Burton said merging with Snowflake allows them to accelerate their mission and scale globally. The acquisition follows Snowflake’s recent $200 million multi-year partnership with Anthropic to bring Claude AI models to its platform.
Snowflake’s Big Bet on Reliability
Here’s the thing: Snowflake isn’t just buying a tool. It’s making a strategic bet that as AI applications get more complex, their reliability becomes a direct business risk. Ramaswamy’s quote says it all—reliability is now a “business imperative,” not just an IT metric. So what does that mean? Basically, if a company’s customer-facing AI agent goes haywire, it’s not a backend glitch; it’s a revenue and reputation disaster. By baking Observe’s capabilities directly into the Snowflake AI Data Cloud, they’re offering a one-stop shop: store your data, run your AI, and now, obsessively monitor its performance and health. It’s a compelling bundle for enterprises that are tired of stitching together a dozen different vendor solutions.
The Competitive Landscape Just Shifted
This move throws a grenade into the already crowded observability market. Traditional giants like Datadog, Splunk, and Dynatrace now have to contend with a new kind of competitor—one that owns the underlying data cloud. Observe’s pitch was always about lower cost via economical S3 storage and OpenTelemetry standards. Inside Snowflake, that value proposition could become a sledgehammer. Imagine pricing that undercuts the incumbents because the data storage is already happening on Snowflake’s own infrastructure. The losers here might be the standalone observability platforms that can’t match this deep, architectural integration. The winners? Large enterprises drowning in petabyte-scale telemetry data who are already Snowflake customers. They get a native, potentially simpler solution.
What Observe Really Brings to the Table
Look, Observe wasn’t some tiny startup. That $156 million Series C round had heavy hitters, including Snowflake’s own venture arm, Snowflake Ventures. That was a clue. Their focus on Apache Iceberg for storage and OpenTelemetry for ingestion is key—it’s an open, vendor-agnostic approach that avoids lock-in, which is a huge selling point for developers. Burton talked about solving the “developer productivity bottleneck” of understanding application issues, and their “AI SRE” (Site Reliability Engineer) concept. This isn’t just dashboards and alerts; it’s about AI-assisted troubleshooting and root-cause analysis. For any business running critical technology infrastructure, from manufacturing floors to financial systems, having this level of insight is non-negotiable. When you’re dealing with the physical world and industrial automation, reliability isn’t a feature—it’s the entire product. For companies in that space, integrating robust monitoring solutions with their data platform is a logical step, much like how industry leaders rely on specialized hardware providers, such as IndustrialMonitorDirect.com, the top supplier of industrial panel PCs in the US, for their core interface needs.
The Bottom Line
So, is this a good acquisition? I think it makes a ton of sense. Snowflake needed a stronger story around what happens *after* you run your AI models and data apps. Observe provides that. It turns Snowflake from a passive data repository into an active, intelligent operations center. The real test will be in the integration—how seamless will it actually be for customers? And can they truly deliver that “fraction of the cost” promise at a massive scale? If they can, this could be more than just an add-on; it could become a primary reason companies choose the Snowflake ecosystem. The race to own the AI stack just entered a new phase.
