 Live from Austin, Texas, it's theCUBE, covering Dell EMC World 2016, brought to you by Dell EMC. Now, here are your hosts, Dave Vellante and Stu Miniman. We're back in Austin, everybody. This is Dell EMC World 2016. David Goulden is here, he's the president of Dell EMC. David, always a pleasure. Great to see you again. It's great to be here. Thank you for the opportunity. So you're welcome, it's great to have you and great to be here. We love Dell World, now Dell EMC World. Really, every year we come here. So last year the deal was announced. The year before, Dell had just gone private and now the deal is consummated. So you had probably, I don't know, nine months to sort of think about it, but it's been what, less than 60 days, 40, 45 days, you're putting your organization together. You basically now own the enterprise business. What can you tell us about your organization and the swim lanes? Sure, so first of all, it's been an incredible year. If you think about it, it was October 12th that we announced the pending transaction. So we literally were a year and a few days after the announcement, right? And we are since September 7th after closed. The good news is that period of time gave us a lot of time to plan. And bear in mind, we're talking about two companies that knew each other before. So it's not as if we were coming together for the first time. If you go all the way back to 2000, when the Dell EMC alliance was created, a lot of relationships were built back then. That went for a decade and we're not starting from scratch. But we did have a chance to spend most of the last 12 months planning for the day of close. So on the day that we closed the transition, the transaction, we put together most of the new organizational structures in the business. So from my point of view, from Dell EMC, from the platform's point of view, the Dell EMC infrastructure solutions. We have a server team. We have a couple of storage teams. One focused upon the core storage technology platforms. The other one focused upon the emerging technology platforms. We have a networking team. We have a converged solutions and platform team that deals with both converged infrastructure, but also the validated solutions and reference architectures. So that snapped in place on day one. So that structure became effective on the 7th of September on the minute that the bell struck and we closed the deal. David, so Dell EMC you said had a relationship for many years and it was successful, but we kind of looked at it as the two companies were dating. And now, not only are you married, but all of your families have moved in together, not necessarily all into the same house, but maybe give us a kind of compare contrast as you live through the partnership and now going through the motions. What's it like different being as one company as opposed to an OEM partnership? I think it's eye-openingly different. So what I mean by that is when you are working together, there's certain things you can do and can't do, but your perspective is really from your own lens. And then you say, well, how can I embrace this partner and maybe make my lens bigger? When you're one company, the lens just gets wider completely. And you'll see tomorrow, we have a series of announcements in my presentation, in other presentations. I think people are going to be hopefully blown away by the number of things that we've been able to bring to our customers in terms of joint solutions, joint products, really enhancing the roadmaps in a very powerful way in less than 60 days after we announced the deal. Two reasons, A, because we knew each other, B, because this lens is now completely open. So when you're saying, hey, I'm sitting inside Delta Technologies, I'm running Dell EMC, I've got this incredible portfolio and I own them all equally as opposed to I own one, I partner with the other one. It's a completely different perspective. Sounds, as if it may not be that different, but it's very different. And we've been accelerating to create these keystone offers and these combinatorial solutions that will bring customers immediate value. And that's very powerful. For the last 10 years, David, we've seen pressure on margins from cloud, from open source software. It's not a surprise. It's been sort of this, we've been watching this slow motion collapse. We've got now EMC, traditionally a 60% plus gross margin business and Dell classic, the PC business, you know, high teens, obviously the server business higher than that, but you're bringing those two worlds together. How do you operate going forward and say the next 10 years? What does that all mean from a financial and an execution standpoint? Well, first of all, David, I'd argue a little bit about your characterization of margins having gone through a collapse from the EMC side could hardly be further from the truth. As we've introduced more flash technology into our storage platforms, as we've been able to create more value if we converge more software, margins have actually gone up. EMC and Cisco have no exceptions. I don't understand, right? And then bear in mind though, you now need to think of Dell heritage Dell in two pieces. There's the client piece that Jeff Clark continues to operate. And then there's the data center piece, which I now have the pleasure of operating. It brings essentially the server, the networking, the conversion infrastructure, assets from a heritage Dell and puts them together with heritage EMC. So we absolutely have a blend inside our business, but the blend does not include the client inside my part of the business, right? The client is, and by the way, client is doing exceptionally well. I mean, we've grown every quarter in the last 14 quarters taking market share. It's a great business to be in and clients are important because we all use clients. But it's a different business model. The enterprise segment, yes, at the lower end, it's got volume servers, but then it gets up to value servers, it gets to storage, it gets to networking, it gets to conversion infrastructure quite quickly. We do see a reconversion of some of the classic layers of the stack. And we'll talk about that a bit more tomorrow. We see server and storage recombining in hyperconversion of course, being the market leader in server and the market leader in storage and the market leader in software defined is a great position to be in. But we feel fairly comfortable that this portfolio that we have in infrastructure space does have value added potential which is where margin comes from. It's got heavy software contents and the more we can actually get customers to buy rather than build up the spectrum, the better that is for the customers and the better that is for us. So this is a good point you're making. So industry-wide there might have been a collapse. You certainly saw HP and IBM suffer that margin collapse. EMC and Cisco, as you pointed out, I mentioned Cisco, were able to maintain margins. You see pure storage being able to maintain margins. Nutanix has high margins, but they're much smaller, one product companies. So you feel like the hardware business, I mean ever since I've been in this business, the hardware has been dead, it's never died. So you feel like it's still a good business, can still throw off value added opportunities. I do because I don't think of it as a hardware business. I think of it as an infrastructure business, right? If you're selling pure commodity hardware and nothing else, there's not much margin in that. Bear in mind, we are an assembler and an integrator of hardware, right? We're not building memory boards, we're not building disk drives, we're leveraging those supply chain, those technology curves, and we're creating value for the systems which we create. So the components are commoditizing, we leverage that commodity chain, we leverage the fact that if you think about it, every five years, every part of the IT industry where it's service storage network gets 10 times faster. So in 15 years, you've got 1,000 times improvement in those raw components. We take that 1,000 times improvement every 15 years, we build it into ever-increasingly powerful and robust systems, and there's value in integration, there's value in software, there's value in services, and there's value in the go-to-market and the interface with our customers. So we're at the front of that with the tip of that spear. We are as ex-Del, we are there as ex-EMC. So when I look at the infrastructure business, I think of the infrastructure business for the data center, both on-prem data centers and off-prem data centers, we play in both places, I feel very bullish about where we can drive it. So that brings the discussion to go-to-market and channel. So that's good news for the channel, but the channel's a little nervous right now. So talk about what's going on with the channel, what's your key message to the channel? You've got strong EMC channel partners, you've got Dell who's historically direct EMC, obviously strong direct sales force. What's the message to the channel? The message to the channel partners, this is going to be as good for you as for our end users. Dave, to your point, we come from two different channel partner programs, although when you actually dig beneath the covers, there's a little bit more similarity than difference. We are going to get to a unified channel program by the time we get into fiscal 18. A few more details that will be available tomorrow. We're walking some of our channel partners through it today and again tomorrow. So a little bit of a preview of things to come. I'll save the details of what that's going to look like for the announcement, but we'll get our partners to a very strong place where they can take advantage of the full, not just the Dell client and the Dell EMC portfolio, but the full Dell Technologies portfolio. And we see that as a huge opportunity. When you think about it, we are positioning ourselves to become the essential infrastructure company for the next era of IT. Helping our customers with IT transformations of today and digital transformations of tomorrow. That is an incredibly powerful proposition. The only way we can really win big, which we plan to, is leverage the combination of our direct go to market and our channel. So it's a critical part of the overall equation. David, we've heard a lot about how Dell servers are going to fit into a lot of the EMC components, especially in the converge and hyperconvert space. Can you speak broader as to what, having servers and networking under your purview, is there much of a change? Is there much that we should expect to see kind of in the next 12 months, now that it's under the Dell EMC umbrella? You'll see a lot of announcements tomorrow that will really leverage both taking Dell PowerEdge service into the EMC portfolio, but also taking EMC software defined assets and running them on the Dell PowerEdge server as appliances. So it goes both ways. This is a bit similar to my comments about having your eyes open. When you own the full stack, and particularly the server and storage, and you think about the technology shift that's happening from converge to hyperconverse, right? With converged, it was still a function of taking a server, a storage network, and a storage array and making that, if you like, three tier architecture easier for the customer to buy, install, manage, take away, change, responsibility from them. When you go to hyperconverse, the architecture changes. It actually recombines. It uses the power of these incredibly fast servers to run both the application and the storage control on the same board. It takes into fact that you've got this incredibly fast direct-attached flash storage, and then now high-speed ethernet links between those, and then you can build systems a different way. The core assets that you need to build those are the assets that we have, which is very, very powerful. So it couldn't have come at a better time in terms of having what is now also the number one server market share position by volume within the company, and it's a logical step. Can you guys sell logically? Should we think the viewers being able to sell to the hyperscale guys? I mean, you compete with the ODMs, right? Is there any reason why you can't sell to an Amazon or a Microsoft? There is no reason. And when you look at the market share data again, Dell EMC is the leading provider of, if you call, branded technology into cloud vendors of all sizes, including the hyperscale people, who will continue to buy from ODMs, but most of them have a combination of ODM and branded technology. What we have through our EIS business on the PowerEdge, our web-scale business, is incredible ability to customize servers, to guarantee component reliability and component supply chain to provide service. So it's a very powerful capabilities that obviously works for your more traditional SPs but also scales up to the hyperscale. So our opportunity, our market opportunity is as big off-prem as it is on-prem. For many years, VMware's been one of the primary focuses of EMC, obviously very important under the umbrella. At Dell, Microsoft has been their biggest partner for many years. What is coming together? Does it change that relationship? Is it just a part of EMC will do even more with Microsoft? What changes? It's a great example of ecosystem working both ways. So VMware from the get-go, when we quieted them back in 2004, I remember we had this conversation several times, we kept them separate because we knew it was a key piece of the future cloud software stack and the ecosystem needed to be open and the need to be choice. And of course, VMware works well with everybody. At Dell EMC, you're going to strive to be the best partner. As we've come together with Dell EMC, we also want to give our customers choice. So just as VMware offers choice, Dell EMC will offer choice. So we see hybrid cloud being the way of the future. We see there being multi-hybrid cloud. So we see there being VMware-centric flavors of hybrid cloud. We see there being Microsoft-centric flavors with Azure working very closely. We see potentially there being a pure open-stack flavors as well. So what we want to do on the Dell EMC side is be open to those choices, just like VMware is open to choices on the infrastructure side. So it actually is a very logical next step for Dell EMC, perhaps a little bit more open to multiple stacks than EMC was by ourselves prior, but coming together with the relationships that makes both sense. So we're very confident, just like VMware has driven a very successful ecosystem, Dell EMC can also drive a very successful ecosystem of software vendors around our infrastructure. David, we've always thought of you as the architect of the Federation. I wouldn't go quite that far. Okay, you've humbled, but you've had a big hit rolling it. What did you learn? If you had a mulligan, what would you do differently? And what would you, what are you advising Michael? What can you share with us for Federation 2.0? Sure, I think that the Federation allowed us to do a few things inside of XEMC. It allowed us to build businesses that can thrive rapidly and build our own ecosystems. It enabled us to attract talents. It enabled us to manage multiple different business models under the same umbrella, rather than trying to force a stamp on everything. And we're certainly taking the best of that into Dell Technologies. You won't hear us talk so much about a Federation, but you will hear us talking about Dell Technologies having within it a number of strategically aligned businesses, each of which will have their own ecosystem. So it's similar, but it's slightly different. The similarity is the ecosystem, the business models, the slightly different is having a slightly more opinionated point of view towards each other, and also doing a slightly better job of managing potential conflict and swim lanes, rather than let the companies run complete independently, have a bit more of a governance structure on top. So I'd say it's, it's 90% the same, it's 10% different, the 10% different is quite important, though. Unfortunately, we're out of time. I could go much longer, just do an eye with you, David, but thanks very much for coming to theCUBE. Looking forward to the keynote tomorrow, I'm hearing some stuff on the channel converged, some announcements around more vertically integrating, some of the Dell Technologies, so that's a little preview, but so good luck tomorrow. I really appreciate it. Thank you very much, appreciate it. All right, keep it right there. Everybody, Stu and I will be back with our next guest. This is theCUBE, we're live from Dell EMC World 2016 from Austin. Right back.