 Okay, we're back, this is Dave Vellante and we're live here at EMC World 2012. We're in Las Vegas and this is Silicon Angles theCUBE, where we bring you the smartest nodes on the planet. We extract information, we share it with you and package it and share it with you, our audience. We've been broadcasting live all week, Monday. We're here all day Tuesday. We'll be broadcasting tomorrow. We've got a simulcast going on at the HBase conference. My co-host John Furrier is at the HBase conference interviewing all the leading executives there. We had Mike Olson on earlier today and Amarawa Dollars there and all the HBase community. And he'll be back here tomorrow. So right now we're talking channels. Fred Kahoot and Jeff Taylor are executives within EMC's channel business. Now for those of you who followed me personally and theCUBE, we've talked about the transformation of EMC within the channel. This has come from the top. Really, Joe Tucci, the CEO and Chairman of EMC has made a commitment to the channel. It has trickled down. The business is changing. You can't go it alone with a pure direct sales force. And gentlemen, let's talk about that. First of all, welcome to theCUBE. Thank you, great to be here. Thanks, great to be here. And so you heard my little rap at the beginning. EMC used to be known as the meat-eating direct sales force, that channel. We don't need no channel. And that's changed a lot over the last three to five years, hasn't it? It's changed quite significantly. I think part of the message that we're talking about here is transformation. And that's what the nature of the conference is about. And clearly the market is changing, going to a more cloud-based solution and a solution orientation. And we are changing our go-to-market to match that and to drive the growth. We realize that our partners deliver solutions and offer a whole host of complementary capabilities to our own sales team. And we realize that for us to achieve our financial goals, the partners are as significant as anything else to us and critical to our success. Yeah, so I understand you guys have a partner conference, your first-ever summit, partner summit. That's right. What's that all about? Take us through that. Well, we decided really to align with the transformation underway. This is our first-ever global partner summit. So we have over 3,000 partners here from more than 80 countries. We had their own keynote session on Sunday with all EMC executives. And now we're breaking out the rest of the days where they get theater-specific information. They hear from all the product groups, all the operational and enablement groups. And the interest and the response has been just outstanding. So I think it's reflective of how that partner ecosystem is getting bigger, right? And becoming a larger part of EMC's strategy. Yeah, so Jeff, EMC's, as I was saying, because it's transformed itself, it's become more channel-friendly. It's sort of a vacuum now. If you look at the big companies, a lot of guys are going vertically integrated. A lot of guys are making big acquisitions that are somewhat threatening to the channel. And EMC is sort of filling that void. Talk a little bit about culturally, the shift that went on inside of EMC to become more channel-friendly. Maybe talk about being channel-friendly, but how are you guys putting your money where your mouth is? Sure, I think, and what we've been describing here and with our partners across a variety of our medias is the priorities we have and the substance of the meat underneath that. So first and foremost, this has been a sales-led initiative. Whereas in the past, we've talked about moving into the channel and had support from the company. Now we have the commitment from the CEO on down from the sales leadership. So the commitment is one really critical part of it. Second, to align our sales engine, we've done a number of things, including enhancing and enforcing our rules of engagement. So it's clear that every sales organization is commission-driven. So we've decided and stated that if a sales rep breaks a rule of engagement with our partner, their commission will be directly impacted. So the way you change sales rep behavior and affect the culture is you change the compensation structure and that's what we've done with our sales force and that's going to have significant impact. Yeah, so that's a two-edged sword, right? Because you got to get it right. If you don't get it right, your margins go down, right? So it's been a learning experience, hasn't it? It is a learning experience. I think we're taking significant but also incremental steps, right? So we haven't said, hey, we're going to open all the markets and really release ourselves completely into the channel. We said, look, we're going to open hundreds of accounts in the enterprise and millions of dollars of run-rate business in each of our three theaters as a way to start engaging our partner community and start building the momentum and the trust and the predictability with the level of accounts there. And then we'll increasingly open more and do more with those partners. And Fred, we were talking about the V-specs announcement. We were there covering it with theCUBE. And interesting strategy, different from Vblock, I always say any colors you want as long as it's black, open it up to the channel. Actually put partners' names on the product. That's right. Different philosophy than say, some other companies that, here's our brand. Right. Boom, three letters. Right. Talk about the V-specs, the channel reaction, the partner reaction to V-specs and give us an update on where you're at with that. Well, I think the proof is in the numbers. And then six weeks since we've announced that new solution and solution concept to the marketplace, we've had over 140 partners sign up to get enabled and take it to market. That's just in six weeks. So I think that's reflective of the level of interest. And then, of course, we've all been having meetings with partners and invariably the conversation comes back to or around V-specs. And they're very interested in the opportunity to represent for them to leverage more of their line card, right, to get to market with a differentiated or higher value solution. So we feel like from where we started and conceiving this and what it should be, we're getting an incredible amount of positive feedback that we're on mark. So, I've been talking for a while at theCUBE about, as has my partner, John Furrier, about the land grab that's going on in the channel. That's what I call it, right? And you get large companies that see the value of the channel. They understand the leverage they can get out of the channel and so they're throwing money at them. They're doing channel-only deals. They're really catering to the channel. You guys are as well. What's your differentiation? I mean, so you're competing for channel mind share. In many cases, you're up against more well-funded companies. I mean, you guys are well-funded, no question. Bigger companies, hundreds of billions of dollars of revenue. How do you guys differentiate and how do you compete for that channel mind share? Yeah, sure, Fred, maybe I'll start and follow up. I think there's a couple of ways that we fight and compete for market share. One of those is the solutions, v-specs, for example. So, as we've talked to our partners, what do partners want? They want the ability to differentiate their offerings and deliver services. So, I think the v-spec solutions offers what their customers want, which is choice and flexibility, and we bring the creativity of EMC and the management capabilities into develop products and solutions like v-specs. So, I think v-specs is one way we differentiate ourselves. The second thing that we're doing is really being really comprehensive in how we're approaching the partners. So, we talked about the rules of engagement. We're doing a pretty comprehensive rep training. Kind of go down the line in a list of all the things you need to make this channel successful. We're doing all of those with the full support of EMC. So, I feel like that comprehensive approach combined with differentiated offerings is what's going to set us apart. So, what's the channel telling you that they want? I mean, obviously, they want margin, right? At the end of the day, it's all about margin, but sure. You know, that's a knob you can turn, you can only turn it so hard. What else are they telling you that they want and then how are you delivering that? You know, I think they're always looking for more support and how they get to market, right? Not only from a skills standpoint, but from an ability to market and create demand. I think they're always looking for more play on the services side of the equation so we had an announcement around that this week as well. We're going to enable our partners to drive more of that services engagement and reap the benefits from that. It's called cooperative services. So, they want more of that play and I think they want us, fundamentally, to keep bringing more IP into the market. That is one of our huge differentiators as well, right? That we have a portfolio that allows them to address several large markets that are fast growing and in the end, that's what they want. Yeah, so they see the waves, Joe Tucci talked about the waves, they see these waves and they're like, oh, I want to go after that wave. Right. You guys are the technology partner. You're coming in saying, hey, we got best of breed technology, we can help you attack that wave now. Is that really the strategy? I mean, we've got the pieces of the portfolio, they're there for you, let's go. Absolutely, you know, if you just look at what we did with these new practices around private cloud infrastructure or public cloud as a service and how you deliver that, that's all expressing the fact that we're going to get our partners lined up with the rest of our EMC IP. And once everybody's in a straight line, then they get to harvest all of that investment collectively. Exactly, that's right. Let's talk about cloud a little bit. You know, we talked about two-edged sword before. Cloud is kind of a two-edged sword, right? I mean, if I'm buying everything from a service provider, what does that mean for the channel? So how is the channel responding to the whole cloud movement? I mean, private cloud I get, right? That's cool. But you know, as people go into public, more public cloud, you know, Joe said, hey, it's not either or we're going to have both. As people move more toward the private cloud, they're going to be, the service provider becomes a channel. How are the channel partners responding to that? Sure, I can sort of, I think there's a couple of different models that will emerge, right? So the largest channel partners are enthusiastically embracing it and they're going to build out infrastructure and will support them, you know, support them to do that. The smaller partners will look as almost, will look to the larger partners and the much larger SPs and they'll look to broker services from them because they won't have the financial substance to go invest the hundreds of millions of dollars to build out network operating centers, et cetera. So I think there's still very much a role for all the players in the channel, from the smallest tier twos of their distribution into the bigger tier ones and beyond, to play a role as a channel model of all and participate in that. And I think each player in that ecosystem is figuring out their role and how they want to play, but clearly the channel partners are excited and excited about driving into that. You know, there's this notion that one replaces the other. And I think you need to kind of flip that on its head and look at what's happening with public cloud or as a service offerings are really expanding the market because it's uncovering a bunch of latent or suppressed buying behavior from companies that couldn't afford IT. And so I think the right way to get this in our minds is it's additive, not subtract. And so that allows us to have multiple partner types to fulfill all of those purchasing models. Well, I mean, and I agree with that. It's additive if the channel partner responds to the trend, if they keep doing what they've been doing as the market moves and it's not going to be additive. So that seems to be the trick that the channel guys got to navigate, right? Because if they just think they could just keep doing what they're doing, selling boxes, that's probably not going to get them to where they want to go. Do you agree with that? Yeah, I think there's two options, right? Either they adopt the model or they shrink, right? The future is very clear. And that's why we're actively announcing the cloud builder practice and other cloud capabilities to help push them in that direction. But it seems very clear there's two options. Adopter. What's interesting is that it opens up a new partnership opportunity for them because they can work if you characterize that partner who's doing transactions only. Well, they have an opportunity to actually be a broker for a larger service providers, right? And so again, I think there are possibilities there that we need to enable them to play out, you know, broker that relationship or enable that relationship to occur. Excellent. All right, gentlemen, Fred and Jeff, thanks very much for coming on theCUBE and giving us your perspective on the channel. Congratulations on that transformation. I think you guys are doing a great job in the channel and very strategic and key piece of the EMC portfolio. So keep it right here. We'll be right back. We got an interview with Laura Mattingly, who's the head of client support services at Louisville Gas and Electric. So keep it right there, siliconango.tv. Be right back.