 This is The Cube, our flagship telecaster. We go out to the event, extract a signal from the noise. I'm joined by my co-host Dave Vellante and special guest, the founder of Dell Computer, Michael Dell. Thanks for having us. It was you who made it happen, really appreciate it. Thank you. And what a great show. You had your keynote today. Bill Clinton is here, the master himself, who's just a great speaker, really tying it all together. So tell us about your keynote real quick and what Bill Clinton was talking about. We'll just get into the interviews. Sure. What I was really talking about is the transformation of Dell to an end-to-end solutions provider and really the expansion of what we do, obviously still in the client business and talked about client virtualization and Windows 8. But we got quickly to the data center and all the things we're doing there with converged infrastructure, what we call our active systems and the expansion in that area. Obviously, our work in software with systems management and IT security with the number of acquisitions we've made and then the growth in our services capability and bringing all that together without a legacy of protecting mainframes or mini computers and being able to help customers transform to new modern architectures and do that in a very efficient way. One of the things that your message is out there is transformation and I remember back in the day when there was no cell phones and then PCs came on, we lived that generation. You had a transformation. You had desktops and you had to build a notebook. You started from scratch and changed that business. You're in a similar situation now. You have a whole nother error of equipment or solutions now. So what's your mindset right now as you attack that next invention? Because one of the things I tweeted out prior to you coming on was you're still the founder and I remember back in the day when I first started joining HP in the late 80s Bill and Dave were around and with the founders in these companies they make a difference. So we know you're at the helm because we chatted last night about your active role but the company always been there but what's your mindset right now? Because you have to do that again. You have to build that growth strategy for the company and you're the founder. You have good historic perspective. You've done it before. A little bit different. OS is on the table to choose from. Windows 8 today. Possibilities tomorrow. What's the mindset? How are you going to solve this? How are you going to build that out? Fortunately I'm not doing it all by myself. I've got a hundred thousand plus team members to help me. So I think you're going to interview a number of those over the next couple of days. But as we started out as a product company for sure. We had PCs and servers and we did really well for our customers with those and gained a lot of share and sort of became the preeminent provider of those products. But the message we got as we went further in the product business was that products were simply not enough to be able to solve the problems and challenges customers had. So we'd show up with a new server and it was incredibly powerful and had however many terabytes and petabytes and exabytes and all kinds of performance. But if we didn't really know about the customer's business and could help them actually use all that power, it really didn't matter. And so today we have 47,000 people in Dell Services organized around verticals and really addressing big challenges customers have. We're the leading managed security service provider in the world. And we see 32 billion IT security events per day. So we're really understanding the key problems and challenges customers have and that's where you've got to evolve to. And we'll have to keep evolving. There's no such thing as you're ever done evolving. You gave me a question when you were interviewing Bill Clinton which was absolutely awesome by the way. I mean, he was so articulate and really laid out a great case for collaborative networks which we're all about here at SiliconANGLE, Wikibon but you asked him about optimism. Tell us why you're optimistic about the future of Dell. You know, when I look at the big opportunities and that exist in the world, the big unsolved problems whether it's in medicine or in education or in energy or the environment. I think these are all problems that technology will solve. I think about the evolution that's occurred over the last couple of decades that I've been in this industry where IT used to be sort of a back room activity that a couple of guys with pocket protectors were involved in. Now, you essentially can't run a business if you're not skilled and agile in terms of using technology and it's becoming even more so. So I think the future of our industry is fantastic. I think Dell's very well positioned and this transformation, these investments we've been making to build out our solutions portfolio are very well aligned with the big opportunities. And you know, there are only about 10 companies on the planet that have more than 1% of this $3 trillion industry we're in. We happen to have about 2% of the $3 trillion. I think the $3 trillion is going to go to $4 trillion and $5 trillion and so we're very optimistic about the fact that we are a company that doesn't have this legacy to protect. We can innovate unencumbered by those older architectures and we can take the leadership we have in x86 servers and extend that into software defined networks and next generation storage architectures and build these kind of converged data centers of the future, help customers move to virtual clients, help them secure all the kind of environments they have and let's face it, they're still an enormous migration off of older systems on to x86. So the world's moving to x86 and Dell is perfectly positioned to capture and help customers make the most of that. Now, one of your secret weapons is scale. It's always been something that Dell's done well and you've leveraged your supply chain. It seems that you're trying to do that in the enterprise now and so what's similar about leveraging your scale in the enterprise and what's different? I think certainly, if you look at disk drives, there's a lot of disk drives in storage systems but way more disk drives in servers than in storage systems and there's a lot of disk drives in servers but there are way more disk drives in PCs than in servers and so Dell has enormous, if you look at the key ingredients, microprocessors, disk drives, displays, memories and going down the list, Dell has enormous scale in those and we have a supply chain, an inventory management system, a fulfillment system that is really world-class and that's certainly scale. Beyond that, we have these customer relationships, 10 million small and medium-sized customers serving 95% of the Fortune 500. I think what's different in the enterprise is the relationship and the knowledge of the customer is incredibly valuable and incredibly important and it's the thing I hear consistently around Dell World here with customers is they value that dialogue whether it's with Dell directly or with our growing partner program. We built a pretty enormous partner program in the last five years. Michael, so on the scale question, we had a conversation with some HP folks at their event and in the hardware business as Wall Street looks at you guys sometimes even though that you're much more of a footprint in services and solutions as you guys are pointing out, the word margin always gets kicked around. You've been living that for a long time, what's the margins, margins are crashing but now with virtualization and we were talking in your leadership keynote yesterday, margin expansion is a big opportunity for you. What is your team look at the margin expansion area? Obviously, software is going to give you an edge there. The integrated of the solutions end to end will give you the edge. You have the BYOD bring your own device to work which is obviously a consumerization of IT. So how are you going to get the margins in the business that Wall Street, what does Wall Street not understand about that margin area of software because now when you put it all together, the new solution is the data center like it was the PC, if you think about it. So you have to build a lot of software. You have a software group under John Swain's. So can you explain that? What's that software magic in this new equation where it's not about the margin on the hardware so much that there's a software element to it? Having sold hundreds of millions of devices and having a large install base of computer systems, the two obvious opportunities are in systems management and IT security. And those are the areas where we've really invested heavily in Dell software. You think about the Quest software acquisition, a great portfolio of assets, areas like identity and access management. This is the hot topic in terms of cloud and federated systems and with Quest one, we have a fantastic portfolio there with sonic walls, secure works, with Ys, aperture. We've got an enormous and very strong portfolio there. But as I think about it, we are really investing as a company. Last quarter, our cash flow was $1.3 billion. It was up 59% year over year. And our customers, our investors realize that we're making investments that may not have a benefit in the short term. As a founder, I'm able to go and make those investments. We know it pays off in the long term and that's really what we're thinking about is how do we add value for our customers over time? Sure, software has a lot more margin and we're now a force in software with the capability we've built organically and organically. Well, you know, I'm big on converging infrastructure. Do you think the words played out a little bit? That's why I asked you the question yesterday. You said modern. And I think that is something that we're hearing. Define modern infrastructure. Define modern, the modern enterprise. Because, you know, one of the things we've been saying on theCUBE at many events is that entrepreneurship is no longer the Silicon Valley startup or the entrepreneur coming out of UT doing some tech thing. It's everyone, entrepreneurship in this new kind of economy with open-source software. People can do their own thing. So there's a lifestyle entrepreneurial culture going on and you're doing a lot of work there. They're small businesses. They may not be 47,000 employees. They may have 400 employees. They might have 4,000 employees. Or four employees. Yeah, or four employees. They need managers. They're not going to put exchange server out there and deal with that in a closet. They don't want that. Disc gets full. Maybe some will do that. But let's talk about that. I mean, that's the new vision. So take us through that world. How do you see that evolving? I mean, that small, medium-sized business. Is it a cloud delivery? Is it managed services? All of the above? And what are you doing? I really think it's all of the above. You know, we do not, you know, we sell two out of five servers in North America. What I can tell you is we know the shipping address of every one of those servers. And there really is not a concentration of capacity in a small number of places. It's the longest tail you've ever seen. And so we still see an enormous dispersion of that. There's a little Rolex there. Oh yeah, there's an enormous number of them. And the opportunity for us is to change that from, you know, I had to sort of go to Home Depot and assemble it myself to now I've got an appliance that I can manage virtual machines. I can manage apps. I can manage workloads. I can manage quality of service. I'm not having to dink around with, do I have the right kind of memory? Do I have, how much flash do I have? And how many do I have? There's also the software question. That small, medium-sized business is a consumer. They're buying iPads and iPhones. And there's a rumor that we sort of leaked that iPad office for the iPad, through some filing some patent documents from Microsoft leaked out this week. So to kind of telegraph Microsoft's moves, obviously they need to have that. But a business might want to say, I got a tablet, it's an iPad. I want it on the network. I don't want Windows 8. So, you know, they have this diversity at the edge. And it's natural. How are you guys going to plan to tackle that with the BYOD? Is it the security app wraparound or? We are rolling out here at Dell World, a complete BYOD suite to help customers manage the myriad of alternative platforms, whether it's iOS, Android, for smartphones, tablets. But I'll tell you, we see a lot of interest in things like Latitude 10, which is a Windows 8 tablet that docks and becomes a full PC. And so now you've got a fully secure device that runs Microsoft Office. It's got the USB port and, you know, works with all the other Windows stuff that a customer has. That's a big deal. Today they have a laptop, they have a, you know, a non-Windows tablet. You got to make them work together. Here you've got one device that does it all. So, you know, one of the things I liked about your keynote after you talked about, you know, starting the company, you went right to the customer. And it was genuine, Santa John. I could really feel Michael's pride as having served these customers. It seems like there's a change in the industry. And I wonder if he could address this. When you started the company in 1984, the value creation out of the vendor world, you know, sales IBM before you, Oracle, HP, Intel, Microsoft was enormous. It seems like today the customer is really creating much more value than the supplier. Did you see that? Is that a reasonable premise? I kind of think it's always been that way. I mean, I think the real value of IT has always been in what our customers do with it, rather than, you know, I mean, we're a part of it. But from the beginning of our business, what I remember is our customers always coming up with enormously creative ways to use our technology. And, you know, we can sit around and imagine what they might do with it, but there are way more of them and they have far more insights into what they're going to do with it. So, you know, we're kind of enablers to helping them, you know, go after these problems. Now, we can extrapolate it to a higher level and give them building blocks that they can assemble much more rapidly. But ultimately, I think that the value is created by customers. That's where it occurs. Yeah, now I got to ask you, too. Bill Clinton put a proposal on the table about your cash overseas. And the majority of cash is not overseas. It's probably, well, I don't know, 15% of it or so, but there's still, you know, a billion plus overseas. I think there's, for us, it's several billion, but certainly for all industry, I think, you know, it's talked about is a trillion dollars of cash offshore. It'd be good to get it back here. I presume you'd take them up on the deal that he proposes. Is that... I'm not sure he's in a position to propose that, but it sounded like a pretty good deal. Michael, talk about the culture of Dell over the years. Obviously, every company has a unique culture. Moore's is Moore's Law, Cadence of Moore's Law, very, you know, you know, process-driven. What's the Dell culture? I mean, that you started, that's still living today, that you can point and say, the one thing about the Dell company and the employees and the execution, what is that? How would you describe that for the folks that want to know now, what's the culture like at Dell? It's customer-centric. It's pleased but never satisfied. It's embracing risks intelligently and really kind of trying to look around the corners and figure out what's going to happen next. So curious, intelligent, customer-focused, without being accurate. So Bill Clinton said something that I love, this whole zero-sum outcome positioning. To me, when I heard him talking about that openness, obviously you were aligning with that in your keynote, the first thing that popped in my head was open-source, the whole open-source movement. Really happened during, under our generation, software development, starting back in the 80s, and then now, really maturing now, open-source is really, really a zero, is the zero-sum outcome, if you think about it. What's your view on open-source and how is Dell aligning with open-source? You mean the non-zero outcome? I mean non-zero-sum outcome. It's not a zero-sum outcome. It's a not a zero-sum because it's about collaboration, contributions, and standing on the shoulders of others, and it's happening after generation after generation. The future workforce will be programming with open-source suite. So has it affected your software strategy and your view of how you look at going forward? You know, I think there are no absolutes in the world, but certainly you look at the rise of Linux, Apache, Tomcat, you look at what's going on with OpenStack. Dell's very involved in that. We think those kind of efforts are incredibly powerful. They resonate very well with customers, but I think you're going to continue to have a variety of approaches, and you know, we have too many customers and too broad of a reach to only serve one kind. You mentioned big data briefly in the keynote. A lot of other vendors are really hanging their hat on big data, big time pushing that hard. What is the big data strategy? It's just out there. It's not really kind of a core feature. It's just everywhere. What's your take on the whole big data movement? Analytics is driving the business side certainly on the tablets. You know, I think what you want is big insights. Big data is just data, right? I want insights and results, and certainly a lot of the large projects that have been using MapReduce type technology have been based on our servers, and we have an enormous position there and built kind of custom products to go address that. We also have some amazing capabilities in products like Vumi. So cloud integration is one of the big challenges in terms of how do you actually get value from all this data and how do you link disparate systems up together? Interestingly enough with the Quest acquisition, there's a big data business inside of TOE, and Quest had already been making some acquisitions in that space. So you're pounding that area hard. So we're taking all that. We're building up our services capability. We have data scientists on staff that we can help deploy for customers, helping them build their own big data, big insights, kinds of capabilities. We'll do that as a service and apply our software technology to help customers go get at the value of all their data. I mean, let's remember that we've helped customers store enormous quantities of data. I think I mentioned to you last night, we have one customer who's purchased 1.2 exabytes of storage from us. Well, how many of those customers actually get real-time insights from their data to make better decisions for their business? Unfortunately, not nearly as good. Well, I mean, you guys are doing well on the server side and we're seeing disruption in the data warehouse market and business intelligence market, which were very high latency queries for reports. Kind of historical. What happened last quarter? Now we're living in a real-time economy where people want real-time information on a tablet. They want faster databases. That's going to require more cores, more flash. And there's a point here. You know, a couple of years ago, guys were talking about these offline data warehouses and there were a whole flurry of companies and we're kind of set up for that. Guess what? You don't need that anymore because the inline systems are so fast that you can do it in line. And technologies like Bumi enable our customers to get at that data very efficiently. Okay, we're getting the hook. My final question is your outlook next year. What's your top priorities? I mean, you're the Commander-in-Chief, you're keynote, laid out the future, but tactically speaking over the next 12 months, what's on your agenda? So when we see you next year at Dell World, come back and say, how did you do? Well, we're going to take number one in servers. We're 64,000 servers away. You're going to walk up there like a chick. Countdown? Like I said, just 10 more servers per customer and we're there. So we're getting real close on that one. I think significant progress on converged infrastructure, standing up this big software business now. That ought to be a billion and a half dollar business for us this next year. That's doing quite well. Certainly advancing our services initiatives significantly around the challenges that customers have that we're talking about here at Dell World. And don't forget about the client. We see this strong adoption of client virtualization and I believe what's going to happen with Windows 8. Right now, if you go to get a Windows 8 machine, there's not a lot of touch machines available. There's not enough capacity, but in six months, nine months, you have a lot of touch capacity and then you'll start to have hundreds of millions of Windows 8 touch machines. This is what's going to happen. Your users will have a Windows 8 touch machine at home. They'll come back in the office and say, hey, how come we have this? This whole cycle's going to repeat itself. So you're going to have a billion and a half machines that are going to be replaced. Microsoft's got to get that going and that's the big bet. They need that. Microsoft needs that. They have no acquisitions next year, right? You're done. We're going to continue. I love it. I love what you pay for, I'm out of your cash flow. Michael Dell inside the queue here, exclusively on SiliconANGLE.tv, Dell World, 2012, Austin, Texas. Great music last night. I really enjoyed the party before the event. After, but the music was phenomenal. And now, see Bill Clinton's keynote was fantastic. Your keynote was great. Great to see the president up there. Thanks for coming on theCUBE. And we hope to see everybody next year, Dell World 2013. We'll be here. Okay, thanks very much. We'll be right back with our next guest. We have this break, Michael Dell inside the cube at his show called Dell World. The cube is this conceptual box, if you will. And we bring people inside of the cube and then we share ideas. But those ideas don't stay inside the cube. We explode that idea. We allow that idea to grow and grow and it does. So we really try to own the whole enterprise technology space. I mean, that's what we're all about. We take analysis, we take publishing, we take news and we take live TV and we combine it together in a product and share that with our community. No one's doing what we're doing. What we're doing in my opinion is the future of media, the future of television, the future of the internet. Video is an amazing, powerful product. So we work in what John and I talk about as a data model. People always say to us, well, how do you guys make money? We sell knowledge, we sell information, we sell data. So the problem that we identified is about what we call big, fast, total data. Anybody can analyze a gigabyte of data. If you do a thousand gigabytes, that's a terabyte of data. You take a thousand terabytes, that's a petabyte of data. A thousand petabytes, that is a terabyte of data. So you are talking big data, lots and lots of data and can you analyze it in real time as it comes in, right? The cube is like we call ESPN of tech because we want to cover technology like ESPN covers sports. John has a great vision for what's going to happen next in tech. And so John is sort of that alter ego of mine that lets me see the future. I've worked with us, Michael Sean Wright, Mark Hopkins, you know, we've got Kim here today. We've got a team of people on our news desk run by Kristen Nicole. So she has a team that help feed us the news of the day, what's happening, the analysis. We have a team of analysts, they feed us information about what's happening and then really importantly, we have a community, a big community of many hundreds of contributors. We love technology, we love the innovation and that's what we do, we want to create a great user experience. And in order to do that properly, you've got to really, really prepare the Cube for the past year that we've been in operation has been very, very successful and companies do pay us to come here. I think the companies who bring us in with the Cube get two things, they get a third party independent resource to provide knowledge to their audience who are seeking it, this demand for the product and also compliments their existing media. We're here at an event and the company has their own TV organization and they have to pay a premium for that. So we compliment that by offering a objective, organic, third party, independent analysis of the event. That's why the top executives come in here. The Cube is a comfortable place. It's a place where people feel happy and are happy to share their knowledge with the world and we're happy to be ambassadors of that knowledge transfer. My entire career has been really built on relationships and talking to people and extracting knowledge from people largely in a belly-to-belly private forum. What the Cube does is it explodes that to a huge audience. I mean, we've reached millions with the Cube and it's real time, it's live TV so you've got to be quick on your feet but you learn very fast and then you iterate from that learning. So John and I play off of that and we're constantly trying to up our game. Here's a go, the video news business believed the internet was a fad. The science...