 Live from Austin, Texas, it's theCUBE. Covering Dell EMC World 2016, brought to you by Dell EMC. Now, here are your hosts, Dave Vellante and Stu Miniman. Welcome back to Austin, Texas, everybody. This is theCUBE, the worldwide leader in live tech coverage. Stu Miniman, my co-host and I are going to be wrapping up two days of coverage here at Dell EMC World. Used to be Dell World, they combined it to Dell EMC World. We'll talk a little bit about what's going to happen next. Actually, let's talk about it now. There will be a Dell EMC World, which will replace the former EMC World in the spring. Typically, it's in May in Las Vegas. Second week of May at the Venetian, just like before. So, EMC World plus the Dell stuff, so probably 15,000 plus people. And we got a flavor for what that was going to be like last year, because, you know, Michael was very prominent on stage, and so that's cool. And you know what's going to be? A zillion announcements and, you know, more or the same. Mega mega. So that's good, mega mega, right. So what's interesting, what's going to be interesting is what happens to this event, right? The Austin vibe is unique, in my opinion, in this industry. It's not Vegas, it's not casinos. You've got a great music scene here. Cool people, great food. People really enjoy being here. It's a laid-back environment, but it's good. It's a good quality audience and a lot of fun. And so I hope somehow, some way that's preserved. And Dave, what we heard is, you know, an executive event, they have what, four or 500 executives that are here. That will probably continue. It won't be Dell World. It'll be something else. And that was really what started this event. They added in what was the Dell Storage Forum, Dell Enterprise Forum, and grew this from, you know, when we first came in 2012, you know, Bill Clinton and, you know, almost 2,000 people, and now it's what, seven, 8,000 people here this year. So this one's grown and now we'll spin into the other one and this goes back to kind of its roots. So full circle. Stu, one of the things that we didn't talk about this morning, and I had to leave the keynote earlier, you stayed to listen to David Goulden's litany of announcements that EMC made. Many of them they made last week. Some today, like the Scale.io PowerEdge announcement, which you can see on the floor here, but take us through what was announced and what the significance of those announcements is. Yeah, so right, there's probably more announcements and we can go through all of them at a high level, right? Number one is Dell, actually Dave, the PowerEdge servers, they're actually branded Dell EMC now, which was something that was like, wow. When they first told us that, I'm like, wow, all those Dell bezels will go Dell EMC. So you're going to see those fit in a lot of environments. So in the what used to be called VCE product line, you know, there's a lot of those. So in the racks and the rails, not the blocks, there's the Dell EMC PowerEdge servers. For Scale.io, they have- Not the blocks because that's still UCS. That's Cisco UCS, absolutely. In Scale.io, which you can buy in the VX Rack, Flex configuration, you can have Dell servers or if I just want to do Scale.io, I can get the Ready node, which is the PowerEdge server. So, you know, I want to go buy a hundred or a thousand of them, a highly scalable type of configurations. Here's some configurations that we have in there. So there's the server rollout, which is what we all expected. Secondly, year of all flash, the Yof as EMC, hashtag Yof put out there. We saw a lot of that. So we talked to CJ Desiree earlier today about, you know, Isilon, how that's getting it, ECS, how it's getting it. So, you know, all of the different pieces where I had a little bit of flash, we have a lot more flash or all flash. So lots more flexibility there. And one of the big pieces, you know, an area I look at a lot is VX Rail. So it's, you know, the Dell EMC server inside VX Rail, and it has a lot of configurations, and they think that this is the platform that can lead them to become the market leader in the hyper-converged infrastructure space. Let me stop you there. So just for those in the audience that don't follow this closely. So, you know, Nutanix was one of the first to do this hyper-converge. There are others, you know, SimpliVity's another one, and then many others, right? And then the whole, many of the software defined companies are in there as well. But Nutanix, recent IPO, super successful. They're a good reference model for a hyper-converged. So a couple of years ago at VMworld, VMware announced Rails technology, right? Which essentially was software defined. It was one of the packages. So when VMware announced virtual SAN, it was actually the thing that got everybody talking about this word of hyper-converged. So VSAN is the software layer that can run on a lot of different configurations. So they put out something they called EvoRail, which was, here is a very prescriptive, this is the configuration you will run, not only, you know, here's the cores, here's the exact, you know, disc and flash configuration that they had. It was a reference architecture. It was a reference architecture. Not a solution. Not a solution, but it was very rigid, Dave. So that meant that there was, I think about a dozen companies, server companies, you know, like Lenovo and Dell and Hewlett Packard, before it was HPE, and storage vendors like Hitachi and NetApp also got on board with this. And of course EMC. And EMC launched one that they called VSpecs Blue. And overall, EvoRail, tiny, tiny, tiny, you know, sales. They were hard to find. Yeah, it was hard to find, to put it into context. I think it was like 30 or 60 days of the new VXRail, which is a more flexible configuration, you know, the VCE Group putting together what was first with Quanta servers, plus VSAN in that hyper-converged deployment, you know, outsold like the entire EvoRail market, you know, install base. And then the big news now is we're seeing that Dell server technology migrate into that platform. Yeah, and once again, it's not one configuration. There's a bunch of different node types. I can start everything from three node, going up to kind of, you know, VMware, you know, scalability for, you know, what a cluster is, which is what VSAN is. But they've had, you know, Chad, you know, is coming in, kind of chest beating with how many sales they've had. They've had real good adoption. We talked to Scott Winslow saying, you know, a Dell channel partner that's already sold some of these. So, you know, definitely they've launched and are, you know, making a big play here. But this is, to me, there's a huge deal. And I guess people aren't making a big deal out of it. I've got Ashley on before and he didn't poo poo it, but he's like, yeah, okay. But the fact that now, Dell has a pipeline into EMC who consumes a lot of servers and will continue to consume a lot of servers, it's a captive base. And the same way that IBM can dictate sort of what technologies they use when they do want a big global services deal, if the customer doesn't care, IBM's going to use IBM technologies, that's kept, you know, afloat a lot of IBM's businesses. In the same way, Dell now has a captive base into EMC. Now maybe it's not as big, but it's meaningful. That's a brand new OEM customer. That's pretty huge. Absolutely. So Dave, you know, people always, we at Wikibon, we came up with the term server sand. And everybody's like, ah, it's a horrible name, whatever. But here's what it is. Before I bought a sand and it was, I bought a server for somebody, I bought storage for somebody else and I bought a network for somebody else and I put that whole thing together. What I get in a hyperconverged environment is that entire sand in a server. And I buy multiples of them and there's a software layer that does that. So I have a VMware option, I have a Nutanix option, SimpliVity has an option. You've got, you know, Maxsta and a whole lot of other companies that are competing in this space. But right, Dell has positioned themselves with, they've got the VMware assets, they've got the EMC Salesforce, they OEM Nutanix, they are the default configuration for customers like Pivot 3 and SimpliVity. So Michael wants to make sure that whichever one of those software options win, he's hoping that the underlying server hardware is going to be his. So I think he's done a great job there, really understanding this market because Cisco with UCS really nailed it with converged, with what they did with VBlock and Flexpod and about 30 storage partnerships and Dell has taken the leadership position by making sure that whether you choose the number one, two, three, four, they've got to play across the board in all of these environments, not just to play, but you know, a leadership position across the board. So the other dynamic that sometimes gets lost here, Stu, is when IBM chose to sell its X86 business, server business to Lenovo, it basically created a vacuum. And Dell EMC is going to fill that, is filling that vacuum. AM and HPE has an opportunity to as well as maybe do some of the ODMs, but some companies with server and storage are in the best position to take advantage of that pendulum swinging what you called server sand back to the server. Storage used to be separate for good reasons. Now it's swinging back. Dell EMC is in as good a position as anybody to take advantage of that. Arguably, actually, I think it's inarguable, the best position. So IBM gave that up. Lenovo has to figure out, okay, how do we partner with storage to do that? Now maybe at some point to go buy a storage company and that comes together, but there's still some deep engineering that can take place, some integration that creates some value there. So that's a, IBM decided because they said we don't want to be in that business. That's a low margin business. It's fine for some people like Dell EMC, that's not our gig. But from a TAM standpoint, they walked away from a lot of TAM. Dell EMC are embracing that TAM in a margin model that Michael Dell's comfortable with. Yeah, Dave, you're absolutely right. We poked at this when we were at IBM Edge and IBM has, you know, if I want to look at that kind of scale out, you know, what we call server sand architecture, well, they have something similar in soft layer. So if I want to consume it that way, not in my data center, don't want to own that piece of the stack, soft layer offers that, but they're not having, you know, an on-prem HCI solution. Lenovo, also Williams Nutanix, also works with VMware vSAN. They're absolutely doing that. HPE has a number of solutions that poke at it. But yeah, Dave, I mean, I agree, you know, Dell is in a pole position here for this solution and, you know, is trying to, you know, muscle their way to the front of this, you know, fast-growing path. It's a good business, right? It's going to throw off a lot of cash. I guess let's talk about the financials for a second. So it's hard to tell. We knew what EMC financials were. That's, you know, very recently became a private company. So we have all that. Slow growth, but growth. Throwing off cash, but not as much cash as they were three or four years ago. Dell, as a company now, Dell EMC, Dell Technologies, let's call it, probably growing, we think, we're not really sure, but I would say probably growing in the low single digits. Certainly throwing off cash, enough cash to pay off the debt, not burdened by dividend payments and stock buybacks, which of course, by the way, are not tax deductible. Dividend payments are not tax deductible. So that's reduced, in theory anyway, the tax rate at Dell EMC. So some interesting dynamics there, but you don't really know, right? The profitability of the company, the growth of the company is whatever they say it is. Okay, that's the way it is until we find out more. Now there is some level of reporting that has to get done because of the tracking stock, so we're going to get some information. Dell files with the SEC, so there's bits and pieces, you've seen 8Ks come out. So pay attention to sec.gov. There's some good tidbits there, but generally speaking, the point here, Stu, is that Michael Dell can write whatever narrative he wants, and it's not a bunch of Wall Street analysts writing the narrative. So that, to me, from a marketing standpoint, is a big advantage because it removes a distraction that others may not have. Yeah, you know, it's interesting, Dave, I think back when Dell went private, I heard a lot more rumbles. I had a lot of friends that kind of had been at Dell a long time and kind of said, kind of cashed out when the deal closed and went on to do the next thing. Now, there's been some changes at EMC, some people have left, some people, there have been some small layoffs right now, what was it, 3,000 I think was announced before? It's expected that as some groups get consolidated, that there will be more, but at least I haven't heard nearly as many rumbles now on kind of the heritage EMC side as they did on Dell, but there's still a lot to play out, but I'm pleasantly surprised at kind of the energy everybody has. There's a lot of the heritage EMC people that showed up here for the first time at a kind of heritage Dell show. So, that's kind of interesting for me on kind of the people side inside a very large company. Well, you would expect there's got to be some rationalization of the headcount. I mean, there has to be, right? I mean, again, we've talked about this a lot on theCUBE. We've had, and David Gouldin disagreed, but I'm not going to argue with him on theCUBE, but there has been a 10 year collapse in infrastructure hardware and software pricing. EMC has been certainly fighting that in a variety of ways and done a fantastic job, credit to them, but at the macro level, there has been a collapse and there continues to be a collapse and there will be a further collapse. The good news again for Dell EMC is it's hidden inside of a private company. The point is you have to have a cost structure that compete with cloud because it was cloud and open source that are driving those pressures. And so Dell's cost structure and a supply chain in our view, anyway, allowed, I think you'd agree, allowed Dell to compete effectively with today anyway, the cloud providers. So Dave, last year Satya Nadella was on stage. We talked a lot about Azure and the future of Azure Stack. At least in the keynotes, I didn't hear a lot about it. We poked around the VMware on AWS stuff. I was a little disappointed at the overall cloud discussion here. Kind of poked at a little bit of to how Dell sees the multicloud world living and some of the pieces that they think will help manage them around there. I'm curious, we talked to a lot of the executives and people around here. Do you have any updates as you're thinking on the VMware on Amazon piece after talking to Michael and everybody? I think I'll repeat what I said before. My opinion VMware absolutely 100% capitulated in its position on AWS generally and public cloud specifically. Point number one, point number two was I think it was the right move to fight that trend would have been a huge mistake. So the trend is your friend. That said, it's unclear to me that that solves the cloud challenges that this company has. It maybe staves it off for a bit. But specifically as it relates to VMware, I think it's business as usual. They've extended their TAM somewhat. They've made it more convenient to run VMs in Amazon instead of waiting whatever seven days for infrastructure. They can spin it up virtually instantaneously. I think that's good. I think that's good for customers did not lose on this. Great, so if customers don't lose, that's good short-term for VMware. The bigger picture is Dell and Dell EMC. How do they compete in the cloud? And to me, the way they compete in the cloud is they sell solutions to cloud providers. I don't expect them to sell a lot to Amazon, Google, and Microsoft. I just don't unless it's part of a quid pro quo. I don't think that's going to be the dominant way. The China hyper scale guys that some people with closer ties to China are likely to win. But the other piece to your point is I think Azure Stack is a great strategy and I think it's the correct strategy. I think it's a gap in Amazon's portfolio. I think Dell can do very, very well there because I think a lot of companies want to mimic as closely as possible what they're doing in the public cloud on prem. Because as Michael said, it's not about where you put it, it's an operating model. I mean, it is about where you put it in terms of who wins, right? But from a customer standpoint, it's about the operating model and the Azure Stack allows you to have a mimic to a great degree as possible, that operating model. And the only other company besides Microsoft doing that is really Oracle, right? And Oracle's a little niche within their red stack. So to me, Dell is in a good position. I'm surprised they didn't talk about it more. Maybe they didn't add a deference to AWS. They didn't want to rub salt in that wound and just have fresh off a deal. But I think, if you listen to Andy Jassy's narrative and compare it to Michael Dell's narrative, even though they're slightly coming together, they're still different ends of the spectrum. And those guys are still battling from market share. And I think that Dell is going to use its choice card where it needs to to compete effectively long-term with Amazon. And that's my take. What do you think? Yeah, no, Dave, I think, yes. I agree with you on a lot of that. As I asked Michael, it's like, okay, I understand how it opens up. It can prevent some bleeding for VMware and over the next couple of years, give them some opportunity potential for some growth. Absolutely, I understand for Amazon, it's a big straw that they stick into 500,000 potential customers and say, we want to pull as much of our stuff into our environment and look at all these other great services we've got here. Wouldn't you like to use them? Isn't this great? The macro thing I look at is, Microsoft has told every customer, SaaS is awesome. You're all signing up for Office 365 and once you get SaaS, it's like, wait, maybe I might want to choose other environments. VMware has told everybody, public cloud is a great place to hold your workloads. Look, here's VMware in an Amazon data center. It's in a soft layer data center from IBM. So where it lives shouldn't matter to you as much anymore. I mean, great. Dave, we've been screaming at the top of our lungs how owning your data center is something you need to get out of. Hopefully this will move the needle. You know, so it's interesting. I still, you know, after everything I hear, I still think this is a much better deal for Amazon in the long term. I would agree with that. And the other thing at the end, at the macro level, SaaS is becoming the new control point in the organization. Applications continue to drive business value. It's the infrastructure is the plumbing. But you know what? Infrastructure is still a good business to participate in that business. You've got to have the right cost structure and Dell understands that. It's got the best supply chain in the business. This is not a complacent company. It is not, in my opinion, a vulnerable company. It is a winner, right? Michael Dell is a winner. I mean, Dave, I love the point from Michael when he talked about the scope of his organization. He's like, we're much bigger than Amazon. I mean, you know, just the purchasing power and you know what their supply chain is. You know, despite that Amazon has, I mean, you know, pretty impressive supply chain for all of Amazon. All right, listen, we got a wrap. Stu, thanks very much. Great, great pleasure working with you. Check out wikibon.com for all the research. Siliconangle.com has all the news and all the write-ups of these videos, Siliconangle.tv. Check out our new site, cube365.net, slash Dellworld. Dell EMC World. Dell EMC World. Sorry, check that. Sixth time I've done that. cube365.net slash Dell EMC World. It's our new platform. We've also got that slash women in tech. Check that out from Grace Hopper. This is a wrap. Jay, Patrick, Ava, Alicia, Greg, awesome. Thanks to Heather. Appreciate all your support. We will see you next time, everybody. This is a wrap from Dell EMC World 2016. Thanks for watching.