 from Austin, Texas. Extracting the signal from the noise. It's theCUBE, covering Dell World 2015. Brought to you by Dell. Now your hosts, Dave Vellante and Stu Miniman. Welcome back to theCUBE in Austin, Texas. This is Dell World 2015. I'm Stu Miniman with Dave Vellante. Happy to have back on the program Ashley Garak-Pawalla, who's VP and GM of Dell servers. Ashley, welcome back to the program. Thank you. Thank you Stu, Dave. Thank you Dave. So Ashley, what's new? Not much new in the news lately. We've all been joking this week. Dell, still strong, at least from the numbers that you guys put out in the markets and for people to track. So what's been hot in the server business for you this week? Well, we've got a lot of exciting news that's happened. If you just look at servers for a second, we've continued our trend to growth. We're on a pretty nice path. As you said, we don't share as much numbers as we used to, sorry about that. But the last four years, and this'll be the fifth year straight, we've taken about two points of share from the number one vendor and we hope to be the number one vendor soon in terms of units, a little bit more to go in revenue. But still number one in the US and APJ, a little second in Mia and moving up very strongly there as well. So we're also really, really excited by the ramp of some new products, whether it's FX2 or 13G in general, has been a fastest ramp we've ever had. And then just in August, we announced publicly for the first time a new server business, scalable solutions business. Think of it as sitting between the PowerEdge mainstream server line and the DCS custom hyperscale line. And if you know how fast DCS grew, we think this is actually going to grow faster, which would make it our fastest Dell enterprise growth. Yeah, it's interesting. I think actually one of the opportunities we have in the market, now that you're private and EMC's going private, we got lazy when it came to measuring the business. It's like, all right, let's count the boxes, let's put them in buckets and just stay there. And too many people think of Dell as, well, how many PCs and servers do they ship? We've been talking for years about the transition of customers don't think about, we were talking to Travis Vigil about storage. I don't buy storage boxes. I deploy applications and here's environments that I have. What are you seeing on the server side? We've talked about that transition. Where are customers? Do they still have the server budget that they buy every year and how many boxes and manage the rotation the way that they did or are you really seeing a change? I'm seeing a drastic change. If you went back, how old are blade systems in the market today, maybe seven years? They were probably designed. Maybe maybe 10, I remember the original IBM platform. Eight and a half years ago, maybe started to talk to customers 10 years ago. And when you did, you talked to the server admin and he got upset with you because now you made him talk to the networking admin and who was going to set the policy for the switch? Who managed that? It's all in one box. It's too converged for how they work. That's gone, all right? So we don't have that issue anymore. And now we talk to people who have, I'm the infrastructure or I'm the software layer, I admin converged, cloud services, things like that. So I think we're past thinking about that in discrete compute networking storage buckets. However, different customers are looking at it differently. So some customers now, very much, I'm going to lay down a very standardized infrastructure and I want it to be standardized and then my software's going to be the thing that differentiates and pulls out the right modules, if you will, for applications and work. And some are going the other way, which is, actually I just, I want a simple, give me an appliance for this workload. Now give me a different appliance for this workload. And I want each one to be optimized because I don't want to go, I don't have a hundred data scientists to work through that software layer that allows me to orchestrate, automate and manage. So I think we're seeing spectrums across the board. And the business has changed in other ways too. I mean the competitive landscape has changed dramatically. I mean on the one hand and the sort of core sweet spot of the server business, kind of have a duopoly as you guys in HP, but you have ODMs coming in, you've got Cisco getting into compute. I wonder if we could talk about the competitive landscape, how that's changed and how Dell has evolved. Sure, sure. So we've been doing servers now for 20 years. And if you look at the very first servers, the uniqueness that set them apart from tower desktops was that we put casters on them. Right, so, and we rolled them around, right? You remember those days? So if you think back then, The server landscape, who shipped the server was completely different. You had digital equipment, you had people in workstations moving the servers from Intograph, you had a completely different set. And I think that's happening again and again throughout this historical 20 years. So eight years ago is when we started DCS and that's when you saw this rise of hyperscale. And if you're at that size, frankly, I would probably try to convince you if you're spending three, four or $5 billion in CapEx every year, you should probably spend 50 to 100 million in Apex and hire people who are experts in helping you spend that CapEx wisely. And that has really given rise to a new set of competitors for us, which, whether they be ODMs or whether they be direct sales, and even smaller companies that are backed by a supply chain that didn't exist just five years ago. I think in some cases we don't compete in those spaces because we've chosen not to and those companies have chosen not to buy a solution from us or to rely on our supply chain, our services, our support that we offer. But that's a handful of customers at best. If you look at the competitive landscape and enterprise, we have a couple of differences. So right now we have a company that is splitting and going less end to end. And we have another company that used to be number three that has decided to get out of the X86 server hardware business. And I think those are acknowledgements of the success we've been having in getting ahead of certain trends, whether it's DCS, DSS, converged, and really putting together a competitive solution, but we're backing it with something different than ODMs or ODMs might do. Global support, two under countries. If you're a growing company and you're thinking about acquisition costs because your scale and infrastructure is so big, you're probably in more than one data center in more than one country and you have ambitions to go beyond that. And that's what we do best, is we're able to service it, get it there, support it even better, and the quality still matters in that regard. Unless you just take a philosophy of, I'm just going to buy over provision and then replace as things fall apart, right? But I think what's really interesting is it's not enough now to have a catalog of really great servers and say, here's my catalog, Dave, would you like to buy something? I think you have to say, Dave, what is, what are you trying to do? What's your application? Are you just doing one app? You control everything? All right, then we need to talk because you're going to grow in a different way. Are you running an enterprise with email archives, mission critical, then we need to talk, we're going to do it in a different way for you. But either way, you should have to leverage in a conversation with me to say, this is exactly kind of what I need and your catalog may not fulfill that. So how do we talk about whether it's economically viable for me to have exactly what I need? So much more of a solutions approach, around workload, around different use cases, and I'll have to know where to use solutions, but I wanted to ask you too about Oracle. Obviously, SQL Server as a database, very popular running on Dell systems. A lot of Oracle running on Dell servers, you know? I mean, it's just, that's the way it happens. I got good Dell servers, I want to run Oracle. How has Oracle's entrance acquisition of Sun obviously getting more aggressive? How has that changed the market? And then specifically, I'm interested in your Oracle solutions. How important of a market is that to you? Obviously, very high-end customers. Maybe you could talk about that a bit. Sure. I think Oracle entering the server hardware business is really been something that we're less worried about in terms of competition or creating a rift between the commercial trade between the two companies. Very, very important software company and partner to us. We use Oracle in our own company. Many of our customers want to use Oracle, but they want to use it on the best-performing servers in the marketplace, the best-supported, i.e. Dell. And so that's how you're going to live. Most, today, most of our customers have a heterogeneous data center. That's the world we live in. That's why Open and Standard helps put these things together. So what do I want? I want to make sure that Oracle runs the best on our servers. Second, we spend a lot of time on solutions, bringing that package appliance together so that you can buy a turnkey and working, again, to make sure we've got the best optimized package. I think if you look at just straight server-to-server, I think the IDC would probably classify Oracle in the other's bucket, so it's a little bit hard to see some of their numbers, for instance, but 20, 30,000 a year is not a, it's a different business than we're running, really. So if I were you, I would be stoked about this EMC acquisition. I mean, you had, obviously, you guys had a great relationship with the EMC, a couple of billion dollars, and then Dell decided to diversify and go more vertically integrated in storage, and then, of course, fighting words to a big storage company like EMC, and so they do the VCE and V blocks, blah, blah, blah. But now I've got a good-sized business, I don't know what is it, let's do VCE, a couple of billion dollars. VCE did over two billion months. Business, nice, you know, that is going to be part of my family. So that's got to be really exciting to you. I mean, you've got an opportunity now to build new solutions with that part of EMC as a part of your company, as opposed to sort of a partner. Yep. Where you had a little, I wouldn't say a coal war, but there was a little bit of a chilly relationship there. Now, how has that dynamic changed your thinking? Well, it'd be going to be difficult for me to speculate forward six to nine months. But- But go ahead. Based on the definitive agreement, if you go and take a poll of the server, technologists and experts who work for me, they are kind of walking a little bit above the floor, they're so excited. And the reason they're so excited is there's never been a bigger commitment in our industry or within Dell by Michael that we're an enterprise company. I mean, you just, no matter what, if someone comes back, I had a dinner with a customer who says, look, I don't know why I didn't consider you, but I've been buying HP servers all these years. I want to convert it over to you. As well, why didn't you consider this earlier? I thought you were a PC company. All right, the commitment has been made at the highest level, independent of the agreement or the proposed transaction. And so you have a set of enterprise people with and Dell who feel like just a weight has been lifted that the world knows now. There's been no bigger news this past week, however, in technology. And so the world knows that Dell is completely committed to the enterprise space and the data center space. And that's the part they're excited about. So Ashley, and the keynote, big news for me was Satya Nadell up on stage, talking about the partnership with Dell and Microsoft. What I'd heard a couple of years ago, Microsoft started to move off of some Dell servers and tried out some of the ODMs. Now it sounds like they're fully back in the fold. Michael said that Microsoft is their number one customer and Satya said how important Dell is. How important is the Microsoft relationship to your server business? It's really, really important. There isn't probably a more strategic customer in terms of hyperscale to us than Microsoft. And it goes much deeper than that. So if you look at just the total balance of trade of a commercial relationship with Microsoft across notebooks, desktops, server OSs, SQL, yeah, just keep going on and on and on. This is a partnership that is the foundation for most of people's data centers. They also have been very, very progressive in building out their cloud services and working with companies like us to build that out. And that's been very impressive. We've got a lot of experience in how to do this. We're sharing that with them and we're co-designing some futuristic technologies together. What's even more interesting is what we talked about at the keynote, which was being able to put stamp sizes of clouds into the people's hands with day to set it up, not weeks, not day to scientists set up. And so whether it's cloud platform system, now called premium and cloud platform system standard on Dell, I think we've got the ability to bring some of this technology in this way of bursting and cloud to almost all sizes of customers. That's pretty exciting, all on Dell. So Microsoft has been pretty vocal in when it comes to OCP. Can you give us the update from Dell's standpoint on OCP? Sure. Again, we were part of the founding elements of OCP. We still serve on some of the committees with our technologists in OCP. We've made donations in the past. We continue to offer certain donations today. I personally have been a little bit disappointed in that I think the commercial viability for the customers has lagged, the perhaps success of the donations. And part of that is our inability to today to share IP. I mean, just legally, that's not a framework for us to be able to share IP. So instead, we're donating specifications, which are valuable, but perhaps not as valuable as the IP would be and the designs would be. It's also based on hardware, not the elements of software that I think are one in the same. So without the orchestration management layers above it, it's a little bit more difficult to enable a customer to take advantage of some of these donations that have been made. So we still see an interest in the theoretical concept of standards. And if, can you help me, Del, lay down an infrastructure in my data center that I can then reformulate into the applications I need by using software as that element versus project by project setting up unique stacks that later I don't know what to do with or have to decommission in a different way. So I think cloud is too big a word, but the qualities of cloud, flexible, agile, reconfigurable, automated, that's what people really want. And this is, so anything that draws them towards that goal, I think is a good thing. And the advent of the mega data center was an inflection point in how data center design was thought about in organizations, whether it's large banks and even trickle down to mid-sized companies, how they're using cloud, et cetera. So you go back to the days of the 90s, early 2000s, you had sort of all the stovepipes. We know the story well, purpose-built hardware supporting a fairly complex application portfolio. That still exists today. Average age of an enterprise app is probably two decades. But then you've got the, as I say, the mega data center's kind of showing the way. At the same time, they're getting more complicated as you just described. How do you see the data center of the future? Is it, you know, this kind of old and new where the new is clean and the old is kind of this mess that you just sort of keep going? Or do those two worlds come together? What are your thoughts on that, Ashley? Well, the CIOs we talk to have a pretty difficult problem. So on one hand, their request has not changed over those last two decades. Can you get more efficient? Can you squeeze? Can you consolidate? But at the same time, don't make sure I'm very reliable. I'm very secure. So in a sense, it's an OPEX and efficiency discussion. At the same time, they're either inspired or perhaps a little bit fearful of a competitor who might turn that over to a business or a digital transformation discussion for IT. And not about efficiency, but about, let me grow there because I'll be faster to the customer. My apps will run quicker. I can reach people in global regions that others can't. And so that dichotomy of how do I operate is really a struggle for CIOs. If you see that transition over, I think the biggest fear we see is people saying, do I eventually just have to run a brand new green field? Bring it up with all these new technologies that I hear you talk about and then just have this other data center wither down to nothing and decommission it. And then I can build another one. And we don't think that's the case. Again, heterogeneous. You're living in decades of technologies being announced every year that can change the game. And so you have to live with both. So how do people operate in that way? Typically project by project or they start in development or proof of concept and then it grows. But some are taking a philosophy that's kind of embodied, for instance, in FX2, our converged platform where it can run and be more efficient in that traditional way of thinking. But I don't have to throw it away. When it comes to software-defined, cloud, big data, it's already optimized for that workload. And so it's future-ready, if you will, is the tagline we've been using. And so I think that's a really powerful way of building for a future technology right now. Excellent, Ashley. The great insight, by the way. I love the vision. It's very clean. And I appreciate you sharing what you're learning from talking to the CIOs. All right, appreciate you coming to theCUBE. Great to see you again. Keep right there, everybody. Stuart and I will be back with our next guest. We're live from Dell World 2015 in Austin, Texas. It's happening here. People coming out of the Solution Showcase. Lot of action, day two. This is theCUBE, we're right back.