 Good morning everyone, happy Wednesday. Lisa Martin with Dave Vellante, live on the show floor, Dell Technologies World 2023 at Mandalay Bay in Vegas. This is our third day of coverage. We have had some phenomenal conversations as you know. There's been a lot of news unpacked. We've had a great guest lineup Dave and we've got another alumni back with us. We're going to be talking about everything Jeff Clark talked about yesterday in his keynote. Edge, why it's important, how it's different. Always a highlight of the cube at Dell Tech World, Lisa. Absolutely, please welcome back to the cube, Jeff Clark, Chief Operating Officer and Vice Chairman at Dell Technologies. Jeff, it's great to have you back on. Great t-shirt. Another one, thanks for having me. Native Edge, born on the edge, and Native Edge. Do you own a tie? Well, I do. I haven't worn one in a long, long time. Do you have one of these? A t-shirt? You knew he was going to ask you that. I had some ratty ones that my wife Deb threw out. But you're well dressed, both of you. Good to see you. It is good to see you. You had a recent blog post that I checked out. Innovation Matters, it's why we exist. Talk about innovation at Dell. Particularly the last year, we've seen so much progress. Yeah, I made comments in our keynote yesterday and with great pride, what our company's been able to do, what we've been able to achieve. Last year alone, we had 2,445 patents, granted a large portfolio of over 28,000 now. And to me, that's representative of the innovation engine that we've built, the flywheel that we've built. We talked about a number of products that we launched over 120 products last year, 30 launches in our infrastructure business over 13 weeks. And I just went through a series of things that we've built. All culminating into, ultimately turning into what we said we were going to do last year, into real products and offers. Which to me is the real testament that the say-do ratio is where we want it. And quite frankly, the innovation to deliver on what we committed to and it's, I think capabilities are, again, another good indicator that we have this flywheel moving and in the right areas, our customers care most about. You've got this pattern now, you sort of launch, announce a project that's solving a customer problem and then a year later, you announce a product which as an analyst, I give you high marks for that. There are a lot of companies that can't really get enough out of their R&D. So that's good, so. We broke a pattern. We used to do the work and then go to people what we did. And we have, I think, grown a bit that we now commit what we're going to go do before we do it and then go deliver it in the time after. Why the change? I think we needed to communicate that we were more forward thinking, that we were actually looking further ahead rather than spend the time in the lab, in the engineering rooms doing the work and then launching a product. We could build momentum. We could set, I think, the tone of leadership in the industry that we are an innovator that we're forward thinking, looking downfield and we align the organization to go do the work. Share your thoughts on the customer alignment. I know it's incredibly tight with Vendell, but share with us how the customers really kind of are fueling that flywheel of innovation. Well, we have the benefit of being a direct sales force for half of our revenue and partners with the other half to very important routes to market. And both of them and particularly the direct path gives us more touches with customers than anybody else in this marketplace. And we are able to take those touch points, the information we gather from our customers and turn that into product features, product capabilities, discuss the problems that they're having and then ultimately try to commit to solve them, whether that be things like Project Alpine, now what we launched on Monday, what we did with Native Edge and Project Frontier. So I think we've built this really tightly coupled capability that is uniquely ours, that links us with our customers more than I think anyone else in our marketplace. I want to go through some of the projects. Sure. But I want to start with Helix because it's the year of AI. So how did that come about? What are those customer sort of alignment issues that you saw and tell us more about how we should expect that to progress over the next year? Well, it started with, we have a great partnership with NVIDIA. Jens and I have known one another for a very long time back in the old workstation days, 27 years ago. We are a large partner of theirs. They're a large partner of ours. And we kind of concluded as we've seen this momentum shift from their side and then what we see, this AI thing is we talked offline, isn't going away. It's here, it's here to stay. We think it's transformative and maybe the most transformative technology that I've seen in my 36 years. Whether that be the PC, whether that be the phone, the internet, the cloud computing areas that we've been through, this is as big and I believe bigger. And we both stepped back and said, if that's going to happen, and at the rate that it's happening, how do we help? Customers are having difficulty building the infrastructure, making it, it's not easy to deploy. This is fairly complicated architecture. So how could we build blueprints? How could we build validated designs? How we could merge our service capabilities? Take the best of NVIDIA, the best of Dell, Project Helix, that's how it came about. I want to ask you about, go back to your thoughts. It's maybe a bit of an academic question, Jeff, but I think you'll appreciate it. When you and Michael and the team were driving the shift to microprocessor-based systems, it coincided or maybe it catalyzed a change in the industry structure. We've talked about this now for many, many years, but at the time it was non-obvious. That vertically integrated stack, and then competition began at each layer. Dell and PCs, Z-Gate and disk drives, EMC and storage, Intel and microprocessors, et cetera, et cetera. But it was a fundamental industry shift in the structure that favored companies like you that were focused. The internet was different. It was more, okay, how do we take advantage of this network? And incumbents actually, like you at the time, they were able to take advantage of that, do more direct, many, many examples. There was some disruption, too, obviously, Amazon and retail. How do you see, and by the way, I mean, cloud in many ways, I mean, yes, sort of disruptive, but it didn't have the productivity impact of those other two, you and I have talked about this. How do you see AI in the context of many dimensions here, the disruptive nature versus the incumbent value? And do you think it'll have an effect on the structure of the industry in terms of maybe the way IT is consumed or the competitive nature of that industry? Yeah, I think the two dynamics I would point to, one is what you just called out. There is a incredible opportunity to increase productivity with AI, and it's disruptive. And companies that figure out how to use their data and their understanding of their markets and customers and be able to synthesize that in a way that gives them unique insights, they're going to have better business outcomes, and we're going to see a wave to that. It's almost we've spent the past four decades preparing for this moment, preparing to enable a massive amount of data to be understood at a greater level in detail, much more quickly and much more in depth to drive better insights, better decisions and do them more quickly. So if you don't embrace that wherever you are, I think you're going to regret that. So whether that's developer productivity, some of the co-pilot tools, some of the other types of technologies that are out there today that are just helping developers with open source and taking out the tedious work that you just have to replicate all goes away, that's a great outcome. I think about language-based task, a fair amount of language-based tasks can be made more efficient. And then architecturally, what we think happens since you opened with microprocessors is the role of the host that we've been involved in since the beginning, the host processor is going to have lots of help, dedicated specific specialty processors, accelerators, and you're going to see a fragmentation, if you will, that all workloads are going into the host, we know that now, purpose-built accelerators and then the ability to knit that together with a softer-defined fabric, I think is going to be key, that's where we're going. You know, it's interesting, we were talking about Charlie Kawa's offline and I watched a video of his, maybe a year or so ago, and he was talking about the connect-centricity of the new architecture, it's not just about the CPU anymore, it's all about the surrounding components, is that really what you're talking about there? Think about a softer-defined data center where now we can have host, we can have purpose-built accelerators, we can bring one workload in, we can arrange, if you will, this fabric through a softer-defined layer to optimize for that workload, bring on another workload, re-synthesize or rebuild the architecture to map to that workload all via software. That's where we think this is going and that's certainly what we're working on. Can you share your leadership principles? You mentioned 36 years, you were a Dell OG, for sure, you're a staple on main stage, but talk about, there's been so much evolution of Dell in 39 years, I just saw the anniversary of Michael creating the company in the stormroom was 39 years, just a few weeks ago, but talk about how your leadership principles have evolved, how you lead the company to really create these endeavors and also be kind of differentiated and turning as Dave said these projects into products consistently. A tough question, and I am not, while I've been on that main stage, it is not my favorite thing to do, I'm an engineer that likes to actually go solve problems and work issues, so that's a very, very difficult task for me. Leadership principles, so look, for me it's really simple, we try to identify what is needed, we try to create a reason why we need to go do this, we're transparent with everything in the decision making process to make the decisions or to choose a path, what the expected outcome is and then to hold our team accountable and give them what they need to finish the work. And a little extra help of compressing timelines and the competitive nature of that, you know, little management tension on occasion. And our teams respond well, again I got to brag about their work yesterday which is tremendous and it couldn't be more proud of what we were able to do on a consistent basis and the breadth of it, which is one of the comments I made yesterday, the breadth of our innovation from the supply chain to what we do in PCs, to servers, to storage, to systems, to services, I like our hand. What I like about your leadership styles is no lack of clarity. People understand very clearly what is expected and you're able to get people aligned and that's powerful. For me, one of the attributes, I think great leaders are great communicators and great leaders are great simplifiers. So we can get overwhelmed with the complexity of the task or the complexity of the problem but as a trained engineer, we're trained to break down a problem into many, many small problems which are manageable. And if we can, one of the roles that I think I play is to be able to break down that complex problem into manageable tasks, clearly communicate that and try to simplify things. And as a result, we tend to perform reasonably well. Yesterday was big news about Cloud Native Edge. Talk about, from a challenger's perspective, what's different about the Edge? What are some of the core design principles around it that Dell is leading with? Well, what's different about the Edge? It's where IT and the things that we've historically done meet the real world. We're interfacing with factories, transportation networks, hospitals, digital cities, whatever they might be. We have some great examples somewhere over there, I think it is. So that interface where operations in the physical world meets IT in the digital world is certainly where there's a lot of difference in what we tried to solve. And actually tried to embrace this notion that we had to build a horizontal product that would allow it to scale to the different verticals, not make it vertical specific, horizontal in nature from an architecture point of view, and then abstract the physical world from the digital world from the physical world so we could actually help our customers deliver the gear, the things they need in their factories, networks, et cetera. So what we did is we built a software platform, a horizontal platform that we've talked about, native Edge, and then we built in what customers tell us they need, the ability to deploy devices, the ability to manage devices, the ability to provision devices in a secure manner, all from a single pane of glass. That's the software stack that we've built. And then it's surrounded by a vast partner network to help very unique vertical opportunities. It seems so obvious now that you do the horizontal play and maybe it always was. Was there ever a discussion internally about, well, do we go horizontal or should we go multiple verticals or was that never even on the table? Always on the table? Yeah, okay. It didn't pass the Jeff test. Yeah, I can see why. Explain that. Well, what was the Jeff test? We do not do well when we build very specific what we call snowflake solutions, no two are the same. We're much better when we industrialize things and horizontal things and get the scale out of that and abstract the problem at that layer. That's sort of where we've historically played and where we'll continue to play. And that's what I mean by that. And it serves as well. You know, in 2021, John and I kind of tongue in cheek came up with this concept of super cloud. And the idea was floating above, not the superlative, but it became a superlative and we got a lot of crap for the term. But then when we saw project Alpine, we said there's evidence that it's a technically feasible that there's a customer problem that a company is addressing. You don't use the term super cloud, you know, kind of our term. But it's the same concept. We talked about that over dinner in Boston. Yes. Several years ago. Yes, we did. Several years ago. And it was sort of in the early stages. And so to see that come to fruition as an analyst is obviously very exciting. My question is, when you look at a project Frontier, now Native Edge, do those two worlds have to come together? I remember I was talking to Nier Zook, the founder of Palo Alto Network, and he said the last thing we need in security is just another sort of stovepipe at the edge. And of course, there are a lot of, you know, edge and IoT security tools. Do you see those worlds coming together or are they so different to kind of lease this question that it's unclear at this point? Well, maybe something we didn't communicate as clearly as we should have. The underlying architecture, hardware architecture that is in our supporting our cloud, our Apex cloud storage, and our Apex cloud platforms, and the Native Edge is the same. The fabric of this common storage layer that I spent some time talking about yesterday runs all the way to the edge. So the edge is one of the clouds that we believe is in this ecosystem. Edge clouds, Colo clouds, Telecom clouds, On-Prim clouds, Public clouds. This fabric, my word, technical world, the substrate that connects these clouds, data, and apps extends out to the edge. Yeah, maybe I was too busy tweeting about your T-shirt and missed that. I doubt that. No, but so that's exciting to hear though, Jeff, because that is the vision that we've put forth to SuperCloud, but you know, I'm not a technologist. I mean, I've been around a long time and I pay attention. I don't buy that. But it's, you got deep engineering expertise, you know, in your company. And so I look to companies like yours to see if the problem is technically feasible. And I guess I should start with is there a customer need? It seems obvious there's a customer need for this. Well, at least what we believe is happening and what customers have done, they're managing each cloud individually. And there's a set of ways that you manage each of those clouds in their own practice. And what we believe, what we interpreted from what we heard is customers were looking for a consistent set of management tools on a consistent way to manage their cloud environments. We cleverly describe that as they want to orchestrate all of these clouds to look like one distributed system. We thought we needed something to connect them. We thought it was the data, hence the common storage layer, that substrate that I talked about. So that's, and given that we're a storage company and have deep storage expertise, that became the foundational point of our architecture is data and storage. And that extends all through cloud here to cloud there and all of the steps in between. Then we built our management tools, our data movers or data mobility tools to be able to support that. And that's how we knit it together. So it kind of comes back to that academic question that I was asking earlier about the structure of the industry. It's definitely there's still competition along horizontal lines. You have competition in storage, for example. It's not really head to head. I mean, maybe the ODMs, but there is head to head competition in servers, but the companies like HPE do other things. My point is, it seems like the cloud sort of brought together that stack in somebody with an end to end capability. Obviously this is self-serving, but that is an advantage for you. And I wonder if AI accelerates that consolidation. When I say consolidation, I don't mean necessarily of the industry. I mean from the standpoint of customer consumption that they don't want to necessarily buy, okay, I'll take a best of breed storage and a best of breed server and a best of breed AI and a best of breed networking. I just want a solution that can talk to each other across clouds. And generally the cloud guys, hey, they put out, Amazon puts out tools. Now Microsoft tries to do abstractions. They announced some stuff this week, but they're not great at doing stuff across cloud on-prem. I know you got some, we had talked yesterday with some very exciting partnerships with Microsoft, but there's got to be somebody there to lead that end to end layer across the cloud. Out to the edge. I drew it purposely, another horizontal connection point. We don't see the vertical nature of how clouds are built today pivoting this way. We thought we had the natural substrate to do that storage that we can connect those clouds, apps and data as a set of management tools. And we're going to continue to invest in this architecture and build this out. We think it's game changing. At the end of the day, if we can figure out how to make this work as one distributed system, orchestrated and to do that, we think it's very powerful is what customers want. Then they get the ability to put the workload where they want it based on their needs. Then we get the ability to reduce complexity, help them manage costs, help them get more predictable costs, which are things we hear from our customers in the current way that clouds work. And that's an opportunity for us. So good of game changers and optimism. I know Michael is an optimist and the fact that you have been working so closely with him for so long, I imagine you're an optimist as well. Talk about, when we talk about generative AI in the news media, there's so much concern. And obviously we have to talk about guardrails and ethics and responsibility. But I'd love to know from your perspective how Dell is really enabling tech for good and enabling a sustainable future, which we all know is going to be incredibly impactful globally. Lots of unpack there. Let's start with the work that we do around ESG and trying to make the world a better place and the environmental stewardship that we believe we're leading the industry. Whether that's a commitment to carbon neutrality, whether that is a commitment to continue to use and reuse materials. I talked yesterday about ocean bound plastics and getting those out of where they would have ended up and into our products. We've talked in the past about using wheat straw, mushrooms on our packaging. We've talked about recycling gold at Apprentice Circuit Board. So a long history of taking materials, we're using materials, materials on the fact that is garbage on someone else's factory floor that we can repurpose to build product with. We've been doing that. Even a leader will continue to do that. The continued challenges is the world's appetite for more compute continues to grow and the engineering challenge to solve this is significant. We're up for it. I don't know how we're going to solve all of our 2030 targets at this point in time. Our engineering teams are working on it. I'm confident we'll figure it out. But it's part of what is fun about the job of it's the unknown. So I think our track record there is strong. We'll only get stronger and we take that role very, very seriously. We've talked, I think last year, even on the stage about Project Luna where we think about a PC being used, not once and then recycled, used, used again, used again, recycled and thinking about building it in a very different way. So when it's serviced, it requires less carbon footprint. So I think track record there. If I go back to AI and I am an optimist like Michael, I generally think people are good people. Is this capability in the wrong hands detrimental? It could be. I think we all have a responsibility to work through that. I think that's why things like zero trust architectures and what we're doing with Project Fort Zero is pretty important long term. Hopefully that's a paradigm shift in security architecture that puts the good guys more back in charge. I hope we think it is. I think about what AI enables and there's just so much good there. We'll figure out how to make it, I guess, good for all. But we can't stop the potential here. I think it unleashes actually human potential. I think it creates a new paradigm for us to solve things that we've not been able to solve. Why would we want to slow that down? Now we need to be responsible. There's all sorts of data privacy, legal issues, which then, if it comes full circle, it's why we think some of this will be done on-prem. It's why not everybody wants to see their data in the big general models. They're going to want to do domain specific work and process specific work. Again, with their data, with their context. Yeah, I mean, we had a customer on, he was running, what do you say, a half a million cores? He said, I'm not going to do that in the cloud. I can't afford it. And as well, a lot of these university supercomputers, they want to show them off. Come on in. Well, not everybody needs to run their model against the known written language of the world. Not everybody needs a model built on 175 billion parameters. A lot of this stuff can be done on a couple million, 10 million, 30 million parameters. Well, you can do that inference on the edge with a host CPU or maybe a single GPU. Yeah, and then the other end, I suspect an open AI is running data centers in Ohio. I mean, that's for a good reason. So, interesting. What percent change in subject? You've been very generous with your time. You haven't kicked me off yet. You've left it all on stage, man. I mean, how hard do you work at these things? We do too, but you put us to shame. What percent of your engineers are software engineers? 80-ish percent. 80 percent, okay. 83, 85, something like that. Now, with things like Apex, native edge, obviously a lot more software components to that, and you can charge for that. So, that should, longer term, have an effect on margins. Right? I'm optimistic. Me too. You look at one of my favorite, I think you asked me last year what was my favorite announcement? It was PowerFlex. You asked me today, PowerFlex is still really a fascinating architecture. Michael talked a little bit about its ability to scale compute and storage independently, massive scaling, multi-hypervisor support, but that software-defined asset might be sort of the core of our common storage layer. Yeah, and I mean, I had to, again, give you props. I mean, when you inherited the EMC portfolio, you had to do a lot of work to consolidate it, and you shared for many years how you approached that, and you got a much more disciplined approach to that horizontal thesis, much more. Well, more of our engineers are doing new and innovative work rather than doing several versions of similar technologies. And when you can get that sort of dispersion really focused, we're able to do deeper levels of innovation quicker, which is, I believe what we're seeing. And we still have opportunity, we're not done. Do you feel, how do you think about M&A versus organic investment, R&D, in that context? I mean, now that you've got this great balance sheet, do you, how do you think about the balance between the two? You want me to talk about M&A in front of the big old screen here, huh? How do we think about it? You're philosophy, I mean, you know. Well, look, the company has. You've done a lot of M&A, obviously. The company has a capital allocation structure. We are committed to that capital allocation structure. And within that, it allows us to do some very purposeful M&A. We made two small acquisitions last year, picked up by some. They're very integral components to what we've launched yesterday. And the architecture that we talk about has components of those capabilities in it. So, where we think we need a capability, we have the ability to do that as an organization. Nothing to announce today. Well, I know that, but so, but what you just described is maybe a smaller acquisition that is a big lever to a much, to catalyze a much greater opportunity. Is that fair? Well, think about the route to market access, any technology that we bring into the family has. You have the largest sales force in technology. The ability to either integrate that into a product to get a capability or to have a specific piece of offer that we'd go sell with that sales force is pretty significant market access. So, we'll be very purposeful in that regard. Jeff, it's been such a pleasure having you on the program. I think you just delivered a masterclass for us. Did a great job of really talking about what's driving the continued innovation at Dell. I think I can see and hear what inspires you. We thank you so much for giving us so much time on theCUBE this morning. We look forward to seeing you next year. We'll see you. Yeah. Thanks again. All right, our pleasure. For Jeff Clark and Dave Vellante, I'm Lisa Martin. Up next, Dave and I are going to sit down and share some insights we've learned over the last two and a half days. Stick around.