 The Cube at EMC World 2014 is brought to you by EMC. Redefine VCE, innovating the world's first converged infrastructure solution for private cloud computing. Brocade, say goodbye to the status quo and hello to Brocade. Okay, welcome back everyone here, live in Las Vegas for EMC World 2012. This is the Cube Silicon Angle and Wikibon's flagship program. We go out to the events, extract the signals from the noise. I'm John Furrier, the founder of Silicon Angle. I'm John Michaels, Dave Vellante, co-founder of wikibon.org and we are pleased to have here a very special guest, David Goulden, who's the president or CEO, I'm sorry, CEO of EMC Two or Two Eyes. Inflation infrastructure. I call it Tube, that's the Roman numerals. Welcome back. Dave and Ivan, first of all, we're excited to celebrate our fifth season of theCUBE and started at EMC World 2010 in Boston. It's crazy to be here. We've been following your career and the numbers, chief operating officer, president, now CEO, federation, they all have their own ships. You got Gelsinger at VMware, Moritz over at Pivotal. You have intimate knowledge of all that, now running EMC information systems and group. What's the federation update? So obviously, everyone's out on their own. It seems we're clicking together. What's the current situation of the federation? Thanks, John. The current federation, the situation, actually is pretty well described this week, right? So people who've been here for the few days this week have seen the federation in action. I think the power of the federation is you've got EMC and AI, you've got VMware and you've got Pivotal, each innovating in our own spaces, in our own swim lanes, if I call it that, with our own competitors and really driving to be the best we possibly can in those markets. But then what you see happening here, if you look on the exhibition floor, our customers are increasingly asking us to work together. So we give them choice. We let the customers choose to work, EMC storage with different virtualization layers and vice versa, but increasingly we want them to see us coming together and they're asking us to come together. So I think that is the demonstration of the federation working, because if you look at what we talked about yesterday, in my keynote, what Paul and Pat talked about today, we're all investing heavily, we're all making grounds in our market, and that together is stronger, I think, for our customers. So what have you learned as the CEO now? Anything different now in terms of product portfolio? Look, I still look at the numbers operationally. Is there stuff new to your job? I want to get some insight into kind of your new current role. I see Jeremy Burton's now president of the products group. Has anything really changed or is this more of a formal title? What new things are you taking on? Well, if you go back, I've really been running the EMC information infrastructure business for the best part of two years right now. Ever since we kind of made the change and we put Pat over to VMware, brought Paul back initially to do some advanced work in big data, then we created Pivotal. So I've essentially been running the EMC business for almost two years, and it was great to get the CEO title in January. And I think it was also part of the affirmation that the Federation really is three companies with each having their own CEO. It didn't seem as sensible from Joe's point of view when you had two parts of the Federation that had a CEO, one part didn't. So to a certain extent, it was really us building out the Federation model. The last 18 months, last two years, I've stayed very close to the product groups. So the nice thing is that ever since I took over, I've had all the product groups working for me directly. We didn't essentially replace what Pat was doing. So when Pat went to VMware, we didn't replace him until very recently when I put Jeremy in that role. So I've had 18 months to two years to really get close to the individual product groups to help shape the strategy, help shape the acquisitions that we've been doing, make some changes to those groups and get to stage where I feel now is the time to put something in charge so I can spend a bit more time on the more customer-facing aspects of the role and also more time working with the other Federation companies. But if I understand it correctly, you still play a very important role in the Federation. So for example, on the earnings calls, you talk about the performance of the different divisions and then you talk about the use of cash, which increasing your dividend, paying down debt and also something, for instance, like financing airwatch. So my question to you is, as the Federation, as a financial expert that you are, what kind of flexibility does that give you relative to, let's say you were an independent company, you didn't have that Federation. Is that a big deal? Is it a minor deal? Is it no big deal? No, I think there actually is some real value in it, Dave. So you're right. When we report to Wall Street, we report the consolidated results of the company. So also wearing my Federation's tier CFO hat, I'm reporting on behalf of all of us. So of course, anybody at the Federation level has to stay close to all parts of the Federation to understand the dynamics and be able to report on it. From a financing point of view, that is one of the benefits of the Federation because we're able to really leverage the full strength and cash flow and balance sheet of the Federation to create a capital structure that enables us to go make acquisitions and move capital and also people around to different parts of the company. So as you saw, when VMware acquired AirWatch, they essentially financed that with money which was borrowed from the Federation. We could borrow more attractive rates on behalf of the total company than VMware could by themselves. So there's some leverage there. And we can also lend money into company quite efficiently that helps the VMware income statement. So it's actually a very efficient way to get the firepower of the combined Federation focusing the parts of the company that need it at that point in time. Before we get to DSSD, I want to ask about that Federation at that point. Obviously the valuations are out of control these days. The bubble might be kind of getting the cream getting skimmed off the top with the market pass few weeks and IPO's being pulled. Pivotal, some people say that was a standalone company would be in trouble. But the Federation provides a lot of value in Pivotal. On a standalone basis, are there numbers acceptable? Are you happy with the performance of Pivotal as part of the Federation? And I'm sure if it was standalone company, it'd still be good because Morris is a great leader. But the Federation, in a way kind of also creating synergies for that. So how do you look at Pivotal on your side of the camp? Obviously it needs some, it's got a strategic asset base, but is it doing really well financially? I guess that's the bad part. John Pivotal is on track. We did exactly what we said that we'd do last year. When you bear in mind, we only created Pivotal formally April 1st last year. We saw you reporting on it as if it existed in January 1st last year. We created it in April and we put some fairly specific goals on the table for what we would do in 2013. Credit to Paul and the team, they did all those things in terms of repositioning the technology portfolio, getting some White House wins, getting the Pivotal 1 platform out, developing Cloud Foundry. And then we further refined the business model. So earlier this year, we actually took some parts that we put into Pivotal that we started off with, principally the DCA, Green Plum Appliance, and some of the implementation services work. We moved those over to the EMC side, perhaps to another benefit of the Federation, we can move things around. That happened very seamlessly, right? There was no big public involved. You don't feel you overextended on what you said you were going to do. You're saying they did what they said they were going to do. That's what we're going to do. Well, because it's your fastest growing business, right? I mean, if I had the numbers right, it's grown to 41%, it grew over 40, but that belies how fast this really got me, because what we're doing in Pivotal's subscriptions, building a subscription business. So the bookings growth rate was way in advance of the 41% revenue growth rate that they did. Did you give guidance on that, or did you give visibility in that? We just told them it was significantly higher, and it was, it was much higher than the 41%. Which is great, I think actually, honestly our biggest challenge with Pivotal right now is responding to the opportunities, because we created a company with 1,200 people in it. Obviously some of the people are very much focused upon R&D, some of them are focused in Pivotal Labs doing specific customer application development work. So we have a field force in Pivotal. The biggest challenge is spending time in the right places, because the interest in what we talk about in terms of a cloud independent pass layer, a big fast data fabric layer, and then rapid application development, those are so important for anybody trying to get into the third platform. I feel like the Federation is your prescription for crossing the chasm. You got 40% plus growth, which is much higher in booking spaces, relatively small, but hundreds of millions of dollars. You got VMware, a $5 billion company growing to 15% to 20%, you got EMC, huge company growing at single digits. Now, I want to ask you, so the numbers at EMC were down, but there's some accounting factors going on there. EMEA was up, surprisingly, it was your best performer. So how much of that sort of softness in EMC-II was accounting? Well, I would call it math, or I'll not call it math, accounting. But here's the important data point, Dave, from a bookings point of view, right, the measure of demand for the EMC-II business and the most biggest part of that by long-way storage. So the storage product booking numbers were up year on year. That's really all that matters. The reason why revenue was down was because of changes in backlog, i.e. unfulfilled orders. What we said we would do is we would build a high percentage or higher mix of unfulfilled orders this Q1, relative to Q1 a year ago, and those year on year compares I mean that in that particular quarter, even though you see positive bookings growth, the revenue growth is inverted because of the change in backlog. So that business is doing very well, and I'll call it math, Ron, call it accounting. But you don't report bookings, right? We don't report bookings, but we did tell people what bookings growth was, broadly speaking, so people didn't think it was an underlying softness in demand. It was a change in business practices that drove how much of the orders we actually tried to ship in the current quarter versus how much we let go into the next quarter to save us having to have the factories screaming and having triple overtime and things at the end of the quarter. In extreme I.O., someone offset the softness at the high end, but the high end's so big, you know, you can't just offset it all. How much of that high end is in your control? Can you recover? Can you talk about that a little bit? It's such a big business. The biggest piece for us right now is product cycle. We're always at the tail end of the current high end product cycle. We'll be announcing a refresh later this year. There's no secret there. We're not telling people exactly when, but think relatively soon. And right now, that's pretty well known by our customers. So there's a little bit of pause as people look at that new product cycle. The high end was also impacted by the math, which I just spoke about. So when you look at the order race, it wasn't down as much as the revenue reduction, but it was down a year from a bookings point of view. But what I would say is really the important thing is look at the way we break our business out. We tell you what we do in high end. We tell you what we do in mid-tier and back recovery platforms. And then we tell you what we do in emerging storage. That emerging storage segment was up 81% year on year, and it's roughly a $2 billion run rate business. So we have a $2 billion run rate business of emerging things. So what is in the emerging storage bucket? Isilon, ExtremeIO, Viper, what will be going in the future, things like DSSD. That bucket is bigger than almost all the startups in the storage industry put together right now and growing faster than the vast majority of them. And people, we need more people to focus on that because the value that we're creating there is huge. And also, if I connect, if I can point those two together and connect the thought between the high end and the emerging, this portfolio play and all the investments we've made in the third platform allowing us to grow our total storage business at a time where most competitors in the industry, our storage business is actually declining. We have this mixed play going for us and such strong growth in the emerging, solid growth in the mid-buckets. I mean, it's a natural hedge for you guys. I mean, it's a natural hedge. You got the, you know, and not a hedge. I don't want to say a hedge. It's a, well, if your high end business doesn't grow as fast, you have emerging on the other side. Exactly. And then we've got the unified and back recovery in the middle, which is more of your traditional mid-tier oriented platforms, but also the BRS business is fueling that as well. We joke with Gallagher last time, the high end is supposed to be dead years ago, right? So, but it's still growing. He still has growth. I mean, the install base is not shrinking, right? That was a key point I made on the next call. We track maniacally how many of those in VMAC systems there are. An interesting thing is over the last few quarters, the install base has not shrunk, despite the fact that the classic play in the high end is consolidation. So when you put a new platform out, you'll typically consolidate three VMAX ones onto VMAX two, for example, which obviously would naturally shrink the install base. We'd be getting enough new systems out there to offset that impact. And that install base has not changed over the last few quarters either. So there's many a myth about workloads going to the cloud. And I'm sure there are some enterprise workloads going to the cloud, but not off the high end stories to see. So you had the helm last year. Obviously Viper was slide where this year, looking good off the tee, as they say, middle of the fairway, a lot of good buzz, a lot of good testimonials. We had the Vatican library in here earlier. He's a word revolutionary with the English accent, I mean, the Italian accent. So I mean, Viper's doing well. You happy with Viper? Viper, this year is the coming of age for Viper. So you're right. Last year, a bunch of PowerPoints, something else that works according to plan, credit to Amitab and his team. We shipped everything we said that we would do on Viper, on schedule, if not inside the schedule, which is unbelievable for a big software, complicated software development platform, super proud of our team and everything right. And then on top of that, we've been taking the Viper concept and turn it into Project Nile, Elastic Cloud Storage, little inner secret story. I'm actually the unofficial product manager of Project Nile. That's my, that's my pet project. Exclusive on theCUBE. There it is. He helped design that thing. He runs the company. He runs it all the way through. He runs it all the way through. Wall Street meetings and product managers. What are you doing in your spare time? I'm playing the cap. I play some tennis. I don't play golf. Okay, so let's talk about the big news. The acquisition just dropped on everyone's lap. Total surprise by the industry. I kind of heard Rumblings and Silicon Valley. Dave and I didn't even know about it until the last minute. The DSSD, a huge deal. Pat had a glimmer in his eye. Twinkle in his eye. Then you can kind of see that he's been tracking. He didn't say that, but he kind of gave hints that you guys were tracking this for a while. SAP on stage. Tied that together. Why is this deal so important? Obviously, Extreme I.O. is well positioned now. Some criticize that move, say there's no meat on the bone. Obviously, that's a hot sector right now. Doing well. Looks like a nice run you could make with your sales team. How does that tracking, that piece of the business? Well, first of all, Extreme I.O. is doing very well. I mean, I don't want to sit here and say everything's doing great, but that particular piece is doing very well. And we GA'd the products in November. We went into number one in market in the fourth quarter bigger than anybody else. We also had a very strong QQ1. But the workloads we're going to run on DSSD are different. It's the in-memory. It's the I.O. intensive workloads that you want to get storage and memory very fast to the processor, very fast to the application. And Pat had a twinkle for the right reasons. We've actually been talking to DSSD for 18 months. We haven't had an investment in them for over 12 months. And you could just see the people. I mean, Andy is a legend in the industry. A bill more on that team. It is the best systems team in the industry. And this is the power of the Federation. They're excited about the Federation. They want to come and work with us as much as we want them to come and work with us. It's incredibly inspiring. And when you see that dynamic happen with the development team and they could go anywhere they want in the whole industry, they are so coveted. And the fact that we chose them, they chose us speaks just volumes. It's very social collaboration at a whole nother level. We know you've got to run. We appreciate it. Summarize to the folks out there in your own words, why this EMC world is so special in this moment in time. What is your take? What's your bumper sticker? You can share in your own words. Great, thank you. The bumper sticker is very simple. This industry is going through a huge transition from the second platform to the third platform. EMC is investing more in third platform technology and assets than anybody else in the industry. And we're just showcasing more and more of those every year. And this year, you see just huge advances in flash and software defined storage and scale out systems. And that's the message. David Goulden, the CEO of EMC, big part of the play, a product manager part time or apparently full time with his other jobs as running the helm at EMC, captain on the bridge of the third platform here at EMC world. This is theCUBE doing our part in the federation, helping them get the word out. We'll be right back after this short break.