 Live from Las Vegas, Nevada, it's theCUBE, covering EMC World 2015. Brought to you by EMC, Brocade, and VCE. theCUBE SiliconANGLE Media, SiliconANGLE.com, Wikibon.com's exclusive six-year coverage of theCUBE. This is our flagship program. We go out to the events and extract the signal from the noise. I'm John Furrier with my co-host Dave Vellante and I'm the co-host of our second theCUBE, Stu Miniman here with Wikibon.com. And we have two special CUBE presentations this week for wall-to-wall coverage through Thursday, live at SiliconANGLE.tv. Check out theCUBE. We will be here, wall-to-wall, non-stop interviews, double barrel shotgun CUBE signal from the noise here live in Las Vegas at EMC World 2015. Dave Stu, welcome to our sixth year. Great to see you guys. We're fresh, we won't be, tomorrow. So, guys, thoughts, six years, we've been doing this. We got to know EMC. I mean, we have been documenting history at EMC for now six years. We have been embedded on the front lines talking to all their execs. This transformation started with Jeremy Burton, Joe Tucci, and the senior execs, Goulden and others, six years. Guys, we've seen it all. We've talked to everyone. We have every corner of this data lake covered inside EMC. Thoughts on where they are, Dave. Well, you think about it, John, the first CUBE ever that we did together was EMC World 2010. You go back to 2010, and you're talking about a whole different world. It was largely EMC, what they call now II, the traditional base. It was VMAX, and VNX was really the workhorses. While they're still throwing off a lot of revenue, that predated all the big data talk, all the dupe talk. Cloud came in sort of a year later, but it was all really private cloud. It wasn't real cloud, not true cloud, Stu, as they say. Now you're seeing EMC sort of transform no Tucci this morning. Tucci wasn't up on the keynote. First time that I can recall that Tucci was not on the keynote, so they had David Goulden up there. I don't know what that says, Stu. We see John Chambers announced, Cisco announced a new CEO today. EMC's been sort of dancing around on the succession plan, so we'll see. But maybe Goulden from within, but Goulden laid out essentially the EMC playbook. And my take away from this morning, John, is Stu, was it was incremental R&D investments in existing products. It was cloud-enabled everything, and it was start hopping on the scale out and the software-defined trends, even though we didn't hear a lot about software-defined this morning, we will this week. The other big news, of course, is the bringing in of VCE, a $3 billion business now this year. It should be, the other thing I'll add is, EMC's now a $25 billion company. Not really growing that fast, and it's got the federation. Everybody's trying to, the guys on Wall Street are trying to break up the federation, but thank God, Stu, for the federation, VMware saved EMC this last quarter from a stock price standpoint. So, better together? What's your take? Yeah, so Dave, right, you know, you think back to 2010, you remember, we had Michael Capellis on theCUBE with Joe Tucci. He had just joined, it was the Acadia, the VCE thing, VCE, Joint Venture gets pulled back in. We're going to see Tucci tomorrow. They're going to go through a lot of the federation. Absolutely, there's a lot of discussion as to the activist investors and what's happening there, and I think the Cisco succession highlights what's going to happen. Tucci had told us last year that he was going to retire in February. Going to step down as CEO, but they added a couple of new board members. He's going to stick around for a while, and absolutely, this is the case here this week as to why the federation makes sense. We've got things like the federation enterprise hybrid cloud. You've got the whole data lake things happening and why VMware and Pivotal, you know, outside of the EMC-II and of course VCE and RSA inside, the EMC-II are helping to make them, you know, one of the critical pieces of IT going forward. Guys, let's talk about their business. EMC is like, they always transform. They're obviously in the middle of the intersection of the storage, conversion structure, a lot of platform change. We hear that every year, the waves of innovation, but right now it's exploding. You're seeing a lot of technology shifts do at the network level with SDN. You're seeing stuff at the data layer going on with Pivotal developers. The cloud has certainly changed the game and the transformation around data is Jeremy Burton's, you know, calling card, information generation, EMC stores the data. Flash is at the center of their product strategy stew. You got flash, market share gains, innovation around the technology. What's your take on the technology for EMC and that shift? Yeah, so John, one thing I actually called out in the keynote, it's interesting. EMC's been talking about this third platform now for a couple of years, but I felt like there was a little bit of a shift. We're talking more about the apps. So obviously they're working with Pivotal, talking about some of those cloud native applications with like the new VX Rack hyperconverge that are out there. It's not just about the application, it's not just about the infrastructure, but it's about the applications, the data that sits on top of this. Information generation is an interesting concept. We'll see where they kind of take it. I think I was taking a page out of IBM's book, Dave. We're talking about smarter planet, we're talking about making just kind of the world a better place. Love to see the Charity Water event going on here. Well, that's great, right? Jeremy even said, he said it's tough for me to come out after listening to Charity Water because they're like changing the world and we're making storage products. It's kind of a self-deprecating joke, but I like it and EMC knows how to elevate that conversation. But here's the thing with the information generation. It's good, it's good marketing, but I think my concern is that it's almost like EMC is asking the baby boomers about the information generation. I'd like to see the information generation front and center. You really didn't see that in that data. It was sort of, what do businesses think? What do old guys think about the information generation? Trust and you notice that real time was very low on that list and I guarantee you if you really talk to the information generation and we saw this last two weeks ago at service now, it was all about real time apps. That's what the information generation cares about. Well, that sets the table for the whole flash focus. So they're expecting huge market share gains, Dave. You know, I was talking with David Floyer last night about this, that the gain in flash alone could be significant for EMC and they're under a lot of pressure. I mean, their business is under pressure. This traditional storage models are stew. We've been talking about this for years, but the elephant in the room is everyone is shifting to what Dave says, near real time and ultimately real time and that requires heavy duty compute and flash on the storage side. Guys, what is it, what is your take on this? Are they under pressure? Are they under siege? What's going on with EMC's business? Yeah, I mean, John, we're going to have Guy Churchward on this afternoon. Core technology division, it's VMAX, it's VNX and it's XtremeIO. So XtremeIO has grown really fast. EMC says it's the fastest, yes, and the data protection group. Which is down, right? Is it down? The data domain grew a huge business. What does XtremeIO do to the legacy businesses, as it were? We're seeing a little bit of a shift. I think Dave, you quoted from the earnings call that 30% of XtremeIO sales are going into existing VMAX customers. So what does that mean for margin? What does that mean for top line revenue as XtremeIO continues to grow in all flashes of market? Well, there are gross margin headwinds. There are currency headwinds to the tune of $400 million. Here's the thing about the core technology business that Guy Churchill runs. It's very cyclical now. It's very much not immune to product cycles. So for instance, this past quarter, data domain was down double digits. Why? Because the customers knew, this new refresh was coming out. The data domain beast, everything's the beast here at EMC World. They're breaking beast records and growls and so forth. So they're very much susceptible to product cycles. So again, EMC Playbook. Incremental innovation in R&D for the existing portfolio. Connect to the new cloud era with whatever. Investments, R&D, tuck-ins like TwinStrada and some other investments that they've made. And then go scale out. That's another sort of investment that they've made with XtremeIO. I mean, Dave, last year, they made a bunch of announcements. They had Andy Bechtelstein on stage, kind of wowing everybody. This year, it kind of seems a big update. Ford.O on the XtremeIO, all their platforms get a major refresh. So it's kind of that cycle of M&A and the research. XtremeIO is the big story. The digital growth, billion dollar plus business. The question is margins, margins, margins. EMC is a consistent mid 60% gross margin business. What's going to happen to those gross margins? Can they maintain them with XtremeIO? Can they grow them? Can they grow them as they go to software defined? And Dave, they talked about the future being software led. And Amazon has set the bar for the software industry with their most recent earnings. I was at 17 points of margin on software. What will EMC look like if the mix starts shifting a little bit out of hardware, some out of services and software grows? Okay guys, let's break it down here. Let's talk about what's happening at the show right now and what you expect this week to see in terms of major moves, partnerships in the ecosystem. What do you guys expect to see from EMC and their federation network of companies and their partners? What's the big top line? What's the big shift? What's the big game changers? And what's me too and what's going to be the evolution? All right, so John, I mean, what I love is we've got wall-to-wall coverage. Last year we set a record with how many interviews we did. We've got the top brass from Jeremy Burton's going to be on all the presidents from the divisions. Pat Gelsinger is going to be here. We've got a double segment lined up with him. Always good on the VMware piece. We've got Pivotalon, of course VCE talking about their new pieces. So we're going to cover all the new announcements. One thing I have to give great kudos to EMC on is we're going to talk to a ton of practitioners. I think over half of the interviews we're going to do on the second set here are going to be practitioners. Trident-true people that are doing cloud things, people that are using storage products and they've got some fun customers that we've got on. We've got the Lotus F1 team. We've got, I think it was, what was it, Fox News Australia and lots and lots of practitioners with interesting businesses that are being transformed in this digital economy. Dave, we've been talking a lot about kind of the second machine age in the digital economy after that MIT event and starting to see how EMC plays into that digital economy and how that impacts the customers we're going to talk to. Yeah, you heard Goulden reference that several times. A couple other new things here. The first time we've really had a DevOps presence, there's a separate DevOps event going on. And then I don't know how much you're going to hear about it, but the Federation is certainly talking more about open source. Things like Project Lattice, we're going to have Pat Gelsinger on. He can maybe take us through some of those things. So you're seeing a cultural shift, physically, John, to the West Coast. You know this, because you're now surrounded by the Federation, as well as a mind share, mindset shift toward more friendliness toward open source, open stack, other open source projects. Yeah, I mean, Dave, just to point, going on this week, Microsoft ignites going on. The old tech aid, huge user show, lots of what's going on with Microsoft Azure. Microsoft made a big announcement today on how you can bring really what they call the Microsoft Azure Stack into your own data center. So the question is, how real is the cloud story here at EMC? That's going on. Talk about the DevOps. There was a great EMC code event, Steve Chambers spent half the day yesterday. CoreOS Fest is going on in the Valley. So it's only a couple hundred people, but hot technology, and a lot of it. So what does EMC have to have that? Microsoft now, one of the new CEO leadership, is talking about big games, the Holodeck product that they're showing. They're showing some kind of game-changing vision, and obviously their cloud business is doing well. What does EMC have to do? Is it information generation? Guys, what's EMC's big play? They got a transition, right? So you got this big giant core technology division that is the profit engine that is under attack. It's under attack from within and from out. And so that's the big thing. They are a company in transition, and they've got to navigate that transition. They've got to accelerate the new so that it grows faster than the old declines. That's the big agenda. Okay guys, we're kicking off the segment. We're going to wrap it up. We're going to bring you wall-to-wall coverage here, live in Las Vegas. This is EMC World 2015. This is theCUBE. I'm John Furrier with Dave Vellante, Stu Miniman, and also Jeff Frick. And we'll have a school of other great guests coming through. Watch our schedule. Follow the CUBE, silkenangle.tv. Again, we're bringing you all the action, talking to all the executives. We'll have all the senior management on CIOs, customers, entrepreneurs, partners, cloud era. Everybody's coming on theCUBE. Stay tuned, wall-to-wall coverage for three days here in Las Vegas for EMC World 2015. We'll be right back after this short break.