 Okay, we're back. This is day three of the Dell Storage Forum, and I'm Dave Vellante, and I'm here with Stu Miniman, who was my co-host this week. We were with wikibonbot.org. This is theCUBE, and we've been covering Dell Storage Forum for the last three days. John MacArthur is with us. John covered Dell Storage Forum last year with Callie Lewis and myself, and is obviously very familiar with the company. John runs Walden Technology Partners, and as a wikibon contributor, runs our peer insight. This is theCUBE, SiliconANGLE.tv's production, where we go to all the events, we drop in, we bring our cameras, we bring our lights, we bring the best guests to you. We try to extract the signal from the noise. We really appreciate all the tweets we've been getting, all the questions. You keep us honest, we really like that, and we've been going really all spring here, Stu and John. It's really been an amazing tour. It's great to see the growth of this type of media, and we've had some fantastic guests this week. We had Dellic senior executives, we've had a number of customers, we've had a lot of analysts and bloggers come on, V-experts, opinion makers. Had an author on today. Oh, right, right, and so it's really been a good, well-rounded event. I want to start, Stu, with you, and just get your takeaways from the Dell Storage Forum this year. Yeah, so it's my first Dell Storage Forum, Dave, and it's an impressive show. I was kind of coming and expecting it to be storage, and we love storage, it's at the core of what we talk about, but Dell's got a nice solid portfolio, so I love the convergence discussion, virtualization, and networking, and there's plenty of that here, and getting to hear the customers that some of them are becoming IT generalists, some of them definitely are bursting outside of their silos, and Dell's portfolio's meeting that need, so converge systems, integrated systems, unified storage, all of those were hot topics of discussion, of course, Flash, Cloud, and even a little bit of big data we saw at this show, so, you know, broader offering than I expected. John, what did you see? What did you learn? What impressed you? What do you think needs to improve? Well, one of the things I did while I was here is I talked to a few Dell Channel partners, and someone was in one of the sessions where they asked some of the Dell Channel partners how many of you are selling the whole stack, because remember, a lot of the Dell Channel were compelling to equal logic resellers, and so what I did here is there is a movement among those storage resellers, many of the storage resellers, to sell the whole stack. There's a big incentive for them to do that. Number one, they get a longer registration on the deals. Number two, they get better discounts if they sell the whole stack, so it was interesting to see the transformation of some of the compelling equal logic resellers. I think the only thing that I would say is for those Dell resellers who are selling only storage, you may need to re-evaluate the strategic decisions for your company and figure out how that positions you competitively. John, a real interesting point, because if you look at Dell from a portfolio standpoint, going from PCs and servers into storage and networking is higher margin. If you're a storage company adding in the servers and the networking, you could be dilutive to your margins there, and therefore you need to reassess kind of your sales and engagement support. Well, one of the things that we've seen from Dell is that they have been very aggressive about partnering with their reseller partners in the delivery of services. So, a lot of resellers are starting to transform their business from a transaction business to more of a recurring revenue model. And so I think Dell's way of partnering there is actually helping facilitate that transition for those companies, because they can pick up Dell contracts, they can write contracts for services that they may not be able to deliver and have Dell deliver those. So, it works both ways there. Yeah, so the channel is obviously key. I think when Dell went out and acquired a lot of these companies, there were some real skeptics. Dell made a commitment to the channel. It has not wavered from that commitment. We heard on Monday was really Channel Day. We had several hundred resellers in the room at the keynote. There was a lot of channel love going on. You know, Day Two was really the opportunity for customers to see Darren Thomas and the executives of the main Dell business units share their commitment to integration. Actually, I thought Darren Thomas sort of laid it out pretty unambiguously. We acquire, we integrate, and then we innovate. And Dell's version of innovation is innovating at the customer experience, which is really where Dell I think shines. They don't struggle with that whole notion of, well, do we do organic or do we do acquisition? They've been very aggressive on the acquisition front. Of course, they had a blank sheet of paper to start with in storage. So, that's sort of one piece. The other is we're clearly seeing the transformation of Dell. Last year was the first integrated Dell storage form where it brought together the compelling C drive and the equal logic customer shows. And then, of course, the core Dell experience. So, we're seeing that transformation of Dell from really a box seller to a company that has intellectual property, not just in storage, but across the other vector here, which is compute and storage and networking. So, that converged infrastructure was the other very strong piece that we saw. The underpinning of all this is the transformation of Dell, primarily to really bolster the company's value. Dell is a company that has tried different things. Obviously, a big PC player and was a high flyer in the 90s and early 2000s. And then, as we entered the post-PC era, Dell's business model had to change. Michael Dell stepped back in, got very aggressive about the strategy of the company and started acquiring intellectual property. This is a company with a $60 billion revenue line and $20 billion of market value. That's a problem. That's a problem. And people, I think, you know, Wall Street, there's a lot of pressure and Michael Dell and his team are doing something about that. You can't just change that overnight. How do you do that? You acquire companies, you integrate, you increase the amount of intellectual property, you increase your margins, you cut costs. Dell announced it's cutting, you know, $2 billion out of its cost structure over the next three years. You pay a dividend. You know, they're doing things to get the stock price up. They've got $14 billion of cash on the balance sheet. They got a substantial amount of debt as well. Nonetheless, Dell, in theory, could use the cash on its balance sheet to buy back all the outstanding shares, which would definitely prop up the stock price and still service its debt because Dell's cash flow is still outstanding. Dell's always been really good at focusing on cash flow. So is the stock undervalued? I would say yes, because to the extent that Dell can make this transformation and succeed, you know, it could be a goodbye. Is it going to be, you know, the next high-flying, you know, Google? Probably not. But a very viable company paying dividends, good sign of confidence in its cash flow and its business model. I have no comments regarding valuations of companies. That would be way outside of my wheelhouse. But I do think it is interesting to see the direction, you know, and watch, see what Dell's going to do from the perspective of, are they going to become a content owner as Apple did? Are they going to become a user interface owner as many systems companies have tried and failed? If they lose, you know, if they win the desktop war but there's no desktops left, if they win the laptop war but there's no laptop stuff, what does Dell do? I think that's an interesting question. And so clearly the infrastructure plays very important for them, but they are going to, Barrow Systems was a good acquisition. They'll have to do more in services, right? So they're doing good things, but they're going to have to do more. And I think also that they're going to have to work on their channel model, not at the SMB and not necessarily in the government space, but it's in the larger commercial space, where some of their resellers do sell very aggressively, and sort of figuring out their channel model there, where do they partner, giving clear direction to the channel, where they can go, where they can't go. So data center obviously is a key thrust for Dell. Obviously with gear, hardware, infrastructure, software, and services, as you're pointing out, absolutely have to do it. I'd like to see more out of big data. We didn't hear a lot of this conference about big data, but we know that Dell has big data and Hadoop-oriented initiatives going on, not surprising that a company of Dell's size with a VC arm that is pretty savvy and a big presence in California. They've actually, I'm sorry if John, if I can, just two points on that. One, we do know that Dell has the partnership with Cloudera. And secondly, they are looking at it. They've got a cross-functional group. Dell's got the services piece. They've got all the infrastructure pieces, scale-out architectures fit well. And in the markets where Dell really plays, the mid-market and below, it's probably a little bit longer before big data gets there. So I don't think they're necessarily behind. That's what it's hard for me in talking about big insights and not big data, because a lot of the customers that they serve don't have big data. But they're also competing, somewhat against the Intel white box server market, going into some of the, and so I think what they do in the highly optimized, highly efficient server space is really important. And didn't hear it too much here, but Dell has their kind of custom services group that help build out those massive scale environments where you're choosing between a white box, completely commoditized solution, or Dell has their value added. And we had a couple of good guests on that helped differentiate for us how they think they still add value there, but still to your point, John, where is Dell outside of the infrastructure? This is very much, there's a storage show that went beyond that, but what is Dell's stake in the next couple of years? So as Tim O'Reilly says, data is the new oil. And data essentially is going to be the source of competitive advantage going forward for companies. And those data practitioners, big data, big insight practitioners are going to make more money, create more value than the people in the factory. And so Dell has to be a supplier to those companies and really help them transform their businesses and really understand how to get value out of big data, value out of information and insights. Now how does Dell do that? One of the ways is working with the developer community. Dell has been much more aggressive about doing that. It's doing a lot of stuff in DevOps. With new development tools, it's a lot easier for a traditional hardware company to really begin to participate in some of these initiatives, open source initiatives, Dell's big and open stack. Stu, we were talking about open flow. Early this week Dell has always had sort of a, an inclusive mindset and was big part of the original open systems movement. If I can use that term from back in the 1980s and 1990s. So we're seeing a new version of that now in 2012. You know, one of the things I would love to see, I think Dell has probably as many, maybe more customer touch points as anybody, which creates an enormous amount of data. I would love to hear more about how Dell is leveraging that data to improve the customer experience. So I think, again, I think it was Praveen who was talking about the CEO of the hotel chain who says, I'm razor focused on increasing my occupancy rate. So what I'm interested in is data analytics that will help me increase my occupancy rate. So what are the data analytics that Dell's most interested in and how can they take that knowledge and then leverage that out to the CEO? Great point, John. In social media, Dell is actually one of the best case studies out there. They've got their listening center down in Texas. They obviously are listening to their customers interacting with them, but in a broader sense, outside of the social space, it'd be great to hear that. Dell has a history of, Dell was one of the original e-commerce companies. Dell was first in the transition to using the web to drive sales. Right, and custom configurations built to order. So to your point and to my point about big data practitioners creating more value than purveyors of big data, Dell as a big data practitioner having all types of knowledge and information about customers, about buying patterns. Now, can Dell figure out how to get value out of that, how to monetize that, deal with privacy concerns? I think yes. I think that's a real opportunity. It's early days there. The other thing that I wanted to point out is the whole app-assure vision, data protection. So you've got a situation where EMC dominates the data protection market with purpose-built backup appliances, has an astounding 66% of that marketplace. It's CTO of that group, the BRS group, Stephen Manley at the last EMC world, put forth a vision of snapshots as a data protection mechanism. Very powerfully, in my opinion, we heard Dell talk about not that as a vision, but as a set of products and solutions. Now, it's still early. Many of the customers that we talk to most, in fact, are not using app-assure yet, but they're looking at that. And to the extent, what I heard, was to the extent that it's integrated into our storage platforms, we are probably going to go in that direction. So that's a good dynamic. The conditions are very good for Dell to really disrupt that whole backup market space. All right, I think that's a good point. We did have Jeff Ackles on from Commvault, talking about the app-assure acquisition and any impact that that might have had on Commvault. So it will be interesting from a Dell partner standpoint going forward. We saw a little bit of this with VMware, which was partnering a great deal with a lot of the app vendors, but started then absorbing some of those tools, those technologies into their own stack with Dell making more investments, as I think they should. I think the partners also have to watch their partnering strategy. Yeah, and speaking about the investments, one of the surprising things and what I was impressed with is, talked about Dell Ventures. Dell's really growing their presence in Silicon Valley. They even took a jab this morning talking about, next year Dell Storage Forums in San Jose, right next door to all the competition. So kind of punching up in this space and good to see them doing this kind of stuff. We're in Hopkins backyard or a front yard, actually. This year, going to San Jose. I like that about Dell, moving the Dell Storage Forum around, appealing to different audiences, getting some, both existing customers to come to these shows year after year after year and then appealing to new audiences by getting local. And they're not just running it here in the U.S., there was Dell Storage Forum in London back in, I think, January. In Paris. And it's going to be in Paris, I believe, in November. So I think that's good. More of a global presence, global visibility for Dell. I don't know, when's the Dell Storage Forum going to be in Asia? Is there one? So we'll keep watching for that. But look, this is, last year was the first year and the big follow through this year. And I think a big step up, too. The other thing that we've been talking about a lot in Wikibon and really this has been driven by a lot of David Fleurer's research on Flash is the whole changing of IO architectures. Essentially, the premise is that all active data is going to be on Flash in the next three to five years. So if that premise comes true, that portends at a complete redesign of IO architectures where tier zero essentially becomes the new tier one or all Flash arrays essentially replace what we have known as the tier one. This new tier zero, really, which is the memory class Flash. And so Dell is not sitting idle. The acquisition of RNA, we learned a lot about the RNA acquisition. It was a year ago that they made that acquisition. A lot of people said, what is that memory virtualization? We're now starting to see and Dell laid out bits and pieces of its vision to really change that IO architecture. Dell intends to be a player there. The storage business has really changed. The big whales don't sit around and wait to get their clocks cleaned anymore. They have the cash on the balance sheet. Yes, they make some mistakes on acquisitions, but generally speaking, they're really smart. They got bright people. They do strong due diligence and they make acquisitions and they try to really get ahead of the curve. Sometimes they get caught off guard, but in a lot of times they just make that up by plunking down a bunch of money and buying companies like Data Domain, which actually turns out working out in those instances. So the big companies are relatively stable and I would say very stable. There are some wild cards. I actually think Dell is a wild card. Dell is dangerous because Dell lives off of PC margins and so anything north of PC margins is gravy for them and so they can compete at very effective prices. Oracle is another wild card. You never really know what Oracle's going to do. They've got their applications business and their database business. They spend money with applications and database. Yep, and they use that as a competitive advantage. Let's run them down. EMC's got VMware. Without VMware, EMC would be a lot less interesting company, but they've got VMware and that puts them in a cat bird seat in a lot of these cases. NetApp, we're going to be at NetApp next week. Really interesting to hear what's going on there. Personally, I think NetApp's got to do more vertical integration. I think it's got to buy software assets. I think it's got to get more into services. Need more scale out. Yeah, and yeah, scale out, certainly from a technology standpoint, it's something they're working on. And IBM, I think we're starting to see a rejuvenated IBM. HP obviously has completely transformed its portfolio. So you've got four or five really strong companies out competing for business. And it's just great for customers. You didn't mention Cisco in all of this, but Cisco's really coming on the server side as well. And they've partnered with a lot of companies. Obviously they're part of VCE, but they're also part of what NetApp is doing, are they part of NetApp's alliance? FlexPos, FlexPos is a partnership system. At the same time, their server growth rate's pretty high from what I understand. But I mean, to put that in context, of course, Cisco's 2% of the overall server business. They are only playing in a small piece of the market, nowhere near the breadth of the portfolio or reach that in HP, IBM or Dell have. But they're a disruptive force. And VCE and Cisco was part of that, started the whole converged infrastructure trend. Interestingly, because you would have thought that would have come from a system vendor, but maybe not. So that was disruptive. And then now every major system vendor has hopped on that bandwagon. Dell most recently, from what I'm hearing, with some of the most impressive packaging, maybe the most impressive packaging. I think IBM on the other end of the spectrum probably has the most impressive intelligence built in to the system. So now it's a game of leapfrog. And again, this is just great for customers. To see large companies that are well funded, that are spending money on R&D, I think it's great for the computer business, the IT business, frankly I think it's great for the United States, because these are all US based companies for the most part. I think it's, basically the business has become an oligopoly, where you have five or six or seven really large stable companies controlling the chessboard. And I think that is good for customers in the sense that it's less disruptive for them. There's less uncertainty for them. They can trust a lot of these big players. They have some really solid choices. And then underneath all that, you've got these startups that are doing all the really cool innovation. Unfortunately, I don't think any of these startups in the near term anyway are going to become giants. But they play a really, really important role in terms of filling white space. And there's a great opportunity. It's a wonderful climate for startups right now. Well, as you know, I'm betting differently. So I think there is an opportunity for some startups to get to some pretty good size. Yeah. Do you think that we'll see another NetApp, for instance, in the storage business, a company that started from scratch and can get to $5 billion? No. No, I don't think so either. $5 billion in a pure storage company. Right. See, it happened in three parts. Data Domain, Isilon, Fusion IO. No, they'll get taken out before. Yeah. They'll get taken out. But I think there is opportunity for companies in the data protection space, in the converged storage space, to get to IPO-able state. Oh yeah, no doubt. And the climate for startups has maybe never been better. And so I agree with that fundamental. I think the disruption is going to come from the web guys. You know, that's really, you know, it's the Dropbox, the Google. Apple. Apple, you know, that's sort of the consumer side. That's the big unknown here. And then, so potentially somebody could emerge out of that space as a really disruptive force. Whether or not they can trickle that into the enterprise, we'll see. Again, the enterprise of Wales will make acquisitions. If it looks as though they're too much of a threat, they'll gobble them up because they've got the cash. Yeah. So, you know, my final take on this show this week, Dave, is, you know, Dell still feels like a startup in the storage world. And that's a good thing. And when you talk to everybody there, you can feel the passion, their excitement. They say they're all running 100 miles an hour and they're trying to figure out how to get to 150. So it's tough to maintain that as you scale, but, you know, good collaborative culture, you hear kind of the innovation and workings together between the teams, learning from the new acquisitions. And that's an exciting model. And, you know, kudos to Dell and their management team for where they've gone so far. Yeah, I think that's right. I last talked a little bit about that in the last hour. And I contrast that with what I saw a few years back when HP was doing all of their acquisitions and, you know, I think the silos pretty much existed pretty tightly there and the flying around, the engineering teams remained relatively discreet and it was sort of which engineering team was going to get to hold onto their job, which proxies were going to get discontinued, I think was one of the concerns that they had. And so I think Dell has done a pretty good job of reassuring the team's ecological component, Exonet, whatever, that they're all valuable and that they've all got a role going forward. Yeah, well, so again, I love the fact that you've got a lot of choice as a customer. Virtually every one of these large companies can point to some product or segment where they're number one, where they really shine. So that means they each got a foothold, you know, from which to build their individual businesses. It's a great time for customers because, you know, prices are going to come down and customers need to do more with less. The other piece, I guess, the other wildcard is cloud service providers. We've heard from some of those guys. And so that's something that we're watching here at SiliconANGLE and Wikibon. So that's a wrap. Any last thoughts? Yeah, just in addition to all the videos, of course, we've got our team writing a lot of articles. So if you go to wikibon.org site, we've got a curation page that we put together. So just wikibon.org, if you search Dell Storage Forum, you can find that. Of course, as Dave, you've mentioned youtube.com slash SiliconANGLE has all of our playlists. We're getting toward the end of phase one of the summer tour and a lot of exciting shows later on this year, VMworld or Cloakland World or some of our big shows that we always hit and, you know, excited for a lot what's going on in the tech world. And I'll just make one quick plug for the peer insights. You know, if you're an end customer and you've got an interesting story to tell, give me a ring. Jay MacArthur at WaldenTech.com. I'd love to hear your story. We'll get you on. Raise your brand and the awareness of your company, the cool things that you're doing. Love to have you on. We typically get 50 to a couple of hundred end users on each call and some great content. So give back to the community. Yeah, help out your peers. That's great. John, thanks for joining us today. It's always a pleasure. Pleasure. Appreciate you participating. And thank you to Dell. We couldn't be here without the generous support and underwriting support of Dell. So thank you very much for having us here. This is Dave Vellante for Stu Miniman and John MacArthur. We're signing off. This has been a great three day event. Keep watching on SiliconAngle.tv for the Hadoop Summit. John Furrier, my colleague, and Jeff Kelly are out there with a team at the Hadoop Summit. A lot of really interesting hot stuff happening in the big world of big data. So keep watching and thanks everybody. We really appreciate the support and we'll see you next time.