 Live from Austin, Texas, 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 everyone. We are here live in Austin, Texas for Dell World. This is theCUBE, SiliconANGLE's flagship program. We go out to the events and extract the super noise. I'm John Furrier, the founder of SiliconANGLE. I'm joined by my co-host, Dave Vellante. I'm a vice president of Global Enterprise Solutions Architects and Alliances at Dell. Welcome to theCUBE. Again, great to see you. Yeah, good to see you again. We were just saying on the intro about the trends and trying to tease through all the squint through all the EMC Dell acquisitions. You know, trying to make sense of, you know, the VMware had a big drop last night in value. Market's confused. We're trying to tease out kind of where everyone's at. And I think one of the things we came to conclusion of was we're back into the solutions provider market. That sounds like a cliche. It's been around for a while, but ultimately the users inside the big companies, big and medium, small, want new stuff. They want their apps, so IT has to respond to that. So the customers are in charge. They want solutions. So we're in a solutions world. People call it business outcomes, all that stuff. So that's your world. So that seems to be the big trend. Also the high margin. It is very high margin. So yeah, I can buy commodity servers, build my own cloud with Dell and EMC. But at the end of the day it's a solutions enabling environment. What's your color on that? Because that seems to be the big trend right now, the enablement of. It is. Customer buying behavior and how customers used to consume is also changing. So customers used to consume IT as a server storage, networking, applications, all separately. Now that's changing. Customers are looking to acquire and consume technology in different ways. They're much more workload oriented. So it's not that their IT figures out exactly what you need and then calls up Dell or any one of our competitors and say, can you give me a better discount? I think that world is changing much, much faster. There is still the need for continuous deployment of server storage and networking. But I think as you said, solutions has been that work that's been thrown around quite a bit. But we're making it real with a lot of our, what Dell actually calls our Dell Blueprints. And Dell Blueprints are basically a combination of our reference architectures and engineering solutions. So think of reference architectures as you've got all of our server storage networking, but then it puts VMware, Red Hat, Microsoft, Nutanix, Nexenta, just to name a few, Cumulus into those reference architectures to make those claims a lot more effective. And then on the engineer solutions, customers who don't really want to consume a reference architecture, they would rather get a stack from us, an integrated stack. That's where we announced yesterday the Dell Hybrid Cloud solution on stage with Satya Nidala and Michael. And those kinds of engineering solutions and integrated stacks also have very powerful claims. So that's sort of how we're solving for those solutions with customers. So talking about the two dynamics that we were also analyzing, which is that in the enterprise, there's really two big kind of moving parts right now where the action is. Architecture, so designing solutions architecture. And then the developers, right? So you have a developer model in the enterprise which kind of looks like DevOps, but it's not maybe pure DevOps. It might be, in the end of the day, it's application development, right? But there's also a re-architecture going on. There's a lot of people thinking, okay, I need to rethink architecture. So it's not just simply hire more developers. There's some architecture involved. Comment on that because open source, you got Docker containers, you got kind of an intersection between developers and architecture. And this is what we like at Dell, right? So Michael talked about this yesterday in his keynote where, you know, Dell stands for choice. I mean, 31 years, Michael has stood for choice. He stood for a complete heterogeneous environment. He's said that, hey, I'll go partner with others and go disrupt markets, you know, some people say commoditize markets, but we've done very well in taking fiefdoms and breaking them and democratizing them. You know, you saw it in PCs, you saw it in service. I think when it comes to solutions and it comes to DevOps or cloud, big data and others, that's also been a stack-based solution, right? And we want to ensure that we're providing that offer. So since our announcement last Monday, there's been a lot of conversations. What announcement? Is it an announcement? That's right, just a little bit. I was in France last week with Microsoft's worldwide sales teams and ensuring that they understood that Dell still stands for choice, even though we've announced and intend to acquire VMware. We continue to work with VMware and for VMware to continue to succeed, they need to continue to be a non-biased hardware provider. So your phone's ringing off the hook, right? So you're getting all these calls. What are some of the things? I mean, email box must be stacked up. What's the phone calls like? I mean, are the people freaking out? What's the questions? What's the frequently asked questions that you're getting? So let me hit on the acquisition. Yeah, absolutely, so customers. So let's take customers, partners, and then let's take alliance partners, right? So customers are loving it because they're saying, well, I mean, we have four or 5,000 customers here. We've been seeing customers. I'm sure some of those customers have been on your show here. But the feedback, overwhelming feedback, is that, hey, you now are able to provide me not only just the leading storage platform, the compute platform, our open networking type of solution. So from an acquisition perspective, EMC, as you guys know, works very well and plays very well and is very focused in the large enterprise, right? Dell has been very focused in the mid-enterprise. So I think between the large enterprise and the mid-enterprise, there is really good solutions that we're able to bring to market. The second one is channel partners. Think about channel partners that Dell was trying to go to and say, hey, you know, we have our client solution, but we also have our enterprise, and they were saying, well, you know, are you guys really ready for the enterprise? Well, guess what? We're now the powerhouse of the enterprise. So a lot of channel partners are a lot more interested in carrying the full Dell stack than just a compute portfolio or just a client portfolio, because they know, I mean, I met with some top channel partners here. I mean, they're on the CRN top 100 list and most of them are here. I think you guys met Cheryl Cook and Cheryl was highlighting the same thing, which is, you know, these channel partners, now all of a sudden, you know, we've changed the game. And then the third one is alliance partners. And alliance partners are seeing, hey, Dell has always stood for 30 plus years of open innovation and we want to continue to drive it with alliance partners. I've always said Dell has the T-Boons pickings, T-Boon pickings strategy of all the above. You want it, we got it. And you're comfortable taking, like you mentioned Cumulus, you mentioned Nutanix, you're comfortable taking those products, you know, packaging them through integration, adding value, and making money. And sharing that with your partners. Do you see that in any way changing as a result of this acquisition? You know, here's how I look at it, Kate. It's, if you take a look at those solutions that you just mentioned, take Nutanix, take Nexenta, take VMware, take Microsoft, Red Hat, right? All of those, what do they require? They require a strong compute converged infrastructure to run on. And we are now providing that strong compute converged infrastructure that can become software defined either with VMware or with Microsoft or with Red Hat or hyper-converged with Nutanix platform. So, you know, Deridge is here, the CEO of Nutanix and, you know, we're, I mean our business has gone off the hook over the course of the last, you know, six months in terms of the growth that we have seen with hyper-converged. So, we continue to, you know, see that. Then you take that forward to say, okay, yes, we are providing the, you know, industry's best powerhouse for converged compute. But then you start thinking about apps. Where should they reside, right? So, if the customer then wants to go to either a public cloud, so we are then offering, taking that compute architecture, fully virtualized software defined with those partners and then giving choice, be it AWS, be it Azure, be it vCloud Air, Google. So, our Dell Cloud Manager is able to take our partner ecosystem and also burst out to all those other platforms. So, that's where our Dell Blueprints, we are trying to make it very simple for the Dell Blueprints to be marketed out to our customers. So, you can go to dell.com slash blueprints. And it now has it. And the idea is rapid deployment. Rapid deployment, yeah. For new architectures. Yeah, it comes with deployment guides, it comes with, you know, scalable, is there certifications involved too? And there's certification? Yeah, there is, yeah. We just actually launched some competency certifications around data solutions and cloud solutions for our channel partners. So, one of the exciting things on this trip for me is besides all the flurry of acquisition commentary and analysis which we love, I mean we just can't sleep at night just watching everything go down. But, as Michael led on his keynote yesterday, which besides the grand vision of the future of the world, is he led with IoT. He introduced the gateway product which is based in the ingestion box. What is your take there? What are you hearing from customers? IoT is super hot. And we can see Dell, I mean I'm speculating that Dell will be making sensors, making connections to sensors, providing the software for that. What is the IoT solution look like from your standpoint? Sure, so Andy Rhodes is our general manager who leads our internet of things division. And Andy and I were just talking about it yesterday. And, you know, it's Dell being that center point where we aggregate a lot of those sensors right now. Commercial sense mostly is where we're focused. But where does all that drive? Andy actually comes from the data center side of the business. So he gets how much of all those IoT devices will create data and you need to store that data on that compute, converge platform that I just talked about. So, you know, it's about getting all that data and actually getting that data stored and then running analytics on it. So one of our blueprints is our big data blueprint. So you're able to take IoT and you're able to then take the IoT data that's running on our Dell blueprint for big data analytics. So not only are we doing Cloudera, Hadoop, MongoDB but then also on top of that, we've got SAP HANA as part of that blueprint. And then we have our own statistical acquisition that we did. So we're able to do actual real-time analytics on that blueprint. So that blueprint is ready in package. The cool part is you're able to then take IoT and that data and then run analytics but then do it for a small, medium or large. We actually call it t-shirt sizing. You guys got a big charter ahead of you. I mean, now you have a lot of masters to serve. I saw Microsoft on stage, I was really in compelling frenemies that was as Bloomberg was calling them but that's been around for a while. I mean, you guys have been partnering with everyone. Dell has been very partner-centric. And so now you have a lot of portfolio moving parts, Lego blocks, whatever you want to call it to cobble together and build these new solutions. So blueprints makes a lot of sense. I get that. The next level when you start getting into the EMC impact is to go to market because it's more complicated because the EMC's got a great sales force. So high margin, high touch, that's right. How does that relate and change your world? So think of, I mean, EMC, I would say they have been doing this much longer than even we've been doing it, right? So think about all the digital transformation that Michael talked about. And you see VCE, for example. So Vblock, VCE, I mean, that's been the first reference architectures that were born and then they turned into others started copying that with FlexPod and others, right? Then you take a look at VSpecs, you take a look at Virtustream, you look at Pivotal, you look at RSA. So all those platforms are there and then we ensure, and again, they have done a phenomenal job. Again, I would say at the top end of the market, right? So when you take a look at what we call our global 500 customers or call it the global 1000 customers, that's been a sweet spot. We want to ensure that we take that and take our Dell blueprints that we're driving in the mid-market and also scaling up. So I think that's complementary more than anything else. So a lot of that converged infrastructure is designed to mimic the capabilities of cloud on-prem. I want to talk a little bit about what you're seeing because you sell the service providers as well. We talked a little bit about this off-camera. You're seeing Amazon has a very clear strategy. Sweep the floor, put everything in the public cloud. They're pretty clear about that. I mean, maybe not that obvious, but that's what they want to do. We know that. And they're expensive. They make a lot of money. They have operating profits similar to that of EMC. So they're doing very well. But there's a whole, and I've observed this a number of times in theCUBE, if you take a look at the services market, IBM, huge services, 30, 40, 50 billion dollars, they've got less than 10% of the market. Why is that? The reason is because services tends to be local. What's happening with local service providers and how is Dell reaching them, supporting them, and what kind of business do you have there? Dave, that's a great question. And we were talking a little bit about that off-camera, but what we're seeing right now is a huge buyer shift. So the buyers that are sales team, so Dell has 20,000 sellers out there, we would sell to a regular commercial customer, an SMB customer, large customer, public sector, in different types of customers that are out there. Now we're seeing the buyer shift where service providers, so think of a lot of channel partners. Think of a lot of hosters. These folks are now looking to build, I almost call them a mini-me version of AWS, or Azure, or Google, because there are data residency challenges now. So if you go to Europe, especially, right? Data, there is data governing laws with Safe Harbor that you cannot have data leave France, or leave Belgium, or leave Germany, right, for that matter. The same thing's happening in Canada, the same thing's happening in Brazil. It's happening all over the place. So I think the big honking data centers that AWS has built, they're also trying to figure out, hey, how do I create more local partnerships already? And how do I take some of that good revenue that they have created with some other technology manufacturers, and actually take that and pass off that offering there? We want to be way ahead of that, and we want to ensure, so for example, we've got some very large hosters in Europe, in Latin America, in Asia Pacific, in Japan, where they're already starting to build out, because Dell actually built out the early Facebook's data centers. We still build out the Azure data center. We are still part of Twitter's data center. So we've learned a lot on how scalable and scale-out data centers have been built. We have a division that Ashley Gurukpawala, our server GM runs, it's a DSS division, Dell Scalable Solutions that we have for Dell's server Scalable Solutions. And those are really geared towards, customers who have those unique requirements, hosters, service providers, and we are not even talking about AT&T's or Orange or Vodafone or Telefonica right now, right? That's another level, which is all the NFB work that we're doing with those service providers, because they see a lot of rich content going over to Facebook, and going over to WhatsApp and others, traversing over their environment. So that's really the service provider ecosystem. So you mentioned some of the big guys, Facebook, Twitter, you talked about Azure. So you're selling Dell servers into those environments in significant volume. It's not just like, oh yeah, Michael Dell, Satya Nadella, we're doing business. You got to take some of my servers so I can say that I'm doing business with the cloud guys. You're talking significant volume. Can you confirm that? Yeah, I mean, I'll put it this way. So I can't disclose what volume there is as a private company, but let me just say, Michael talks about this regularly, that Uber data center, Dell continues to go develop Uber's data center, Ancestry.com. A lot of these ones that have come up, but they have realized very, I would say early on where a lot of the others would not work with those folks to customize their service solutions, Dell started doing that five, six, seven, eight years ago. And now we have learned a lot from that. We created pods for them. So we learned from some of the bigger ones, and they now use ODMs in certain cases, they use Dell in certain cases, they use HP, but they see the difference that Dell has provided. Dell's taken that model, made it into a pod, and we actually then go to other startups like Uber or Ancestry.com, and now the hosters in Europe and Asia Pacific and other parts of the world. We're taking that learning that we had and goodness and passing it on to customers. I wanted to ask you about customization because the Convention of Wisdom five years ago was, oh, Amazon and Google, they just buy off the shelf components. They don't need customized hardware. And then, of course, when everybody was saying that, Amazon and Google were quietly saying, no, no, we need highly customized hardware, and they've since come out and talked about that. So, and initially when that information came out, people thought, okay, well that's all sort of ODMs. Dell was at the heart of that. So ODMs was always an interesting dynamic. Right, oh, ODMs are going to kill Dell. And Dell's like, no, no, no, we'll compete with ODMs. So can you talk about the dynamic? How have those two worlds come together? Is Dell becoming more ODM-like? Are the ODMs trying to get more Dell-like? What's going on there? I think Dell is becoming more and more solution oriented to take those, so obviously we have regular customers. So your commercial customer, public sector customers, large banks, financials, who want a certain stack of platform that does not require much customization. So we have that. But then that DSS platform that I mentioned is for our customers who are looking for that level of customization, but still want to drive big data analytics, still want to drive a lot of our VDI architectures that they're able to provide to their users. But it's really interesting when you take a look at, when you talked about Amazon or Azure that they don't require a lot of customization, they have hundreds or thousands of engineers, R&D engineers who actually take a box from Quanta or Delta or Supermicro or something and actually put their software on it. They actually extract a lot of the software and they've written their own software because they don't need 1,000 features. They only need to use 50 features in that platform. And if a manufacturer is not doing it for them, they have hired engineers to do that. We at Dell in our customizable solution area, we actually can create a lot of that. But then again, for the customer, by partnering up with Cumulus. So I'll give you a Cumulus example. I think it's public knowledge where Cumulus runs one of the largest data center network technologies in one of the data centers. And we started working with Cumulus with JR Rivers and we started to take Linux and put it on our Dell networking switches. So when you put Linux on Dell networking switches, you don't have Dell networking OS on it. But we then package that up in the data centers to bring that cost down from an OPEC standpoint. So you have a Linux administrator managing the server, the storage and the network, one guy. So what you're saying is the guys, the big mega internet folks that have thousands and thousands of PhDs running around, they might not need you guys to do that piece, but there's a whole, to my earlier point, 90% of the market is local. Those guys need that capability because they don't have as many engineers running. And that's a strategic direction that you guys have done. You see that, how that's different than a super micro or quanta, right? They are very much about, hey, here's my hardware. Go nuts. No frills. We're saying, hey, here's our box. It has all our features in it, or you can customize it with Cumulus, with VMware, with Microsoft, with Red Hat. And then we can try to do a reference architecture with you. So one of the things we're saying earlier was enterprises have Google NB, they have Amazon NB. They want to build their own clouds. This is now the new kind of procurement consumption model. Build out a core, new data center, I guess, or Colo still on-prem and private or two different dynamics. But there's a trend there. This is why we probably, the ODM angle is like, Amazon builds their own boxes. That's right. Not everyone can do that. So you guys are commoditizing the hardware side of it, not just to sell boxes, but to bring in the solution piece. So bridge that gap. So I'm a large telco, or I'm so, hey, you know what, I got to build my own cloud. Take me through that solution connection. Sure, so if you look at a, let me use a manufacturing, large manufacturing in Detroit, a customer, right? So you can think of them today managing, they've got a billion dollar IT budget, and their IT budget is usually handled by, hey, here's a billion dollars. You know, make sure that that car comes out at the end of the assembly line faster than it used to before I gave you the billion dollars. And now Amazon is calling that business line executive who actually gives a billion dollar to the CIO is saying, well, I can cut that all into fractions. And for 25% of the dollar, I can actually do that work for you in the public cloud. So the CIO, number one is saying, well. He's got his attention. Yeah. Hello, I'm interested. Exactly. Tell me more. So CIO is now saying, hey, why don't I take my data center for predictable workloads and non-predictable workloads? And that's how they start to differentiate between the two. Hey, why don't I deploy a hybrid cloud in my environment, start with on-premise. It can also be off-premise. They build that out and then they're able to burst to it when they need for unpredictable workloads, right? Because unpredictable workloads, it's, you know, you have a certain time and the new, you know, business. Auto-scale, all those things are great. Auto-scale and others have come down. So what we're helping a lot of the CIOs is to say, hey, you know, rather than going to Amazon, by the way, we have some data that shows that customers who went to public cloud, a good chunk of them. The data is something like 60 to 70% of them are coming back into a private cloud environment because the cost of an Amazon AWS, it looks nice right up front, but if you actually then take a long tail of it and actually look at it for five years. That's the iceberg. Cost of ownership becomes an issue. For example, exactly. So for example, a public cloud provider will charge you per virtual machine. Instance, right? So if you're actually building out, let me just use an example of 3,500 orders per minute SQL database. That requires a server storage network. And if you were to deploy 3,500 orders per minute, you need to run about 25 concurrent virtual machine instances. If you put that into public cloud, you will continue to pay that over the course of five years. Not, you may not pay the acquisition cost of your hardware and software, but over time you would pay. And we have charts. We actually show, we have a study. It's actually been validated by principal technologies that actually shows that chart. You should share that with the Wikibon team because that's the number one question we get from a lot of practitioners is, I need to understand the cost of ownership, lifetime value of the cloud approach. And that's ultimately, because they're making a big bet. Yeah, you get my attention, knock down a billion dollars by 25, 30%. That's good cash. Then where is that going to shift to? That's the big question. And then that Dell blueprint for cloud, that actually has those kinds of claims and data. Happy to share it with the Wikibon team so that you guys have it. That'd be great. Another question for you is, just the impact of the acquisition. Dell, EMC, how has your life changed and share some insight, color, anecdotes about your past week and a half? It's been great actually. Last week when the news broke, I was in Europe. I was at the Microsoft conference and the news broke and the interest from our Microsoft team. And then I went from that to another conference where we had our Red Hat teams and others. I'll be very honest with you. Customers who are there at these events are starting to look at Dell as, wow, you guys really do mean business with Michael said that he's going to move to the enterprise. You're moving to the enterprise. I mean, that's $67 billion. I love the way Michael said it on stage, right? He said EMC, $67 billion and he said priceless. No, and he said controlling your own destiny. Controlling your own destiny, priceless. That's what he said. And that's a great move. You guys are in a good spot. It is. And then we're excited by it. Our customers are excited. We have 600 channel partners who are here. 6 to 700 channel partners Cheryl Cook and Jim Defoe and others. They're thrilled to do a lot more with us. Our Alliance partners are thrilled to do a lot more with us. So we're excited. We're looking forward to this year. I'm glad I'm on. Thanks so much for joining us on theCUBE. Thanks for sharing the insight. Vice President of Global Solutions and Alliances here inside theCUBE with Dell. Thanks for sharing the data. We'll be right back with more after this short break. We'll see you guys.