 We're live at Dell World 2012 in Austin, Texas. I'm John Furrier with SiliconANGLE.com. This is theCUBE, our flagship program. We go out to the events and extract the signal from the noise and what a day it's been, day one. I'm with my co-host Dave Vellante and we're digging in the data. We're all about providing the data to you and extracting the signal from the noise at Dell World and Dave, introduce our next guest. We have another analyst coming to the table here with some data. John, Roger Kay and I used to work that we met at IDC. Roger's the president of Endpoint Technologies, a very well-known player in the whole mobile and device space. Roger, welcome to theCUBE. Thanks for having me on, Dave. Yeah, good to see you again. We're here at Dell World. So what are your initial thoughts? You saw, I presume you were in the keynote, saw Michael Dell and Bill Clinton. Bill Clinton is Bill Clinton. He's just fabulous. He's good, right? He sell himself. He ran a little long, but he has a lot of good ideas. Trademark for Bill Clinton, yeah. But he was good. That was really enjoyable. So what do you think of Dell World? I mean, you've been coming to Dell Worlds for a while now, right? Well, I haven't been that many. I think this is the second Dell World, just to be clear about that. So yeah, I've been to all the Dell World since they began. But yeah, so it's grown quite a bit from last year. And in fact, I had a conversation with Michael Dell in between about where to have it. And the question was, is Austin big enough for Dell World? And he was thinking, where can we go? Should we go to Las Vegas? And I was saying, how about Silicon Valley? But it looks like what he decided to do was to just take up all the space in Austin and have it here one more time. And I think it's been a pretty successful conference. It's a good challenge for that, I mean. Yeah, so it was a little cold last night, though, for being outdoors. Yeah, that was a little tough. East Coast people are used to it, John. True. All right, so what are your thoughts on Dell? I mean, obviously they're a company in transition. We've been talking all day about, hey, this is a $60 billion company with a sub-$20 billion market cap and $11 billion in cash. Right. And so a lot of work going on in the last four years have been about this transformation, this end-to-end. What's your angle on Dell, and particularly in the device space? Yeah, well, where I think they're going, Dave, is basically around this long transition. Wall Street's been very impatient. They've been hammering the stock, saying, where's the results? You want to see more stuff? And... Gimme, gimme, gimme. Well, you know, why would they do that? But at any event, this is a long transition and it could take up to a decade. If you look at startup businesses, sometimes they take 10 or 15 years to pay out if they're complicated businesses. So this is a case of a startup business occurring within an established business. Established business is the commodity client business, the stuff that I'm known to deal with. And that's the business that slowed its growth nearly to zero and is beginning to decline. And Dell's share in it, in fact, is declining. And so that's slowly going away while they're trying to build their enterprise business which is building, but slowly, maybe more slowly than they'd like. But I expect it to keep on going. There may be a dip in revenue that's fairly substantial before the new business picks up enough to take the weight over, but it's got a future to it. So Michael is doing the right thing by investing for the future and just staying the course with it because it's hard to stick with something when Wall Street's always yelling at you, telling you to get moving with it. Well, when Michael was on here, I mean, I asked him a direct question. I kind of, I don't think he connected with the dots, but I was trying to make the metaphor. But, you know, staying for the long haul, he mentioned the long haul. I kind of brought up that he's still the founder of the company and you look at, you know, we look at historically some of the big companies that had founders, like even Bill Hewlett and Dave Packard back when they've had, they've had a bunch of bumps from their business from 1939 to when they retired. But the founders, they write the ship. So what I, you know, we see, I kind of see that with Dell. At the same time though, the old way of doing things was based on a solid OS. So one of the things we've been debating and this is still unknown is that you got this jump ball between Windows 8 and Android on the lower end of the mobile market. So anything over 1,500 apples crushing in desktop solid, things are stable there, but their mobile category is obviously soft and declining and changing. I mean, obviously, mobile's exploding, so there's big data, but so those are areas that we know will be around. So what's your take on that? I mean, you got Android eating up on the total low end, the tablets, eating into the notebook side of the mobile. So, I mean, you got, I bet in the ranch on obviously Windows 8. Are the L's working on Android, do you think? I mean, what do you recommend to them, should they be? What's your advice to them? Okay, so Dell has always been somewhat agnostic. I mean, I should say that in a qualified way. So for example, in the days of the hegemony of Wintel, Dell was a clear Microsoft Intel, those are my best friends, it's how I do business. And in fact, it actually came up to bite them. I think it was in 2005 when some of the subsidies from Intel actually exceeded a billion dollars in a quarter, which seemed a little extreme for marketing development funds, but in any event, they were clear. We love MDF. They were clearly very much involved with those two suppliers. But at various points in history, Dell has played footsie with other platforms, be it ARM processors or Android operating systems, and they've continued to experiment in this way. The problem is they're a little bit blocked in the high mobility space, which I count as phones and tablets right now, and that's where the growth is. But they're a little bit blocked there because they can't really launch a phone in the United States because there's so much competition here, they have nothing to differentiate on, they don't have the carrier relations that you need, and so where are they going to go? One of their competitors, Lenovo, had the luxury of launching their phone in China, and they could build a huge market, another number two in phones in China, and they just moved to Vietnam and Indonesia and Philippines and much of places. They're going to be selling a whole lot of phones before they even come to the United States. Dell doesn't have that luxury, and HP has fallen on its sword a couple of times, backing palm and then backing away from palm. So the short answer to the question, John, is Windows 8 is kind of where their money has to be because they don't really have an alternative platform, so they're hoping for it. And as you may have, you seem to be pointing out. Hoping for it. There was some issues with exactly how Windows 8 was positioned because, frankly, it seemed as if it's an operating system whose business is to sell tablets against Apple, and it seems to be really good at that, and if you have a nice touch screen, you can scroll left and right on that wonderful Windows 8 menu, but if you're trying to do that with a mouse, it's a pretty ugly experience. So as a general OS for PCs, Windows 8 is kind of eh, not so great. And there's compatibility mode, I mean, whenever you see that, you just kind of throw up in your mouth because it's just like, it's just like, right. And so what's going on is, enterprises are looking at, I'll get a few of those Windows 8 tablets and see how they go, see if it makes our sales force many more productive. And oh, by the way, we're happy because we can tie it back to corporate IT since all our stuff is Windows anyway, so that's sort of working. But it's not working as well when it comes to just putting it in general into the enterprise. And so what's going on is we're going to sell a lot of those units into enterprises and it's going to end up happening is people will be buying downgrade licenses and putting in Windows 7. XP support disappears this coming year and so enterprises have to reluctantly move to the next platform, they never move voluntarily. Meanwhile, consumers are sitting there going, as you pointed out, Android for cheap or whatever, maybe they like Google Maps better. And iOS, Android's getting the smartphone business because people are getting smartphones for the first time and Android's better than not having a smartphone so they don't know the difference. They don't want to buy the Apple maybe too expensive, a little better deal, Android's cheaper, hey, smartphone, first generation, you don't even know what it looks like. So I think, okay, I buy that, but still Android's weird, it has weirdness going on, malware, inconsistent software dealing with the hardware, so a lot of that stuff still needs to be developed. That's what we're hearing. But it sounds like you're saying that Dell needs to be in phones but it can't get into phones. It's a real, a conundrum. It doesn't have an obvious way in. And so you say, well, what else is there in high mobility? Well, so far, tablets is the other form factor. When I started Endpoint Technologies 2005, I was the PC guy at IDC. And I thought, you know, PCs are not always going to be the platform. Sometime it's going to be something else. I want to abstract from a PC to something that called an endpoint, which could be anything that a human might use to get on the internet with. And it turned out that two years later, the iPhone came out. So I was like, right, okay, so I had the right idea. Now the question is, what are those form factors? So the iPhone was the first clear high mobility device. This thing really has a special kind of a place. Then these other things came out. Android stuff came out. And then the iPad came out. So once you had a tablet, it said, okay, so there's a second form factor. Oh, by the way, it's an embarrassment for Microsoft that they had tablets, but they failed. So then Apple has a tablet, but it's a great success. So it turns out it's not the category that's a problem, it's how you do it. Yeah, yeah. So then the question is, are there other things we haven't thought about? What could there be? Is it some kind of, is it some plan, all of the form factors that you're now seeing coming out of the different spin and flip and all the different sort of hybrid notebooks. It's a little of this, a little of that. I had always said the problem with that kind of form factor, a kind of, I could be a notebook, but I could be a tablet. It seemed as if the vendor wasn't really very assured that it was either one. In other words, here's our tablet. Let's give them both. You might like this tablet, but just in case you don't, it could become a notebook for you again. I'm saying, well, but Apple just said, here's your tablet. They didn't say it could become a notebook if you don't like tablets. They committed to that form factor. They built a kick-ass tablet, and there's kick-ass. And that's what you were behind it, they had the software behind it, all that stuff. So Microsoft has come galloping along behind, and they've now got an app store. By the way, the app store model is going to be software distribution. All the guys I know in software development are like tearing their hair out because they all have to go through stores now. And it's a pain in the butt. You used to be able to publish in Windows World directly to the end users. You hit the API and you're good to go. But now it's like you have to be approved by those guys. And if you're doing something they don't like, including things like maybe you're competitive to one of their products, then they can somehow or another get yours lost in the shuffle. To Google Map fiasco. That's a classic example. Well, and it's one thing though for Apple to dictate those terms, because everybody wants to play in that same box. The gatekeeper model doesn't work. But from Microsoft to transition to that model, that's pretty risky, isn't it? Right. And so what Microsoft is doing to make it even harder for us is that they've got two versions. The RT version and the full Win 8 version. So you got Win 32 compatible, full Win 8. And that's to satisfy the corporate guys who have got all that investment in hardware and software that they don't want to throw away so they need backward compatibility. You've got to have that. Okay, that's the bread and butter. It's a little bit analogous to what Dell's doing because that's the old business and it has to be maintained and you can't let that revenue stream drop too quickly while you bring in the new business. And the new business looks a lot more like Windows RT. Because that's saying, look, drop the legacy, make it tight and secure. The app publishing has to go through our little filters so that we don't get bad stuff in there. It's lightweight. It runs nice. It's pretty. It's got a small footprint. You can get much higher mobility out of it because it uses less power. And it's much smaller. You don't have all of those ancient drivers in there. So it's a clean version. It's what Microsoft would do if it were Apple. But now you have a problem of having a foot on both sides of this tectonic thing that's moving apart. And you say, all right, what are you going to do? You know, this is separating from that. And at one point, you're going to go, okay, how are we going to do this? So they haven't really, we don't really know how that's going to resolve. But I do know that the software developers that I talked to are really interested in that new RT model. They said, that's the cool thing. And even though 98% of the initial sales of Windows 8 are in full win eight because of that whole compatibility world, yeah, yeah, that RT thing is just a toy, it's not a toy. That's the real deal. It's a feature. Yeah. You mentioned Dell might have to go through, I'm going to swing it back to Dell. It might have to go through a revenue decline at some point. And it looks like, you know. They're kind of doing it. They're doing that. But I also feel like Dell is hanging on. I mean, they want to use their scale as an advantage. Do you see the potential? I mean, somebody made the comment earlier that IBM getting out of that, that the PC business actually hurt them from a buying power standpoint. There is that. There's that. Dell uses that. HP uses that. And HP, I don't know what you thought about HP thinking about getting out of the PC business. I would imagine you felt like that was a mistake. Is that, yeah, okay. And John was very strong about that as well. Particularly because it helps with the distribution channel of things like tablets. Oh, right, anyway. Do you see the point of Dell's revenue decline actually impacting that buying power? Or is that you not see a significant enough decline to do that? Well, okay, so this is one of the things I talked to some Dell executives about this time. They have to declare their better together story clearly. If they believe in better together, meaning keep the PCs and join it with the solutions and make sure that's all one family somehow or another. Then they have to say, that's what we're doing. Carly Fiorino was the better together story at HP. So he said, we're going to keep it because it's good. And then, you know, Leo didn't want to do that and so on, he had like craziness there. It's very clear that you can lose purchasing scale if you throw away the client business. Because something like memory, for example, if servers represent them, you're going to pick a number three to 5% of the total volume and you drop 97% of your volume, that's 97% of your buying power for memories, for hard drives, for basic elements that you need and even for sheet metal. So you got to charge more. So that's going to cause your cost structure to do something that's going to be uncompetitive. Charge more or make less money. You know, you're very bad. So, and I believe that Dell is committed to keeping the client business and even maintaining it and growing it if it can. But I feel like it has to have a better story because right now it's very proud of its solutions biz and it's not really saying anything about its clients. And you know, I know guys on the consumer side, for example, are trying to come up with new, cool products like the XPS, which actually is pretty cool. But they're not getting a lot of love in the sense of, you know, marketing, dollar, budget share and things like that. Yeah, you're saying, you're saying, well, Kim, you don't see a lot of new stuff there that's exciting you. I mean, I love the XPS stuff and the Alienware stuff. I mean, I like those boxes. Right. The Alienware too, yeah. It's good. It's a lot of high performance. So, go ahead. Well, you know, so they've got this stuff but they're not really hugging it and saying, you know, this is really us too. They're trying to convince everybody we're a solutions company. And they're doing that so well that people are forgetting that they're a PC company. And they've got to amp up the marketing because that's where their bread and butter's going to be, but they have to bounce on that business, that the old business, they've got to rely on that scale. With that, I want to ask you what your take is on the BYOD mandate. I mean, obviously they're groping for a position. They want to be there. The BYOD is critical. But is that truly a consumer experience? And then, you know, the answer to me is like, hey, come on. Do you point to, you just mentioned RT, which is Windows 8. Okay, company lets me have a tablet that swivels, it looks like a tablet. I'm still going to bring my iPad to work. I still got my iPhone. Well, but if you talk to the case guys, they'll tell you that they've got a very nice solution you can bring in your Apple product. They can, you know, they put a little agent on there. It does business with a corporate network and you've got what amounts to a paint at last and they can give you a secure access to the network and they can provision you and do all kinds of things like that. And that's a pretty decent BYOD story. So I feel like this story is as good as anybody else's. Yeah, it works. So it works. So your take is, do you think they have a good story with BYOD? Well, what about the Y's acquisition? You know, we had Tarkin Maynard on earlier, right? I mean, he's a real advocate, obviously, for that business. That whole, you know, that's more end user virtualization. Well, Tarkin had the no PC positioning in Navi. Right. You know what I mean? Zero from C. It's sort of zero client, right? What do you make of that strategy? Well, I think that as a solution provider, Dell has to be able to offer IT managers pretty much anything they want. One of everything, yeah. And so if, you know, zero client is a good thing. I know a number of companies that are doing things in that area. And I think that, well, one of the things you can say about this, the thin client solution or zero client makes incredible sense as long as your communications is, I believe it's four things. It's ubiquitous, meaning you can always get it any place. It's reliable, so it doesn't fall apart on you, and it's fast. So high bandwidth in all situations, and the fourth thing is secure. So nobody has to get it. So it's good if you're inside your four walls with an ethernet connection. You're fine. And then, if you assume that all four of those things are true, when they are sometimes, and in Korea they're true, then what happens is the best model is clearly to have the thinnest thing you can at the client and to let all the computing be done in the data center because there they can manage the image. They can shut it off if there's a security issue, that no bits are on the outside. They can update things in one place rather than a whole bunch of places. So there's a lot of really good management about the thin client model. The thing that has kept the thin client model from becoming pervasive is this communications problem. As long as it's not 100% perfect, you lose productivity the minute you have a glitch in communication and everybody says, no, I need the computing close to my fingers so I can still be productive. Think, you know, I'm in an airplane. I have to be productive in an airplane. I can't do that with a thin client, at least today. Well, you mentioned earlier ARM versus X86, and you've seen this game before. I mean, you've been primarily focused on the, you know, the device end. You said you were the PC analyst at IDC, but back when I was at IDC, people used to sort of laugh, poo poo Intel in the enterprise. And then the volume's just overwhelmed. You know, the Unix stuff spark, you know, spark is essentially dead. I mean, let's face it, if it weren't for the Japanese government, it'd be dead. Do you see the same thing happening with ARM? We saw Calzada make an announcement with HP. Do you think that will get into the enterprise in a big way? Well, it's interesting because I feel like we're in this sort of classic Clay Christensen disruption mode here. And it always starts with the guys, the incumbents, poo pooing the new technologies. Oh, that's crappy stuff. It hardly works. It's like a signal, you know. Must be something there, right? It was analyst, we got it. You know? So, when you see that, you go, uh-huh, this is the disrupting coming, you know? Because even now, you watch Intel basically saying, oh, you know, ARM just doesn't have the performance characteristics that we do. Say, well, it's true, but $2014, 64-bit, you've already got quad-core, so the performance, by the way, isn't the issue. The performance vector is okay. They've got enough performance to do what people want to do most of the time out there in the field. So they don't need more performance. What they need is less power and that's where you guys have a problem. And so you say that to them year after year and they're not listening. So just wait, because we have process node technology that's going to kill that problem off. And you say like, okay, so when are you going to be on par? You go, uh-huh, 2014? Okay, well that's still a couple of years from now and the market's going to do a whole lot of development between now and then and right now, the ARM ecosystem is in place and all the ARM partners are there and it's going like, right, more ARM. So the question of, can we see more of the, particularly the high-density servers, ARM-based servers going into the corporate network? And I think the answer is something between what Intel says, which is that could only be 15% of the workloads and something that like Calzada would say, which is actually, it could be more like 25 or 30%, because more and more workloads are going to migrate to that very sparse, very big scale type of thing. So you end up with server and storage farms all over the place with really interesting data, which only one person wants every million years, that particular data item. And so if your crawlers spend all their time going looking for that thing and then when they find it, they shout to each other, found it and they all go home and they send that one piece of data back to where it was supposed to go. That's a perfect workload for that type of architecture. Roger, so, sorry, I didn't mean to interrupt, but so obviously the wireless aspect of the business is important. We saw AT&T just yesterday in the news on Wall Street taking a little subsidy. We all knew they were subsidizing Apple iPhones, but they love that, that deal certainly helped Apple. But in the enterprise, is there any infrastructure things that you're seeing that will impact the mobile aspect of the enterprise device? But in terms of the consumerization, will the wireless 3G or LTE be a factor? Is it going to be all obviously Wi-Fi? Well, certainly LTE is going to make the effectiveness of highly mobile clients much greater. So if you've got something out in the field that looks like this or looks like this, then it can do some serious work if it's got real bandwidth. Among other things, you can have work done at the server end, which doesn't have to be done at the client end, so you can keep a light endpoint and just call down whatever you need and realize that you have enough bandwidth to get it. So I feel like that is going to improve that type of productivity and you will find a lot of enterprises adopting that more explicitly. It's very clear that if you've got a field for sales, or service, or executive, that they could be much more productive if they have access to all of their IT assets while they're in the field and they can get it very instantly. If the sales guy can get a quote right there and give it to the client, he can close the deal. You can see revenue acceleration as a result of this kind of technology, so it's very clear there's no deal. So Dell's looking at their market. They actually have enterprise customers. They also have service providers. Service providers themselves have a mobility challenge to their customers on the consumer side. Is there a blurring of the lines there? Is it, I mean, you still have that carrier could be a supplier at the enterprise side as well as they have the same challenges. They're buying Dell Cloud in the back end. Is there a trend there as we're just making this offer? I think that we have to distinguish between the United States and some of the other markets. I used to work for Motorola International. I spent all my time with the foreign PTTs back when the only private company doing telecommunications with AT&T and everything else was a government agency, and those were the folks we dealt with around the world. In international, the habits are very different from the way they are in the United States. In the United States, you really have to use the carrier as a channel. You have to go through the carrier. The carrier arbitrates a lot of what happens in high mobility. Overseas, you can sell devices directly to companies or individuals, and it's up to them to go through business with their carrier. They often have existing relationships, but as a device maker, you're out of that business. Whereas here, you have to be in it. An example would be Qualcomm. If you look at Qualcomm, their whole business, they're very different from Intel. Same kind of thing. They make silicon. They sell it to other folks who put it in products and sell it on to other people. So they have very similar business laws in that sense. Qualcomm actually have a fab? No, they don't. They don't have a fab. So they're not IDMs in the sense that Intel is. Yeah, but they have that nice license. Right, they do have the license. But the distribution model is very similar. Distribution model, yeah. But what I wanted to point out is that while you have Intel inside, calling out Intel as a brand, and they get to punch through to the end user, Qualcomm is always hidden behind its customers. Because if you said, Qualcomm, why don't you make more hay out of the fact that you've got all this great intellectual property and tell people how great you are? They would go, we don't want to do that because we would get in front of AT&T, Verizon, and all these other guys who we don't want to do that. We want them to be in the forefront because that's part of the relationship. So Qualcomm is a long time supplier to carriers and they've developed that relationship of sort of hiding behind the carriers in the United States. Overseas they have different relationships. So I think you need to distinguish. All right, so boiling this all down here at Dell World, what's the bottom line executive summary from your take, what's going on behind you here? What would you share with the folks out there about the walk away, so far, day one, mobility, the notebook business, where's the action, what's happening, what's your take? What I would say is that Dell is partway through its journey to transform itself into an enterprise solutions provider. This show is a proof point that they're well engaged, well on the way to achieving that goal. They've got lots of partners here, they've got lots of customers here, they've got many proof points about how they're doing. It's still a work in progress, but you can see that there's quite a lot of activity and that they're well on their way to their goal. And given the corporate personality, they're likely to stay the course because that's the kind of folks they are. Committed, right? They're going to charge you. They're going to charge the market. Great, Roger K, thanks for coming on theCUBE. Great analysis. Roger K, you can find him on the web and what's your URL, do you have a website out there? It's called K at NDPTA.com or you can just do NDPTA.com and you'll find me. All the research here, Wikibon and also Roger K here. This is theCUBE, we'll be right back with our next guest right after this short break. First time on theCUBE, baby, rock and roll. I think it's probably five or six.