 Live from Las Vegas, it's theCUBE. Covering Dell Technologies World 2019. Brought to you by Dell Technologies and its ecosystem partners. Okay, welcome back everyone. CUBE's live coverage day three, wrap up of Dell Technologies World 2019. I'm John Furrier, Dave Vellante, Stu Miniman. On set one, we've got the set two over there. Blue set, white set, we've got a lot of content. It's been a CUBE canon, guys, a canon of content firing into the digital sphere. Great guests. We've had all the senior executive players, tech athletes at Dell Technologies World, Michael Dell, Tom Sweet, Marius Haas, Howard Elias. We've had Pat Gelsinger, CEO of EM. We're on the key partner in the family there of Dell Technologies World. And we've had the clients, guys on who do Alienware as well as the laptops and the power machines. We've had the power edge guys on. We talked about Hollywood. It's been a great run. But, Dave, it's been 10 years, Stu. Remember the first CUBE event we ever went to was EMC World in Boston. The chowder there we had. And what was the slogan of that show? Journey to the Private Cloud. I think that was the slogan. Journey to the Private Cloud. That was 2010. Well, in 2010, it was Cloud, Cloud, Cloud, Cloud, 2019, it's all cloud. Now, the difference is, back then, it was like fake cloud and made-up cloud and really, there was no substance to it. We really started to see, Stu, especially something that we've been talking about for years, which is substantially mimicking the public cloud on-prem. Now, I know there are those who would say, no, no, no, no, no. Andy Jassy probably being one of those. That's not cloud. So there's still that dichotomy. Is it cloud? Well, Dave, if I could jump in on that, one of the things that's really interesting is when VMware made that partnership with AWS, it was the ripple through this ecosystem. Oh, what's that mean for Dell? VMware and Dell not working together? Well, they set the model and they started rolling out in VMware and they took the learnings that they had and they're bringing that data center as a service down to the Dell environment. So it's funny, we always hear AWS, they're learning from their partnership, they're listening and everything like that. Well, Dell and VMware, they've been listening, they've been learning too in this and it brings into a little bit of equilibrium for me that partnership, and right, David, you said, there used to be that cloud-washing discussion and today we're talking about stacks that live in AWS and Google and Microsoft and now in my hosted or service provider or my own data center, if that makes sense. I mean, if you want to just simplify the high order bit, Dave, and cloud, it's simply this. Amazon's trying to be enterprise, everyone in the enterprise is trying to be Amazon, right? And so what that basically means is it's all cloud, it's all a distributed computer system, okay? Scott McNeely had it right, the network is the computer. If you look at what's going on here, the traditional enterprise vendors over decades of business model and technology, you know, had full stack solutions from mainframe, mini computers, to PC, the local area networking, all cobbled together, IT wires it up, creates application services, all of that is completely being decimated by a new way to roll out storage, computing and networking, it's the same stuff. It's just being configured differently. Throw on massive compute power with cloud and Moore's law and data and AI, you have a changing of the architecture. But at the end of the day, the cloud is an operating model of distributed computing. If you look at all the theories and theses of computer science do and networking, all those paradigms are actually playing out in the cloud, everything from AI, AI in the 80s and 90s, you got distributed networking and computing, but it's all one big computer. And Michael Dell, who was the master of the computer industry, building PCs, looks at this probably like it's one big computer. You got a processor and subsystems, so this is what's interesting, Amazon has done that. And if they try to be like the enterprise, like the old way, they can fall into that trap. So if the enterprise stays in the enterprise, they know they're not going to be well. So I think it's interesting how you see the enterprise trying to be like Amazon, Amazon, trying to be like the enterprise. So at the end of the day, whoever can build that system, that's scalable the way I think Dell's doing it's great, horizontally scalable, using data for specialty. So it's a distributed computer. That's all that's going on in the world right now. And it's changing everything. Open source software is there. All that makes it completely different. And it's a huge opportunity. Whoever can crack the code on this, it's in the trillions and trillions of dollar total of adjustable market. Well, in 2010, we said that we noted the gap. There's still a gap between what Amazon could do and what the on-prem guys can do. We'd argue it was a five years, seven years, maybe 10 years, whatever it is. But at the time, we said, if you recall, look it, they got to close the gap. It's got to be good enough for IT to buy into it. And I think we're starting to see that. But my view, it's still not cloud. It doesn't have the scale of cloud. It doesn't have the economics cloud. And when you peel the onion, it certainly doesn't have the SaaS model and the consumption model of cloud nowhere close yet. Well, and you know, here's the drumbeat of innovation that we see from the public cloud. You know, we're at the show this week, the public cloud providers, how many announcements that they probably had? Sure, there was a mega launch of announcements here, but the public cloud's just that regular cadence of there. You know, public cloud CICD. We're not quite there yet in this kind of environment. It's still, what Amazon would say is, you put this in an environment and it's kind of frozen, well, it's thawed some. And it's now, we can get data center service, consumption model is something we can go. We're shifting in that model. It's easier to update things, but you know, how do I get access to the new features? But we're seeing that blurring of the line. I can start moving services, that hybrid nature of the environment. We've talked a few times. We've been digging into that hybrid cloud taxonomy and some of those services to span because it's not public or private. It's now truly that hybrid and multi environment and customers are going to live in all of these. And the question, John, is it good enough to hold serve? Well, I think the reality is, is that, you can go back to 2010, the journey of the private cloud. Enterprise is almost 10 years to figure out that it's real. And I think in that timeframe, Amazon has absolutely leveled everybody. We call it the tsunami. Microsoft quickly figures out that they got to get cloud. They come in there, got a fast follower second. Google's trying to retool Oracle. I think missed the boat completely. Got Alibaba and IBM in there. So you got the whole cloud game happening. The problem with the enterprises is that there's no growth in terms of old school enterprise other than reconciliate and position for cloud. My question to you guys is, is there going to be true growth in the classic enterprise business? Or will all this SaaS run on cloud? So yes, if it's multi-cloud or even hybrid for the reasons they talk about, that's not a lot of growth compared to what the cloud can offer. So again, I still haven't seen, Dave, the visibility in my mind that on-premises growth is going to be massive compared to cloud. I think cloud is where SaaS lives. I think that's where the scale lives. And how much scale can you do with consolidation? We are in a prolonged bull market that started in 2010, and it's gone on, we're in the 10th year of a decade of bull market. The enterprise market is cyclical. And at some point, you're going to start to see a slowdown. Cloud, I mean, it's just a tiny little portion of the market, it is going to continue to gain share. Cloud can grow in a downturn, the- But Dell pointed out on this, Michael Dell pointed out on the Cubans as the lieutenants. The IT is, the consolidation of IT is just a retooling to be cloud ready operationally. That's where hybrid comes in. So I think that realization has kicked in. But as enterprises aren't like, they're not like Google and Facebook, they're not really that fast. So they got to kind of get their act together on-premises, that's why I think in the short term, this consolidation and new revitalization is happening because they're retooling to be cloud ready. That is absolutely happening. But to say that's the massive growth, Stu, I don't know. Look, as Dave's pointed out, the way that there is more than the market growth is by gaining market share. There are areas where Dell and EMC didn't have large environment. I spent 10 years at EMC. I was a networking guy. It was mostly storage networking, some WAN connectivity for replication like SRDF and like today at this show, I talked to a lot of the telco people, talked to the service providers, talked to where the SD WAN, the NYSERA, some of these pieces, they're really starting to do networking. That's the area where that software defined, not SDN, but the OEM partnership with companies like BigSwitch. They're getting into that market and they have such small market share there that there's huge uplift to be able to dig into the giant in that space. Okay, couple questions. What percent of Dell's 91 billion today is multi-cloud revenue? Great question. Okay, what percent? I mean, very small. Okay, very small. Zero. And is that multi-cloud revenue all incremental growth? Or is it going to cannibalize the existing base? These are the fundamentals of the cyclical market that I'm talking about. To get into this, you love the financial conversations. We had Tom Speedon, the CFO, he nailed this. He said there's multiple levers to share older growth. Pay down the debt, check, he's got to do that. You love that conversation. Margin expansion, get the margins up, use the client business to cover costs, as you said, increase go-to-market efficiency and leverage the supply chain. That's like their core, fit this right down. Throw up cash, and that all leads to cash. Okay, one thing he said that was mind-blowing to me is that no one gets the valuation of how valuable Dell Technologies is. They're throwing off close to $7 billion in free cash flow. Free cash flow. Okay, so you can talk margin expansion all you want. That's great, but they've got this huge cash flow coming in. You can't go out of business right now. Listen, you don't run out of cash. When the market is good, these guys are in as good a position as anybody, and I would argue better position than anybody. The question on the table that I'm asking is, how long can it last? And if and when the market turns down, and markets are always cyclical, we're like, again, we're in a 10th year of a bull market. I mean, it's somewhat unprecedented. If Dell can use the war chest of the free cash flow, check on these levers that they're talking about here. They're going to have the leverage to go in during the downturn and then be the cost optimizer for customers. Right now they're going to be taking their medicine, creating this one common operating environment, which they have an advantage because they have all the puzzle pieces. Ula-Pakar Enterprise doesn't have, they have gaping holes in the end to end. They can't address it. So that is a really good point that you're making now. So then the next question is, okay, if and when the downturn comes, who's going to take advantage of it? Who's going to come out stronger? I think Amazon is going to continue to dominate, and as long as they don't fall into the enterprise trap of trying to be too enterprising, continue to operate their way for enterprises, I think Jassy's got that covered. I think Dell Technologies is perfectly positioned to leverage the cash flow and their thing to do that. I think Cisco's got a great opportunity, and I think that's something that you don't hear a lot talk about the EMware Cisco war happening, but Cisco has a network. They have a developer ecosystem just starting to get revitalized. That's an opportunity. So I got thoughts on Cisco too, but one of the things I want to say about Dell being able to come out of that stronger, I keep saying, I've said this a number of times and asked a lot of questions this week is, the PC business is vital for Dell. It's almost half the company's revenue, maybe not quite, but it's where the company started, and it sucks up a lot of corporate overhead. If Ulet Packard did not spin out HPE and HP, they would be in the game. I think spinning that out was a huge mistake. I wrote about it publicly, took a lot of heat for it, but I try to go along with the HPE focus. Dell has proven bigger is better. HP has proven that smaller is not as leveraged. If they had the PC, they'd have the Mojo in gaming, they had the Mojo in the edge, and Dell's got all those levers to cross-pollinate the front end and edge into the back end, common cloud operating environment. That is going to be an advantage, and that's going to be something that we'll see how that's going to play out. Let me counter what you just said. I agree, the spin out, but the autonomy was the big mistake. Once HP bought autonomy, what Meg did was almost a fate, a complete, they never should have bought autonomy. Meg was Leo Apatekker. But she inherited that bag of rocks, and then what are you going to do with it? Okay, so that's why they had a spin out, and it did create shareholder value. If they had not purchased autonomy, then it would have been a much better shape, not to split it up, and they would be a much stronger competitor now. Shareholder pop, they had a pop on value, people made some cash for the long game, I think that's going to hurt them. HP Inc has actually done pretty well for shareholders. As a standalone PC company. But again, I think Dell, with that leverage, assuming PCs, it's going to be really interesting. I don't know as much about that market, you were loving that PC conversation, but the whole, you know, the new gamer markets, and the new way to work, they're throwing an edge in there. I don't know, is edge, is PC an edge, is that sort of peanut butter? So the big thing that Michael Dell said on theCUBE was we're not a conglomerate, we're an integrated company, and when you have an integrated company like this, with the tech landscape shifting to their advantage, you have the ability to cross subsidize. So the strategy game, if Matt Baker was here, we'd be talking about, okay, I can cross subsidize margin, you even brought it up on the client side. Smaller margins, but it pays a lot of the corporate overhead. So then you got higher margin EMC business, which you know those margins, that's contributing. And so when you have this new configuration, you can cross subsidize and move and shift. So I think that's a great advantage, I think that's undervalued in the marketplace. And I think Dell, stock price, is well undervalued, you point out the numbers, they got VMware in there. The question is, what point does VMware blink and go all in on Dell technologies too? Or, because remember, Pat Kessler's got a partner. You don't think the phone was ringing off the hook in Palo Alto from their partners? What, and what's this Azure deal? So VMware's got to be the neutral party. It's a big problem, big opportunity. Well, look, if I'm a traditional, historical partner of VMware, it's not the Azure announcement that has me a little bit concerned, because all of them partner with Microsoft too. It is how tightly combined Dell and VMware are. EMC always kept them in arms like, now they're in the same. It's like Dave, they're blending it. It's like Dell from a market cap standpoint gets 50 cents on the dollar. VMware is a software company and they get their multiples. Dell is not a software company, but VMware, pivotal are. Well, if we can blend that a little bit, maybe we can get that market cap off. Is it too blended? No, no, I think the strategy is absolutely right on. You have to go hard with VMware and use it as a competitive weapon. But studio point, 50 cents on the dollar, it's actually much worse than that. I mean, the number is, if you take out VMware, the VMware ownership, you take out the core debt and you look at the market value, you're left with like a billion dollars. Core Dell is undervalued. Core Dell is worth more than a billion or two billion dollars, okay? So, it's a really cheap way to buy VMware, right? Tom Sweet nailed this. He said, you know, basically these companies, the street's not used to tech companies having such big debt. But to your point, John, they're throwing off cash. So, this company is undervalued in my view. Now, there's some risks associated with that. And that's why the investors are penalizing them for that debt. They're penalizing them from Michael's ownership structure. You know, that's what this is, but. I think there's a lack of understanding in my opinion. I think. I just think they don't understand, look at Dell and they think GE, they don't look at Dell and think distributed computing system with software filling this gaps and all that extra 10 expansion. It's legit. I think they can go after new market opportunities as obtuse to us as the client business. I mean, mirroring trade ends and just that's massive, trillions of dollars is. So I think that is a huge deal. But I'm a bull. I'm a bull on the value of the company. I think there's no question. All right, guys. Most important developments. Dell technology world. What's the big story that you think is coming out of the show here? Well, it's definitely, you know, the VMware on Dell. I mean, that is the big story. And it's, to your point, it's Dell basically saying we're going to integrate this. We're going to be hard. We're going to go hard. And, you know, VMware on Dell is a preferred solution. No doubt that is top for Dell. And Pat Gelsinger said it. VMware and AWS is the first and preferred solution. Those are the two primary vectors that are going to drive hard. And then, oh yeah, we'll listen to customers, whatever else you want, Google, Azure, fine, we're there. But those two vectors, they're going to drive really hard. Yeah, Dave, I'll build on that because we saw VMware building out its multi-cloud strategy. And what we have today is Dell is now putting themselves in there as a first-class citizen. Before it was like, oh, we're doing VxRail and NSX and, you know, we'll integrate all these pieces there but infrastructure, infrastructure, infrastructure. Now it is, it is multi-cloud. We want to see it at the big table. Right. And Jeff Clark said, why are you doing both? Let's just, one strategy, one company. It's all one cash register, is the saying goes. Yeah, I heard that before. I think the biggest story to me is something that we've been saying in the KubeLaw, you know I've been on this rant. Horizontally scalable operating environment is the land grab and then vertically integrated with the data into applications that allow each vertical industry leverage data for the kind of intimate personalized experiences for user experiences in each industry. Whether it's oil and gas, public sector, each one has got their own experiences that are unique, the data drives that. But the horizontal end-to-end operating model, whether it's on-premises, hybrid or multi-cloud, is a huge land grab. And I think that is a major strategic win for Dell. And I think if no one challenges them on this, Dave, if HP doesn't go on an M&A change, if HPE does not do a M&A complete change-over from strategy and fill in their end-to-end, I think that going to be really hurting. I think there's going to be a tell sign and we'll see who reacts and challenges Dell on this end-to-end. And I think if they can pull it off without being contested. The only thing I would say to that, the only thing I would say to that, John, is you know HP very well. I mean they got a lot of loyal customers and there's a huge market out there. So, you know it's- Dave, the economics are shifting in the new world. New use cases, new step function of user experiences. This is going to be new user experiences at new economic price points. That's business model innovation. Loyal customers, that's hard to sustain. They'll keep some clutching and grabbing, but everyone will move to the better mousetrap in this scenario. So, the combination of that stability with software, it's just- It's a big market. So, John, 2010, little table, that corner of EMC, Dell Technologies World, double set, beautiful theater of presence. Lot of things change in the industry, but the partnership and support of this ecosystem is something that's helped us along the way. You know, when we started doing this, Jeff came on board, the team has been amazing. We have been growing up and getting better every show. Small incremental improvements here and there. It's been an amazing production, an amazing team, all around us, but the support of the communities do. This has been a co-creation project from day one. We love having these conversations with smart people, tech athletes, make it unique, make it organic, let the paid stuff on the other literature pieces go well, but here it's about conversations for and with the community. And I think the community sponsorship has been part of funding more of it. You're seeing more cubes. Soon there'll be four sets of AWS, four sets of VMworld, four sets here, global partner sets. I mean, Stu, what have we missed? Yeah, it's phenomenal. You know, we are at a unique time in the industry and honored to be able to help document it with the two of you and the whole team. Dave, Howard Elias sitting there, giving him some kind of a victory lap because he's been with us for 10 years. He's been one of the co-cappings of the integration. He deserves a lot of credit. Yeah, Howard has had an amazing career. I met him like literally decades ago and he has always taken on the really hard jobs. I mean, that's, I think, part of his secret success because it's like, he took on the integration. He took on the services business at EMC. You remember, Stu, when Joe Choo Choo said, we're a product company, not a services company. I was like, give me services. I'll take that. It's been on theCUBE 10 years, Dave. He was drawn away. He was on fire this week. I thought Pat Gelsinger was phenomenal. Yeah, he's an amazing guest. Tom Sweet, you know, very strong, Marius. That's a great cube moment. It was great. What's your favorite cube moment? I'll never forget, Joe Tucci had my little camera out. Bill and Joe Tucci had it in one of the sessions. Give us some commentary in the hallway. Well, that was at 2010, one of, 2011, I think one of my favorite 2010 moments, I'll go back to the first time we did theCUBE was when you asked Joe Tucci, you know, why is storage sexy? If you remember that. Yeah, I did, I did. He never came on again. But that was a meme, that was a cube meme. All for the next couple of years. Yeah, right, to remember Tom George's, we have to go, I'm not touching that. So I remember when we were critical of hybrid clouds like 2012 or 2013, I go, Pat, is a hybrid cloud a halfway house to the final destination of public cloud? He goes to me, he goes, halfway house. The interview was just like, the whole crowd was like, what just happened? Stu, favorite moment. Oh, gosh, I mean, so many here. John, as you said, it's just such a community. I love, you know, the people that we've had on for 10 years and then, you know, took us, you know, three or four years to before we had Michael Dell on. Now he's a regular on our program. The luminaries we've had on, you know, but yeah, I mean, 2010, you know, I was actually my last week working for EMC. So Dave, thanks for popping me out. It's been a fun ride. And yeah, I mean, it's amazing to be able to talk to this whole community. My favorite moment was, Stu, when we were at AWS, our first show, we're like, are we still live? Hell, this is James Hamilton, Andy Jazzy, come on up. Very small show, now it's a monster. Dave, the cube has had some good luck. Well, we've been on the right waves and a lot of companies have sold their companies, been part of the queue. Companies went public, unicorns, Nutanix came on early on. No one understood that company. What I'm thrilled about too, John, is we're now a decade in, we're documenting a lot of the big waves. One of the most memorable moments for me was when you called me up and said, hey, we're doing Hadoop World in New York. I got on a plane and went out. I landed at like 2.30 in the morning. You met me. We did Hadoop World. Nobody knew what Hadoop was back then. It became like the hottest thing going. Now nobody talks about Hadoop. So we're seeing these waves and the cube is able to document them. It's really a pleasure. The cube canon, we got the cube studio, soon to have cube stories with cube network. Stu, cube all the time. Absolutely. Guys, thanks, it's been a pleasure doing business with you here, Dell Technologies. Shout out to Leonard, Chuck and the team. Sonya, Gabe, everyone else. Guys, great job, excellent set. Good show. Closing down, Dell Technologies rose to cubes coverage. Thanks for watching.