 The wall-to-wall coverage of Dell World 2010-12 in Austin, Texas. Dave, we are here for another opportunity to dig into some of these vendors like Dell, these companies that are doing extremely well, but not being valued in the marketplace. Dell here launching their entire suite of products to the world. Michael Dell was on CNBC. We saw Michael Dell last night at the kickoff concert. Dell is an amazing story in the history of computing, and we're here to cover their transformation. So this is theCUBE, our flagship telecast. We go out to the events to extract the signal from the noise. Dave, I want to get your take on one first impressions and what you think Dell will be doing this week here at Dell World 2012. Well, first of all, John, I just want to say it's been a great year for theCUBE. I believe we've done over 25 Cube gigs this year, and it's been phenomenal. The team is growing, and I'm really happy about that. This will be our last event, I think, before the new year. So 26 events. This is our 26th Cube event this year, Dave. Pretty crazy. So Dell World, this is Dell's big custom rent, John. There are 5,000 people here. Dell, as we've talked about in the past, roughly a $60 billion company with a market cap that's under $20 billion. That's a problem. Michael Dell four years ago and management team really set forth to change the strategy of the company and really focus on enterprise. And they're really doing that through acquisitions. This year alone they've made six acquisitions and many of them in software. They're really focusing on software and services to drive the margins up. Dell's margins are in the low 20s. It's PC business, it's client business is shrinking, and that's a problem. So Dell is going through this massive transformation and it's taking some time. They're into it now four years. John, it could be another three to five years before we really see Dell back on that growth curve. Yeah, and it's going to be exciting to dig into Dell. I mean, we've had a chance to have Dell on theCUBE in the past. It was our first Dell World Day and getting to know the top executives. Some familiar names, Marius Haas with HB who we've interviewed on theCUBE. He now is running the president of the enterprise group. He was on stage last night with the analysts and the press during the executive leadership briefing. Michael Dell obviously is who he is, the company's named after him. The storied entrepreneur who started this company in his dorm room became a billionaire, built this massive company. Over the past five years, Dell has dropped significantly. At the end of 2008, their stock dropped from the high 20s and then kind of stabilized for the next couple of years and over the past years dropped down to around 10 with a market cap of what? Close to the $18 billion. And we're seeing a transformation and we've been at theCUBE now 26 events this year and the themes in 2012 day as we look at the end of the year here in December has been all about the enterprise transformation. The consumerization of IT. We're seeing the consumer bubble burst. We saw Facebook go public. We see Twitter out there. We see Apple just kicking butt across the board on the high end. Anything over $2,000 priced device, PC, desktop or whatever. Apple's doing very extremely well. We've seen the emergence of the mobile marketplace from a whole other vector which is essentially Android and low-end tablets just absolutely eating away at the computer makers like HP and Dell. And this is causing quite the conflict in the marketplace. Quite the debate is will Windows 8 save the day for Dell and HP? Will Android be the standard in the low-end and mobile market, mobile and tablets? And that's really the story here with Dell. And Dell is getting hammered in the public sentiment because of that. Certainly the desktop PCs that we all know from our days at work are doing fine. It's the notebooks. It's the mobile platform that's under massive siege and that's one of the things we will be digging into here at Dell World. And the trend across the board this year has been about this IT environment where big data, mobility, cloud, social media, all these are trends, mega trends that are changing the landscape of the tech business, Dave. And I think what we're going to see here from Dell is a positioning around two things. Infrastructure, modernization. Michael Dell teased that out yesterday per my question. So modernizing what that infrastructure is, Dell is doing extremely well on the servers. And we're going to see the Windows 8 message become the core story. And then on the front end we're going to see on top of the tablets what is the solutions for applications. Bring your own device to work. Will Dell have a mobile strategy? Truly that's concurrent with what the users want with the success of Apple and Android. So interesting to see what's happening here. Not a lot of big data discussions so far. Not a lot of mobility discussions around Android. The story here is Windows 8 and infrastructure transformation. So I'm looking forward to digging in to those trends and seeing what Dell has to offer. And there's some bright spots in Dell and some interesting scabs that are out there. And we were talking prior around what Dell has as an opportunity. So I want to ask you, Dave, two things. First, let's talk about the infrastructure. What do you think about Dell relative to the infrastructure? You've got server, storage and networking. Obviously Marius Haas is leading that charge. But specifically around storage, it's been the hottest trend in the business that we've been covering with Flash and accelerated application deployment. And storage particularly, HP is catching up to EMC. EMC is still the leader. What does Dell have in the storage, servers and networking? Well, so Dell, you'll hear a big emphasis this week, of course. And we've heard it from Dell before, end to end, John. And essentially what Dell does is they do their deep R&D with their checkbooks. They go out and they buy companies. And then their R&D internally, their organic R&D, if you will, I would refer to that as more tactical R&D where they're focused on integration. So what you're seeing from Dell is they purchased in Ecologic. Then they lost out on the bidding war to HP in the 3-par war. HP ended up with 3-par. Dell shows a compelling, a lower end competitor to 3-par with similar technology but clearly lower end. And what they've been doing, and they've also brought in other assets, Ocarina, Appashore and others, what they've been focusing their R&D on is something they call fluid data architecture, trying to bring some consistency across the lines of storage, the management consistency. It's a real problem. People have all these heterogeneous silos out there. Dell's trying to solve that problem. But it's a hard problem to solve and it's taking a long time. So comparing, for example, HP to Dell post 3-par, HP's got a much bigger business than Dell. HP's business is probably around four billion. Dell's is probably a billion and a half. HP's got a much, much broader portfolio, higher end. Dell's more focused on the small to mid-sized customers. And so, and now HP, as we know from last week, just recently introduced a sub $30,000, some $25,000 box version of 3-par, John. So that's really going after the Dell marketplace. Now Dell's response, I was talking to a Dell executive last night, he said, but when you configure that thing, it's up to $100,000. We have to dig into that a little bit. We'll have our David Floyer on. We'll ask him about that. He's a real configuration expert. But the point is that you're seeing HP go down market. Dell trying to get up market with more solutions and more integration and more services. And so the problem for Dell right now is the business is not growing. The business declined sequentially around 3%. And Dell just replaced its head of storage. Now, nobody's talking about why, but my feeling, John, is they weren't happy with the growth prospects. Essentially, Darren Thomas, who ran that business, was the architect behind the old EMC OEM deal. The world has changed. And Dell is really now focused on developing its own IPs. And they're bringing in new leaders. So they've got two guys vying for that position. Pete Kors, who runs the compelling business, and a guy named Alan Hackinson, former CEO of XIO, Xiotek, as we used to know them, who's now running the other side of the storage business. So those guys are essentially now in line for Darren Thomas' job, I guess. So I'm going to ask you about the three-par acquisters, because we all know we covered that heavily on SiliconANGLE. It was essentially a bidding war between HP and Dell. Dell lost. They got compelling, some say, consolation prize. What's your take on the post-three-par with HP and now compelling within Dell? Yeah, so I think, as I was saying, I think that three-par is trying to really broaden its chronic line and go down market as well as up market. Three-par is doing very well competing against EMC at the high end. And essentially, HP's got a strategy to have a single architecture for each of the main use cases. Primary storage, archival storage, and backup. Okay, we just lost our lights here. Not sure when the lights are. Anyway, so we'll stay on the air. We have a little technical difficulties here. You got some music in the background. Okay, here we go. We got the lights back. Okay, so obviously Dell's got this huge event. You can hear the noise in the background. They're kind of gearing up the sound system. But Dave, you were saying three-par, compelling. How'd that all shake out? So HP, again, much larger business, much more rich portfolio from very high to lower end. And they're trying to rationalize that. They are rationalizing that around three-par, which they now call, what do they call it? Sorry, my brain here. They got store all, store once. And that's the third line that I can't, the brain is not working. Yeah, but so HP got the three-par. And we were actually discovered that was extremely successful launch. They got the 7,000 line there. And so we're as compelling right now. And obviously there's been some movement in Dell's storage. What's your take on Dell, in particular on storage? And we heard Marius Haas up there kind of grinning on stage, talking about the server growth. So obviously the big debate is, do you put flash storage closer to the server and the architectural changes are changing around? This is an interesting discussion. So by the way, it's store-serve. So store-serve is three-par's product. So here's the thing. As I said before, Dell's R&D internally, the organic R&D is largely tactical. However, they made an acquisition of a company called RNA Networks. And the squirrels are working in the back room in the lab at Dell. And they're really trying to develop an end-to-end flash strategy. Really trying to take advantage of what we call software-led infrastructure where the metadata will be closer to the servers. Now Dell is doing very well in the server business. They've launched a converged networking line, converged server line. And I think what they're trying to do, John, is take that RNA Networks, which is server-led, and bring flash throughout the hierarchy from server down to storage. And what I like about that strategy, and of course they haven't announced it in detail yet, but they've given it a sense. What I like about it is, in my view, fast servers are the place to manage metadata, not slow storage. So let's talk about Dell World here. We're in Austin. It's the music capital of the world, rock and roll. We had a great party last night. Dell put on probably one of the best live shows of just rock stars just kind of coming together, doing a riff together. It was fantastic. Dell is quite the company around kind of entertaining. But let's talk about the reality of Dell's business. Obviously, Michael Dell talks about transformation. And again, he's leading this company, got Marius Haas from the enterprise group from HP. They have a software guy now heading up the software side of the business. Obviously, we've been talking about software-led infrastructure. So the question is this. Does Dell have a chance for solutions truly in the enterprise? Obviously, services is doing very well. How do they get their margin up, Dave? What's your take on that? Do you think that margin expansion will come from the mobility side? And do they have a viable mobile play with Windows 8? Well, I think that there's no question that the margin expansion has to come from the enterprise side. As we know, enterprise margins are certainly well north of the 22 percent average gross margin of Dell. They're well over 50 percent. So that's compulsory. Now, Windows 8 is interesting. Dell is putting forth a lot of optimism about Windows 8. But I've talked to a lot of customers, John, that aren't as optimistic. They don't want to migrate. And so, you know, those big migrations, the ROI on those is oftentimes very, you know... Michael Dell's in the house, walking around with me, grab him on. That's something we got to watch. I really am much more bullish, frankly, on Dell's enterprise business. You know, the client business, here's the thing about the client business, I'll say to you. It's almost as though Dell refuses to shrink. They believe that, in my view, that scale in their supply chain is a competitive advantage. So they are holding on to that business in a way that, you know, you've talked about HP should hold on to its BC business for maybe some different reasons. But so Dell believes, I believe, that scale is a key competitive differentiator. Why? Because it gives them more buying power and it helps them drive their cash flow. Now, the last thing I'll say about that is, cash flow is critical. This is the thing most people don't understand about Dell. They have the cash flow to fund their acquisitions. So they basically pay their own way. They're not taking on tons of debt for these acquisitions. These are tuck-in acquisitions. And you see the way that Michael Dell's financial people are managing the balance sheets. They're basically keeping it stable, bringing in acquisitions and throwing off cash to pay their own way for that transformation. Yeah, and you know, here's the, we were talking earlier, and I think one of the themes we're going to cover here at Dell is, you know, what are their chances in this transformation? And at the end of the day, you know, I've been following Dell going back to the early 90s when they really were a startup. And the fact of the matter is this, Dell has a lot of assets. They're trading at $18 billion in market cap on the stock market, completely undervalued. And there's the, there's the, I have a rant around this. I mean, HP and Dell are companies building durable goods in a market that's in transition and transforming. But here's the bottom line. Their market cap is less than companies that have no durable goods, like Facebook and others. And you know, Dell and HP in particular, actually have a viable plan, a vibrant company. They're just severely undervalued. So in my opinion, Dell and HP are poised. You know, they talk about, you know, HP is the turnaround and Dell is the comeback. And I talked with Michael Dell privately and I said, you know, what do you think about that comeback story? He's like, we never went anywhere. And I think that's the theme that we're hearing at Dell is that Dell, Dell is not coming back from anything. He said it was nonsense. Dell is there. So Dell is here. There's no comeback. There's just a growth strategy. And to me the growth strategy is very simple. They need a mobile story quickly. If you look at the numbers on their financials, it's mobile that's getting crushed right now. The desktops are fine. Services are doing well. Yeah, the storage could turn around. But the bottom line overall, they're getting crushed on mobile. And you know, I remember when Dell was expanding their PC portfolio back in the 90s, they had no laptop. They had no notebook presence. They hired some key engineers and they built a rugged, great laptop and that notebook business sword. And the rest is history. They became a leader in the notebook, great at price performance, great reliability, build to order, supply chain optimization. Dell kicked ass at that. So my thinking is this. Now it's still a different day because Windows was the standard OS at the time. So there's two things that I'm watching right now with Dell. One, what are they doing with mobile? Yeah, BYOD, bring your own device to work. That's a bunch of marketing in my opinion. But at the end of the day, it's going to come down to this. Can they get a mobile and a tablet offering that's going to be competing with Android and some of these lower end guys? And two, is it Windows 8 or Android? Because that ultimately will decide. So I think Dell and HP in this regard can build a really killer tablet, can build a really killer mobile phone. And they must, in my opinion. But the issue is if they make the wrong choice, Dave, on OS, they could be hoes. So to me, I think Dell really needs to be looking at the effectiveness of Windows 8. And if the acceleration of Android on the low end with phones and tablets continue to eat at that low end, that mobile notebook market, Dell will be in serious trouble. So I think if I'm with Michael Dell and we're in a meeting, I'm like, look it, I want a phone on the market. I want a tablet. I want Windows 8 and I want Android. You got to hedge that bet. And in my opinion right now in today's marketplace in the enterprise, it's a jump ball on OS dominance. Unlike in the 90s, Dave, there was a standard OS. It was Windows. Here it's not. You've got a little fragmentation and forking on the OS. So to me, that is ultimately the big story. The second thing, obviously, is big data. Before you go there, I want to just second what you just said. So we were at HP Discover last week and we saw this great lineup of HP products. But the problem was, it was no Android. And so to your point, they've really got to hedge that bet. Yeah, so with HP in particular, there was no Android and no Thunderbolt support. Now Thunderbolt is the killer I.O., mostly for media products. We saw that at NAB and ultimately it's a little bit probably expensive, I think on a component basis. Maybe HP passed. There's really no need to compromise right now. But it doesn't make them sexy. But ultimately, it's going to come down to Windows 8. If Windows 8 can maintain and grow share against Android, that will be a winner for Dell. And it's obvious here they're betting the ranch on Windows 8. Again, I don't think that's going to happen. I think ultimately it's a jump ball. And if I was a betting man, Dave, I would say I would need to see an Android device because people are used buying tablets and that's cannibalizing directly into the mobile market. We're seeing that trend across the board. The consumerization of IT truly is going to happen. The opportunity is to look for a new OS in Android to make that position. So again, this is just kind of a nuance on Dell, but to me that's a core area that Dell needs to own. HP needs to have a position in. That's the edge of the network. We heard that in the leadership from the core of the network to the edge. And everything in between is what they're building. So Dell's solid on the enterprise side. No doubt about it. Alright, so John, our next guest is Darius Samarian. He was on earlier this year in June. Dell Storage Forum. He's the Vice President General Manager of the Enterprise Systems and Solutions Group. One of the real growth areas. He also was running Dell Ventures. He's a Valley Boy. And so it should be a great conversation. And I'm Dave Vellante. I'm John Furrier. We'll be right back with our next guest. This is theCUBE, our flagship program. We'll go out to the events. We'll try to seal it from the noise. We're going to have the top executives from Dell on. Michael Dell's coming on. We're going to have Marius Haas. We're going to have Tarkin Maynard. We're going to have all the top guys here coming in to talk about Dell. And we're going to dig deep. We're going to ask some questions and some hard questions around what they're going to do. And I think we're going to be really pleasantly surprised by the results from Dell. So again, this is siliconangle.com. Go there for the reference point of tech innovation. wikibond.org for all the free research. Stay here all day today and all day tomorrow. We'll be covering Dell where we'll be digging in. Wall to wall coverage. This is theCUBE, our flagship program. We'll be right back with our next guest after this break. Years ago, the video news business believed the internet was a fact. The science has settled. We all know the internet is here to stay. Bubbles and busts come and go, but the industry deserves a news team that goes the distance. 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