 Live from Austin, Texas, extracting the signal from the noise. It's theCUBE, covering Dell World 2015, brought to you by Dell. Okay, welcome back everyone. We are here for the final wrap up of day two of Dell World. This is Silicon Angles flagship program theCUBE, where we go out to the events and extract the signal from the noise. I'm John Furrier, founder of Silicon Angles. Joining my co-host here for the final wrap up, Dave Vellante, co-founder of Wikibon.com, chief analyst at Wikibon. Stu Miniman, analyst in cloud and infrastructure at Wikibon. Guys, great week, super exciting. I got to tell you, I am jazzed because as a tech sports lover, we love to use the comparison of sports and tech. A lot of action, a lot of fumbles on the ground, a lot of things happening, a lot of balls being thrown downfield, whatever metaphor you want to use, just a ton of action. Dell, Michael Dell, putting the wall out on the table, betting the ranch on the future of the industry with EMC. 67 billion dollars with a tracking stock to VMware, which we can talk about quickly. And just the impact, it's a, as Dave, you said, title wave. Super, super exciting. I'm excited to cover it and track it. You'll know you guys got some special stuff going on at Wikibon.com in terms of special reports, special research that we've heard from a customer today. I'm just trying to make sense of what it means to me. Do I rip or replace? What's the future of Newtonics? What's the future of EMC? Dave, put this in perspective, okay? One week has passed since the announcement. We've been here at Dell World. What is your take? Bring it home for me. Well, I think this is such a large deal. You have to look at it in multiple perspectives. First and foremost, this is a financial transaction. Okay, it wouldn't happen without some financial wizards being able to do a 67 billion dollar merger to be able to raise that kind of capital from large banks to be able to orchestrate and architect the tracking stock to cover some of the funding of this deal, to be able to carry that type of debt. This is a financial transaction. I think the financial wizards are going to do very well with this. It's also a sentimental one. You've got a company that's how old? 30, 40 years old and EMC founded by Dick Egan and Jack Egan and Mike Egan and Chris Egan and Egan Thorin Egan. And Marino. The Family Affair and Marino, right? Roger Marino, and they have had a huge impact on Massachusetts in general, not only, you know, obviously the broader, but Massachusetts in general. So sentimentally, as a Massachusetts resident, there's sadness there, but it had to be done. So from Dell's perspective, this accelerates, this is a tidal wave of enterprise injection into Dell. And I think it had to happen, it was inevitable because as we were just talking about with Tarkin Maynard, EMC for decades has been marking up Seagate disk drives, 10X with controllers that, you know, cost a little bit and certainly added a value, but putting huge margins on top of fry disk drives, that is collapsing. And so only a company like Dell is going to be able to weather that. Well, HP too, we'll see, is going to be able to weather that. So to me, this was inevitable. The last angle is the customer angle. There's good and there's not so good. If you're a customer of legacy systems that aren't growing, you are going to see longer R&D cycles. You're going to see increased maintenance fees and you're going to have to be aware of that. So get used to it and make your call. Do you want to stick with that and not absorb the transition costs or do you want to cut the cord and go now? Okay, so Stu, I want to get your perspective and Dave, we can weigh in on this. Michael Dell is not looking like he's just going to stuff a couple of toys into his bench and into his toy chest here. He's actually embracing EMC and at least the messaging from what I can look in the white of his eyes, I see a legit straight up transparency of, hey, EMC's a great company. I'm going to bring that into the fold. I'm not going to mess with success. Either it might be some carving off, some bloodshed somewhere in the outer fringes of the EMC where it deserves to be cut, some fat Navy here and there, but EMC's essentially going to come in. There's going to be more EMC in Dell than Dell in EMC. Stu, I want to get your take on that because you've got a great management team at EMC. You get the product synergies, product overlaps. Guys, is the EMC essentially a reverse merger into Dell? Well, John, I think that's a great point because here's what, those of us that are on the inside and we watch all these changes, we know how much Dell has changed from the early days. But I tell you, you turn on the big financial news, Dell's a PC company. Look at their revenues, it's mostly PCs. When we talk to Dell executives and it says, why don't you win in certain environments? They said, well, people aren't aware that Dell's doing that. When most people talk, Dell was a consumer company, a PC company, and despite being so strong in servers, all they've done through acquisitions in storage, convergence, partnerships, Dell was not considered one of the big enterprise players. Today, it is without a doubt that Dell is a premium player because they've got EMC together. So this will transform for the market. Everybody will know where Dell sits in the market. Dell and EMC together. So it's really interesting to me that this isn't the guy that created a PC out of his college room anymore. This is the new Dell with EMC, the enterprise company that can go into many of these markets. And as Dave said, there's going to be some challenges, but Dell is a big player with the big thing that we've got in EMC, going to be in our backyard up in Hopkins. I always said Stu, it's a shame that Dell is not known for its servers. That's a marketing challenge, and you've got to put that on the marketing department. But they've done well on the servers. They are doing well on the enterprise. So this is not a $67 billion ad campaign to get more presents. They're basically putting together a high-touch sales force. Dave, you always call it belly-to-belly sales. That's a direct model. That is something that Dell has never really been strong at. They've been known for the indirect channel brilliance. They've got the supply chain, going back to the roots, great SMB channel. Direct and then evolved into indirect. Well, no, they've had a direct sales. Now with the enterprise, as Stu was pointing out, they've been chipping away at this direct sales. They didn't really move the ball in a big way. They've been getting inch by inch, running the ball in the enterprise. Now with EMC, they bolt on a serious sales force. What's your thoughts on that? So I think that the channel is interesting because the guys who have experience, hands-on experience with the modern Dell, like Dell's channel. But Dell in the past has head-faked the channel. So there's a lot of channel partners that haven't done business with Dell, like, oh, I'm really nervous. To me, the big issue was EMC channel partners. Some of those guys are really nervous. Stu and I have talked to some, and they're concerned that Dell will come in with an end-to-end strategy and say, we're going to sell you devices all the way up to large-scale systems and everything in between, converged infrastructure, and their concern is that EMC and Dell will co-opt that relationship, and they won't be able to compete. Oh, we'll give you some kickbacks. That's the big concern of the channel. And so they, channel members, I'll tell you right now, are moving, they're responding before this deal goes down and they're trying to transition their business. Now, they may be jumping the gun a little bit, I don't know, but they are not going to sit still and because they're afraid. So there's a fact, John. You may see it differently. There's a fact from real data in the field. So you may see it differently. We're talking to channel partners saying, we are afraid about this. I'll tell you about the reality. The reality, no, but they're selling you. They're freaked out about it and they're making moves. So here's the challenge. Let's stay in the facts. EMC and Dell, these are facts. The EMC and Dell are going to have to calm that channel down. Or else it's going to open possibilities with IBM, open possibilities with tighter partnerships with Cisco. These conversations are occurring right now and you're kidding yourself if you don't think they're happening. I know, sometimes I do kid myself but I will acknowledge that you're right. There's a freak out thing going on the channel. But I don't think it's big of an issue. Where I disagree with you is, I don't think it's that big of an issue. I'll tell you why. The muscle of the combination is so powerful. Yes, there's probably going to be, call it kickbacks or incentives and soft dollars, whatever. Whoever can, the channel's fickle. The channel's a fickle animal. You bring money to the table, people will act differently. And so the challenge to be, to just highlight your other point, which is this uncertainty, that's going to cause people to freak out because they got to invest in the solution providing business. Wrapping services around products that are known, not unknown, as we've been hearing from customers. So once the product clarity's done, I think the channel equation will be good. Dell is channel friendly, so is EMC. So that's a positive. So I kind of think Dell's of all. Who's not channel friendly? I think Cisco's presence is smaller. IBM has got their own channel. I mean, they're all. Cisco is all about the channel. I mean, well, who's got more muscle? Who's got more, who has more muscle today? And Cisco is a segment of the channel. So they have an indirect channel. If there was an indirect sales, and you can drill down and discuss what indirect means. All I'm saying is everybody says they're channel friendly. You have to be channel friendly. If you don't embrace the channel, you're screwed. But you are right. I'm not saying that it's unrecoverable. All I'm saying is there's action occurring right now in the channel, and I think Dell and EMC really have to address that. The integration team has to address it, and I will say this. The channel behaves very cleanly when you say, here is the clarity around what you offer and how you support it, and do I make money with it? It's all about the gross profit. For the channel partner to me, what's in it for me is I want to serve customers with a reliable product where I don't lose money. So coin operated equation, whatever can address that issue, it might be gonna work. Now, there's a problem now, which you pointed out, which is what the hell does this mean? I got to invest in my business. I got to do my planning, and every day that Dell and EMC wait on the channel decisions is going to cost them an opportunity with their competitors. No doubt about that. So that is to me a tier one problem on the integration thing. Well, I think here's the deal. Is that if you're a manufacturer of products, you want your sales rep to be spending all his or her time focusing on your products. If they're nervous, they're distracted, for whatever reason, right, wrong, and different perceived, and they're now pursuing relationships with your competitors' products, just as a hedge, that's not good for you, because they're spending time doing that when they could be selling your product. That's a fact that is happening, and I think they've got to have a clear message to the channel that we are not going to encourage you. I was running the channel for both businesses. Say I was the lead of the integration team. I would say, okay, what do we have at the table here? EMC and Dell have been partnering, so they have their own little channel programs, channel relationships. There's probably going to be some ugliness and some force-fitting, but ultimately, there's some consistency there. There's a track record. I would essentially pull the partners in, do a partner summit immediately, write big fat checks to the partners, and send the ones that we're betting on, we want to win with you, and then bolt a ton of training on top of it, get that solution message out there very cleanly, and have the sales team incentive on the channel partners with real money coming in to support that. If they don't do that, in my opinion, that'll be a fail opportunity on integration. Yeah, and John, two big strengths that really highlighted to me this week that Dell has in their back pocket. Number one, the long-term relationship with Microsoft. Microsoft is still hugely important. They're growing in SaaS applications, of course. They're growing in infrastructure as a service, that hybrid cloud partnership, and now Dell will have an even tighter relationship with VMware. If you talk about the channel and what they care about, those are two powerful forces that drive, that give them some strength to, we haven't talked a lot about AWS, but if that's the battle front, and what part of the market can Dell have a strong position in, I think they're in good shape with Microsoft and VMware on their side. I think that brings us to cloud, if we can, because Dell's cloud story is pretty clear. I don't think EMC and VMware's cloud story has, frankly, ever been clear, and they've made some other moves yesterday to stir that on clarity even further. Although, again, in fairness, we haven't talked to Rodney and EMC and VMware about it. We're starting to, our team is, and we'll report back. But, as I say, Dell's got clarity. Oracle has clarity, AWS has clarity. I personally like clarity, and I think that it's going to be really interesting. The market likes clarity. The market likes clarity, exactly. And so it's going to be really interesting to see what Michael does with respect to that cloud option. Is Dave Donatelli right? Do you have to have a public cloud option as an enterprise player, or are you screwed? Well, or you could partner in supplying those public cloud providers, like with hardware. So you would say, no, you don't have to have public cloud. Not if you have the kind of relationships with the alliances and the partnerships. If you are making more money selling, quote, ODM-like devices that have software enabled, built-in, all this management software tied into a lot of internet of things. There's an argument that says that the OEM business for Dell could be the catalyst to fund every new cloud build so that people don't have to build their own boxes like Amazon. I think you're right, by the way, let me just say. So I think Oracle, to that, would say, well, we're a higher margin business, and Dell would say, hey, we're going to do volume, and we're going to drive more revenue. I mean, Dave, we heard Pat Gelson during Carl Asherbach say to their channel, when AWS wins, we all lose. You heard Michael Dell basically say, when Microsoft wins, we're all going to win here. So I think it's a big customer. Great point. All right, guys, I want to talk now about what Wikibon is doing right now with this, because your practitioner community, you and I were talking last night, Stu, you were also chiming in on some insight around. You guys have a huge practitioner network within Wikibon. The CUBE community itself has obviously been following what we've been doing here and at the events. What is Wikibon doing for helping practitioners understand the ramifications? Because this is the number one synonym we're hearing from users. Oh shit, what does this mean to me? That's ultimately what the practitioners are seeing across the board, and they're constantly evaluating, there's not a lot of information out, shoes will drop, as Stu said yesterday. What is Wikibon.com doing? Any special reports? What kind of research? What's happening? So we like to tell the practitioners like it is, and so the first thing we did is we wrote the survival guide to the Dell EMC acquisition. That was on the day of the announcement. We were going in the boardroom, and we were firing stuff out, so it was hasty, but nonetheless, one of the things that we told our practitioners was really expect what I said before. Expect for the products that are not growing, expect elongated product cycles, expect less R&D, expect higher maintenance costs. What should you do about that? You have to place a bet now. Maybe that's okay. Maybe that doesn't, that's not a problem for you. Maybe you can do what they do is elongate your own product cycles, don't refresh, don't put new workloads on those systems, or maybe you better think about a new platform. You know, whether it's inside the family or outside the family, these are very important times and very important decisions. The last thing we advised our clients to do is sit back and wait and see what happens, because words don't matter. You know, BS walks, money talks. So that's one thing. It was tactically getting word out to our constituents, our practitioners, what to expect. The second thing is Stu and Brian Gracely are finishing up the cloud manifesto. We have been working on this cloud transformation and cloud disruption now for quite some time, helping our clients understand the multi-cloud environment. We certainly agree that it's going to be a multi-cloud environment. All the growth, as you know, is coming from the public cloud, but it's still going to be an inter-cloud, multi-cloud environment. So we're trying to help them understand how to manage that myriad of cloud, whether it's infrastructure as a service or platform as a service, and very importantly, one of the things that people always overlook is software as a service. You've got all these SaaS applications and relationships that are cloud connections. You've got to deal with those. So the manifesto is addressing that. And the third piece is this whole big data, this notion of systems of intelligence. We see traditional operations, transaction systems, and big data analytics systems coming together to create systems of intelligence. A lot of that activity is going to take place in the cloud. So that kind of goes full circle, Stu. Stu, what's your take on this? Yeah, absolutely. You can obviously cloud impact, you and Brian Gracely have been doing some stuff. What's happening? Yeah, so I mean, we're spending a lot of time. I mean, it's been late night, lots of people. I mean, at this event, there's been, you know, great rumor mongering and everything going on. So we talked about John lately last night. There's so many changes yet to happen. We've got a lot of shows coming up between Oracle next week to a few other shows there. And absolutely, we're going to keep publishing. We're going to be doing lots of videos. And we welcome the feedback from the community. So we're really easy to get in touch with, you know, reach out to us, ask us questions, and we're happy to go dig into those to try to find out what the reality is and how it impacts all of the practitioners. Because that's what Wikibon was founded on. It's allowing IT practitioners to share with their peers and understand how to take advantage of all of these new technologies and opportunities that are out there. Because we're trying to get beyond that, you know, just buying point technologies and, you know, doing undifferentiated heavy lifting. What do we do to enable the business help with the digital transformation and move forward? All right, well guys, I want to say it's been a real pleasure, you know, working with you guys in this event. Always a pleasure, John. I want to thank Heather from Dell, who's been great with the schedule and the team here, Patrick, throwing out all the great summaries. If you've noticed from theCUBE, we're putting out as much confetti and fireworks we call it. We want to get the soundbites. You're going to see the Twitter cards. You're going to see images. Our goal is to serve you as much confident as possible. You're starting to see these small snippets with these soundbites. We're calling them cube gems. Not to be confused with ESPN of tech web gems, but because there's no web here, since they're cube gems, we'll call them cube gems. Where you can get a sample in the stream in real time, easy to consume, you'll see a lot more of that. We're going to be at Oracle Open World next week, as well as IBM Insight and there'll be many more events. So it's been a busy month. And I'm Dave, Stu, thanks so much. Thank you, John. Quick wrap up, I mean, bumper sticker of the show. Michael Dell, go big or go home, as Karen Kinto said. This to me, this show, is a seminal moment in the industry. Michael Dell has put him in the pantheon of leaders, like Larry Ellison, like Steve Jobs, like Bill Gates. This is a moment where he's still got the vigor. He's still got the spring in his depth. He's only 50 years old. This is Dell 5.0. This is going to be the beginning of a sea change as Dave says, title wave. So that's my take, Dave. What's your quick summary of the event? Well, it's sticking with your waves theme, John. The waves are getting gnarly and EMC decided, you know, we're going to partner up with Dell and Dell's riding the waves. You've got to ride the waves. And they're riding Dell. What's Pat Gelsinger's thing? What's Pat Gelsinger's quote? If you're not in front of the wave, you're going to be driftwood. So EMC, I think, decided, you know what? We're going to be driftwood if we don't make a move and this is the move they chose. It's two. So two weeks ago, Conan O'Brien put out a little skit and showed Michael Dell, you know, sitting up on stage at Dell World and saying, hey guys, nothing new, please go buy some new PCs. Look at all the press that was here. The excitement is my fourth year here at this show. This is a major show. Kudos to Michael and the whole team for what they're doing. You know, as you said, seismic changes. We're going to look back five years from now and say, remember when Dell bought EMC and all the ripples that we saw go through what happened? The founder is still around, you know, for all the entrepreneurial talk and venture capital discussions of unicorns. It's always the case when the founders around founder led companies statistically do better than non-founder led companies. And that really is a key thing. Great to have Marys Haas and Michael Dell and joining us. Thanks to the crew, Andrew, Alex, Jeff and the team, Sam, Heather. Thanks for everyone. Thanks for watching. This is signing out from Dell World 2015. Go to wikibon.com for all the latest research, the survival guides and in-depth research for what this all means for you, the Dell EMC. Go to siliconangle.com. Go to siliconangle.tv for all the videos and thanks for joining the conversation. See you next time.