 Extracting the signal from the noise. It's theCUBE, covering Dell World 2015. Brought to you by Dell. Now your hosts, John Furrier and Dave Vellante. Okay, welcome back, Ron. We are back here at Dell World 2015. This is theCUBE. SiliconANGLE's flagship program. We go out to the events and extract the signal noise. I'm John Furrier. My co-host Dave Vellante. CUBE alum, Marius Haas, Chief Commercial Officer, President of Dell Enterprise. Welcome back to theCUBE. Thanks for coming. I know you've got a tight schedule. Great to see you. No, it's wonderful. It's always great to be with you all. Great afternoon. I remember when I first did an interview with you when you were at HP. I did a podcast for like 2007 or eight. I forget what year it was. You just bought 3Com, okay? And it's a mega merger for HP. This is a monster kind of deal that you guys have done here at Dell. And it's just pretty amazing that since around 2010, 11, 12, Dell has been acquiring some serious management team, okay? Michael goes private. I mean, three years ago, we saw him at the party standing alone. Me and Dave said, you got to smile. You're going to be a happy man. I tell you, one of the key reasons I came here is to help build a world-class enterprise franchise with Michael. And I think we are doing it. Now, we even had a much higher stage. So we're excited. The capabilities that we bring that come to the table here is part of the portfolio with our new friends at EMC, but also VMware and the whole solution set that it represents for customers. It's, I'd say, a dream come true. There's two perspectives on this M&A thing that I look at. I want to share with you. And one is, he who dies with the most toys wins is one kind of philosophy of acquiring things. And then the other one is entrepreneurial. And I kind of tweeted out, this is Michael's 50th year. He's 50 years old like me, Michael Dell 5.0. I mean, he's got an entrepreneurial spirit here. So you can see from his keynote, it's not the former. It's like, I want to build something again. It's certainly an entrepreneurial vibe. Why? Share what that is going on and how that translates to an operation that's already thrown off. As he said, 900 billion in revenue since he started the company. How does he go from here? Why? I think one of the key things and why he's still the key icon within the industry is the fact that he's always had this philosophy about change or die. And so what do we need to do? What do we as a company need to do differently to be relevant within all size enterprises? And clearly this is a pretty darn big statement about how we can bring together great intellectual property to better serve customers. And help solve their business problems. And as you heard this morning, these present problems are only becoming more and more complex. What do we do to simplify that for them? How do we enable them to consume and drive an extremely agile infrastructure so they can provision on the fly to deliver the workloads for their internal constituencies as well as for their external customers. And do it in a very simplistic way, which is something that we've always strived to do. What's your take on what's going on in the enterprise IT business? HP splitting up, IBM's paying companies to take its micro electronics business, Dell goes private, smaller companies like Informatica, BMC are going private, and now this mega merger. What's happening? Why? I think something that Michael mentioned several times is that we believe that our largest customers and actually customers of all sizes are looking for fewer partners to deliver better value and more value to them holistically. Everything from old IT to new IT. So the more we can enable and bring together the capabilities that then we translate into how do we solve business problems, the better off we become as creating value for them. So for us it's the velocity of transferring value from technology to business and enabling our customers to do that. So that's been a big push and we think the consolidation of the industry will continue to happen, clearly seeing it happen in the PC space. So in the areas where there's heavy commoditization it's going to continue to happen. You saw some of the announcements today with Sandisk being bought by Western Digit. 19 billion, big number. It's another big M&A deal. So I think if I'm not mistaken, this year is one of the biggest M&A years within the banking, with the banking, M&A service providers. Huge consolidation. It's amazing. So the two questions that come up is one, how do you pay for it all, with money? It's a lot of cash, 67 billion. I mean, just put your arms around it. Just the numbers mind blowing. So you guys are financially engineered. Mike, David Goulden at EMC, same thing. Where's the cash come from? Is it going to come from existing products? Is it going to be from operations? I mean, you guys are privately held. You don't have to go to Wall Street and disclose anything, but like you see enough revenue and it's cash flow throwing off and it's going to be funded. I think that the market is very excited about this opportunity and the value it creates for customers and how we can do that. Big part of it is, to your point, how do you secure the funding to get a transaction of this size done, largest IT transaction in history, all that's secured and we were oversubscribed. You can imagine when you have partners like Silverlake. It's cost the capital part of that. Silverlake is obviously one of the best in financial engineering of deals. Tremendous respect for them. Spent some time at KKR, so I know things that they can do. Mine's from the 80s, right? And certainly they're a tremendous partner to this equation, providing significant advice. And we certainly think that we've done some pretty unique things here. A tracking stock structure which has never been done in the history of M&A and the ability to pull that off, be able to make sure you provide the best capital structure in a deal of this size is pretty exciting. We were, I was pretty bullish on the Twitter when I saw the news. Dave and I had a crowd chat. It was really robust. Yeah, a lot of product overlaps, but as Joe Tucci said, better have overlaps and gaps and EMC's got a lot of overlaps. But that's a whole other question. But the thing when we look at the mega mergers, the ones that have worked and not worked, you kind of look at the trend, the pattern. And I want to get your take on your opinion on this. My comment was the ones that work are founderlet. So the integration really gets driven through. The other ones had transient CEOs. Maybe the instruments might not be right on the financial side or market conditions. Here, the cost of capital's got low. You got founder at the helm. IT's changing. As you know, my background, I've been in many of these big transformational transactions throughout my career. What's the pattern? And I'll tell you, I think you're exactly right. Where there creates a lot of management churn, what happens is the institutional knowledge kind of goes away. And then, and so what's critically important and what's exciting about this engagement is, is that we have an extremely strong EMC management team. They're going to be leading the enterprise group going forward. You have obviously a very strong VMware contingency, plus Pivotal and the other assets that we have. And of course, we have an amazing, talented executive team at Dell. What are you going to do? There's plenty of work. I can't be a little more trusty. There's plenty of work. You know, I think this is what Michael said at our town hall meeting. We had Joe Tucci and Michael come in and we did a town hall on Tuesday. You were the host. I read the transcripts. That's right. And one of the words Michael said is that it's an all you can eat work environment. Yeah. I think. Yeah, and if you're an executor, you're going to do well. If you're a hider, you know, you're going to flounder in this environment. I mean, it's going to expose a lot of. What I've learned in my experiences is when we did the HP CapEx merger, I wanted to jump in. So it's really an environment where you want to make sure you are part of, how do you design and be part of the future of the company? And then those core executives need to be part of the go forward model. Make sure that they then are responsible. There's a lot of work to do, a lot of execution in the management side of things, strategic and tactical. But what's it's. Innovation strategy and a tactical strategy. What's exciting is, is that the receptivity from the customer base has been enormous. We are already receiving calls today from EMC customers that are now opening the doors that for us had been tough to get into. So it is, it's exciting. You're number one. I mean, 22 markets, he said, by Gartner's Magic Quadrants. I don't think that anyone that it's in the mode of wanting to move their organization forward, wanting to move into the new IT ecosystem will call us and want us to be part of us. People get scared though. People do get scared, right? You also know there's also some, you know, shaving of some things that go on in these deals to kind of shape the new order, which might require some layoffs and things. We feel always afraid. So expand on the philosophy that you guys have. Like you said, it's an all you can eat environment. What's the message to the employee based into the market? The biggest part here is our belief is that the revenue synergies, positive energy synergies of us coming together with an amazing enterprise sales force with a phenomenal mid-market sales organization with great IP, we will be able to move forward. We will be able to grow this engine extremely well. And to my point earlier, with the feedback that we're already getting, we believe that we're absolutely on the right track. So talk more about that feedback. You add some color to that. What are people saying? What are the senior level IT execs saying about the merger? Well, I'll give you an example. So at the largest end of the accounts, obviously EMC has built a very good reputation, very good relationships with the C-suite within that account base. When you have the ability to partner at that level and influence decision making around architecture strategies, that's an important capability that we were building, but to be honest, would have taken us too long to build organically to get to that level. So this clearly allows us to move into that relationship space with the full suite of capabilities that Dell has in the mix. And then from our reach within the mid-market space, clearly how can we help the EMC portfolio, the rest of the VMware portfolio come through and be more pervasive across the board as around the architecture solutions that we deliver into the mid-market space? That's why it's so complimentary, if you will, from a go-to-market customer coverage perspective, relationship building perspective, but also from a portfolio side. So far are you guys, and I had to run this thing. I was like, we're here to listen. So we have limited R&D, we have big R&D, but it's limited. So let's take the pieces that aren't growing and let's elongate the product lifecycle, let's maybe slow down the cycles of innovation there, and put it over here where the growth is. Maybe let's bump up the maintenance a little bit and let's be transparent about it. So we're going to do, because we're going to put our investment over here. Is that a fair way to think about this? I think that's a very fair way to think about it. I think it's one of the core pieces of this is, we clearly understand where the businesses are. We clearly understand the balance between how do you take existing businesses, how do you take growth businesses, how do you make sure you have the right balance to invest in the growth businesses. And you should assume that we'll be taking a real hard look at all those levers as part of this equation. We've already launched our integration team. We've taken two of our best and brightest, and Rory Reid on the Dell side and Howard Elias on the EMC side. Executives that are unbelievable reputation in the market. They know how to do integration. They know how to get things done. And we've aligned them already with teams from both sides in all the disciplines. And there are no already, yesterday had a four hour kickoff face to face. So they're moving. Maris, for the folks out there that don't have the history in the M&A market, I want to ask you two things. Get some color to the kind of revolutionary sides of this transaction in terms of vis-a-vis other deals and even go back into the 80s and kind of why now this kind of transaction can happen. And then talk about like how do you balance this new era of being superbly innovative, trying to be innovative and disruptive at the same time, disruptive from a cost perspective. Much of Michael laid out. We went at lower cost, you have efficiencies lower cost and innovate at the same time. So there's two major dynamics that are hard to do at the same time. So the M&A color historically to the new dynamics. And I think the notion of industry consolidation, we've all talked about it for a long time. And there was plenty of rumors for multiple years going various different assets around the industry. This one would be best matches, what would be the opportunity. We felt as though now was as good as any other time in the history to help derive that. So we would rather be in the driver's seat, make it happen than have someone else do it to us. Versus what? Three years of little deals and like, just always value in adding intellectual property into your portfolio. But being able to do a deal that has a material. Tidal wave, it generates a lot of momentum. And again, there is some overlap, but it's actually very little. To your point, we've done a lot in moving up the stack and delivering more and more enterprise class capabilities across the board in servers, in stores, in networking. But we've always done it with the same philosophy of how do we translate value to customers quicker? Which means in those areas where there is commodization, guess what? We know that we're perfectly fine to driving that. Because otherwise some of the- That's tells mantra, they've done that many years. And so the expectation and why there's such a gravitational pull from customers now wanting for us to come in is because that core competency that we have in delivering value back to them, they can see how that will translate going forward. Enabling that to what Michael said, how do you rebalance the investment and maintenance of infrastructure to investment and innovation? And certainly- You've got nine months to get it done. I know you've got to go, but my last question is, great thing about being private is you can write your own narrative or Amazon as part, AWS as part of a larger public company. What's the narrative that you want to convey about your business? Okay, it's a whole new chapter in the enterprise business, in the enterprise space. But the capabilities that we now bring together as one team, one organization is never been done before at that scale. And again, if you then tie it back to our core competencies and be able to serve an enterprise market and a mid-market with a strong partner channel ecosystem, we'll be able to reach, you know, what is a three-plus billion dollar, trillion dollar TAM, extremely effectively- And that might be interesting. I mean, we've got IoT as well, by the way. So the chips are on the table on the market, new markets are exploding, new game-changing deal. It's all about execution, right? Which is what you said from the beginning. So I think we've got a pretty solid track record of being able to do that. And we're certainly going to bring that cadence into the mix here. Well, we certainly love the deal. It certainly creates a lot of action for our media business. We really appreciate all the entertainment and we'll be documenting all the trials and tribulations along the way. This is Marys Haas, CUBE alumni senior manager here, senior executive at Dell, now Dell EMC and everything else, new chapter in IT. Marys, thanks for taking time out of your busy schedule to share your insight with us. I really appreciate it. Gentlemen, we're always a pleasure. Thank you very much. We'll be right back with more CUBE at Dell World after this short break.