 Okay, we're back. This is Dave Vellante, and we're live here at Dell Storage Forum in Boston. We're at the convention center on the waterfront, and I'm here with my co-host for the next segment, the only other guy in the room with a tie on, John MacArthur. I'm with Wikibon.org. John is principal at Walden Technology Partners and a Wikibon major Wikibon contributor. John actually runs the Peer Insight program for Wikibon, which is our community and user practitioner program where we have these regular meetups. So John, welcome back to the Cube. Thank you. Good to see you. We were together last week at IBM Edge, you know, good event. We're here at Dell Storage Forum, second year for us at Dell Storage Forum, and the second year of the Converged Dell Storage Forum, if you will, where they brought into equal logic and compelling assets. This show to me looks a little bit bigger than last year. We have a bigger venue. I'm happy to see it's in Boston, as opposed to Orlando, because it's a lot easier for us. It is easier. Some of us anyway. And so we're talking about Dell and the transformation that Dell has been through in the last four or five years. You know, it used to be John that Dell resold other people's storage. And Dell has probably been, I would say, if not the most, one of the most aggressive acquirers of storage companies, and certainly in the last three or four years, wouldn't you say? Yeah, they definitely needed to replace some portfolio where they were OEMing from LSI. They were OEMing from or reselling EMC. They wanted to have more of their own content. So they got pretty aggressive on the acquisition side. And they did, you know, a little bit of the HP strategy, go chase some big guns. And then they also did a little bit of more of the IBM strategy, which is go get some technology where maybe they didn't have to pay quite so much for some technology. So by that, you mean going after Equalogic, spending a billion dollars in Equalogic? Yeah, so Equalogic was an expensive acquisition. And a billion dollar on compelling. Right. Compellent was a relative. Billion plus. Well, it was, no. Compellent was less than a billion. Was it .9, right? Yeah, .9. You know, don't quote me. So. But less than half of what they would have paid for three par. Less than half of what they paid for three par. And I think more in their wheelhouse, frankly. Yeah, that's how I tweeted this morning. I said that. So here's the thing, John. Dell's got more cash in the balance sheet than any other storage company. Okay. With the exception of Oracle. And I don't really consider Oracle a storage company. So here's the stats. Dell's got $14 billion in the balance sheet, EMC6, NetApp5, HP8, IBM12, and Oracle 30. Yeah. So Oracle, I mean, Dell can compete with anybody at the acquisition game, can it? Sure. You don't always, you know, you don't always acquire with cash. But yeah. Right. So these days, people have been acquiring with more cash deals, right? That's true. That's true. Because you're not sure of the direction of the market, I guess. But yeah, with that balance sheet, and I expect them to continue to stay aggressive on the acquisition side. When you think about, think across their portfolio, they've got the power vault line. I know you just had Brett Roscoe up. So they've got the power vault line. Is there more intellectual property that they could own there? I think they use mega-rate inside that, some of the power vault products, I think. And then, of course, equilogic and then compelent. So I guess they could go higher end. I'd be surprised if they did, because they don't really have a server line that competes with a really high end of IBM, who's been gaining share since, I guess, Oracle's acquisition of Sun, right? So I think they'll probably stay there, so be looking for more technologies where they could move more server, more disks. How about, I was in the keynote this morning, I don't know if you were at the keynote, but they were talking... Sucking traffic. They were sort of talking, hinting at converged infrastructure. We're seeing that now from certainly VBlock, HP, IBM, and Dell itself has... NetApp has got it out. NetApp has got it out. FlexPod, and Dell has got its version. I feel like Dell has to do more, or is converged infrastructure not as appealing to the sort of SMB crowd? Well, that's a good question. Converged... Anytime you can sort of simplify the acquisition process and implementation process, that's good, because it's time to revenue, time to value. On the other hand, the low end customers, sometimes they're extremely price sensitive, so it'll sometimes a little bit more of a do-it-yourself. I think one of the things that I've seen that I've been most impressed with, met with some channel partners this last year, and they're picking up more Dell services, they're doing more Dell services, and they're subcontracting with Dell to deliver Dell services, so they may be... They may write it on their own paper, they may be a subcontractor to Dell services to do implementation, and so I'm starting to see some of the Dell partners going after the SMB space to deal with the time to implement. So you're saying that could be a reseller branded offering? It can be a reseller branded offering, could be a Dell branded offering, and using more of their reseller partner site, that's been a sort of a shift to deliver services. So this is all about time to implementing technology, time to value, you know? So there's a room full of people this morning, a packed house, and a very strong channel message. Now it's interesting, right, because I think Dell, you know, direct sales, right? But now, Equalogic was a channel play, Compound was a big channel play, so you think Dell is learning from those acquisitions? I think they are learning, I think it's still a mix back a little bit, so you still hear some reseller partners who are complaining about channel conflict, but you also hear other partners who've been partnering very closely with Dell who are saying they're giving me opportunities to make margin in other ways, so they're making margin office services. Services, and maybe even networking and servers and bringing those capabilities in. I think it's probably the pure storage-only resellers that may feel it the most, you know, if they're not trying to, if they're not sort of getting on that whole portfolio play, that may be harder. What do you think is happening in the channel? There's a huge channel land grab going on, you see EMC, IBM, HP, Dell, NetApp, they're all going hard after the channel, lots of spiffs, you've seen HP do things like, say, and now recently EMC and all channel products were, you know, in case of HP, when you load those. Well, I think EMC is probably the most transformative, because they were really tough. They were like anti-channel. Right, yeah, no you can't do services, no you can't, and yes, I'm taking this deal directly, and they've really transformed over the last, I think they've really transformed over the last few years. NetApp, right, I mean, maybe that's not so much to transform, but it's done a really good job there. Yeah, it's harder for me to parse that out with NetApp, because, you know, you had, you did have some conflict, I think, with the N series going through IBM, you know, and with some of the NetApp resellers, like who owns these deals, and is it a NetApp product, or is it an IBM product that's going in? So, you know. Well, presumably that's an IBM channel issue, right, not a NetApp channel issue. It becomes a NetApp channel issue, right, if you're competing with your own product with a different brand. So, what about Dell? I mean, what's the channel telling you about Dell? I mean, do they trust that Dell is not going to head fake them? I think that Dell is asking partners to step up and do more, right? And so, I think that the Dell storage only, meaning, because remember, Dell didn't really have a storage channel, right? Right. So, they're bringing those into the environment. So, you bring them into a systems company portfolio, what's the systems company want you to do? Do they want you to sell just storage? It's great, because the margin's better on storage, but they may also want you to sell servers, desktops, and other things. So, for partners who want to kind of move in that direction, I think they've got a great opportunity. For partners that just want to ship storage, it may be more of a challenge. I'm going to use this as a form to learn more about that. Yeah, I mean, as you know, I work with a couple of startups that are certainly hoping that Dell messes up on the channel side on pure storage. Because they'd love to capture that compelling channel, or they'd love to capture the Equalogic channel. Yeah, you're talking about startups that could tuck in and try to mimic the Equalogic and compelling business models. And Equalogic ran great channel programs, you know. Yeah, you're absolutely right. Well, the book, certainly compelling, was just fabulous in the channel, right? They were all channel and very dedicated channels, so. Right. Okay, well we're here live. This is theCUBE. We're at Dell Storage Forum. I'm here with John MacArthur, a former IDC analyst, colleague of mine, worked very strong contributor to Wikibon, principal at Walden Technology Partners. What do you think Dell has to do at events like this? What is their primary mission to win the day? Okay, so this is a Dell Storage Forum. So one of the things that they did last year when we were down in Orlando is it was the first time they were bringing partners and customers together at the same venue. So they had reseller partners, they had their technology partners, and they had their customers all together at one venue. And you know, just as the same advice that we gave to IBM, I think we give to Dell. And they've done it here. As you said, this is a bigger event than Orlando was. Keep up the investment, you know. Make your customers understand that you do care about storage, not only as part of this integrated sort of systems play, but also as best-of-breed product. So you get the horses on the track. I mean, you know, it's like the storage business is now controlled by, I don't know, four or five leaders, right? There's EMC, there's IBM, there's HP, there's Dell, there's NetApp. Right. And then there's... And there's Hitachi at the high-end. And Hitachi. And then, although I would say Hitachi's not controlling the chessboard, you know, the way the other five are. And you could argue, yeah, I put NetApp in that list only because NetApp has got such a large share of mine. So Hitachi makes some acquisitions, and it's definitely a super credible player, but it's sort of a tweener. And then you've got... So let's put Hitachi in there, sort of 5A, slash 6. And then you've got a zillion startups out there. It feels like we're never going to see another company just rock it up and compete with the next NetApp. It looks like they get to a point and then get fired. Data domain, Isilon, you know, Compalant, Equalogic, 3par, now you're seeing all the Flash guys on a similar trajectory. I mean, don't tell all those guys... I mean, Fusion IO made it to IPO, right? And that was a pretty remarkable rocket ship there. Yeah, and they're still going. I mean, you know, they've definitely got some upside. And they've got a grand vision as a platform play. But at the same time, somebody could take them out, you know? Somebody could. They've gotten more expensive and, you know, so try to think who the bidding war would be. Would this be a three-power kind of bidding war data domain, kind of bidding war for Fusion IO? Maybe. I mean, who do you think it would be? Well, I mean... So it would be in the game. So to me, the Fusion IO game comes down to Fusion IO versus Intel. I mean, essentially getting application developers to write to a new memory class storage that's persistent, right? So could the five companies that we just mentioned benefit from that? You know, NetApp, not a systems company. You know, VMWare, or EMC, not a systems company, but they got VMWare, so they are, by default, a systems company. Certainly Dell, IBM, and HP as systems companies. You know, kind of regaining some of that. So yeah, I think, and you do have to think about it, the app, you know, for whom is it an application space where they need to serve it better? And for whom is it an application space where they want to get into, right? So as an expansion. So IBM obviously has a strong application developer affinity, but that's an expensive acquisition, and IBM doesn't make typically expensive acquisitions. It seems like IBM is really trying to pick up technology early in the development phase, as they did with store-wise, as they did with Dilligent. XIV. XIV was relatively early. They're paying a lot less. A fraction. Half or less of what Dell paid for Compellent, as an example, but Compellent was 10 years of maturity. Yeah, basically a third of what Compellent is. Yeah, actually, they said your number was too high. Right, we were estimating on the XIV, because it wasn't. Yeah, it was over 300, though, right? Actually, someone said, not so much, but regardless, it's nowhere near the Compellent. Let's peg it at roughly 300. Somewhere around there. It was hundreds of millions, right? Right, and as I said, Dell's got a little bit of a strategy of doing a little bit of both, buying some technologies and buying big companies. IEMC's acquisition of Xtreme I.O. was sort of- Another, we reached the Polytons, so my number was high there, too, but I was saying it was north of 400, which I think it was. But they also had a stake in the company, right? Yeah, so maybe they're backing that out? Maybe they're backing that out, and one guy that I talked to who's really bright, had a conspiracy theory that NetApp was bidding for it just to get EMC to pay more than they would otherwise have to, knowing that EMC had last look, so I don't know, I have to- Well, yeah, you heard NetApp was bidding on that, right? Right. And in fact, I had heard that NetApp put a higher bid in. Right, but maybe NetApp didn't really want it, but they just wanted EMC to pay more. So it's a head fake. This is not my thesis, it was a friend shared that thesis. Well, NetApp is NetApp's industry company. A lot of people are taking shots at NetApp right now because their growth hasn't been what it is. They are, right. But here's the thing, as we called this several times, NetApp has a very tough compare right now. You knew this was coming, and Georgians has been really trying to expand the TAM- In that period of transition. The ingenio acquisition was all about TAM expansion, and so they're taking a lot of heat right now, but NetApp is not going away. NetApp is a really solid company with a really strong channel, a great portfolio, so they're right there. And you're heading out to meet with them again? And next week they got their analyst meeting, and that's always a big highlight. So we've got a lot of questions there. I'll be interested to hear back from you, and I'll obviously watch the live stream, but I'll be interested to hear sort of how they're dealing with the ingenio acquisition, and particularly as it relates to sort of the tailing down, and these are long tails, but the tailing down of the ingenio OEM relationships with Oracle, with IBM, and also, I think, with Dell, right? Yeah, yeah. Okay, so we're getting the hook, John. Thanks for coming on, and I appreciate your perspectives. Keep it right there, this is theCUBE. We're right back with the Dell Storage Forum 12 with our next guest.