 The Cube at EMC World 2014 is brought to you by EMC. Redefine VCE, innovating the world's first Converged Infrastructure solution for private cloud computing. Brocade, say goodbye to the status quo and hello to Brocade. Okay, welcome back everyone. This is the Cube, our flagship program. We got through the events, expected to see the noise. We're live in Las Vegas at EMC World 2014. I'm John Furrier, the founder of SiliconANGLE. I'm Jill Mike Coze, Dave Vellante and Cube analyst, Stu Miniman, co-host here on the Cube2. For our wrap-up for day one, for three days of wall-to-wall coverage. When I say wall-to-wall coverage, I mean, there are two cubes here. There's actually two sets, 75 plus interviews is going to be happening between today through Wednesday. Guys, exciting kickoff in first day and a couple of notable things. One, this marks our fifth season, EMC World 2010 in Boston was our first Cube project. We actually went out and started seeing it from the noise, Dave, our first time. And I think, Dave, it really highlights that one of the things that's happening is that the Cube is generating an active community. And I think people like the content being engaged and I just want to say it's been great working with you and the team and Stu, the new addition as a host on the team, Jeff Frick. And the entire team has just been really fun. A lot of people coming up saying, hey, the Cube again, it's just really good. I just want to say thank you. But as always, always a first at EMC World for us with the double cube action. But Joe Tucci dropping the hammer down with the big acquisition of DSSD, Legend in Silicon Valley, Andy Beshastain of which Pat Gelsinger is kind of hitting. I'd known Andy for a long, long time like it was in the works. So besides all the other stuff going on, the normal flare and pomp and circumstance around EMC World, guys, Dave, DSSD is a huge deal. We heard a lot of people talking about software at the center of the value proposition. Dave, what is your take on that and the... Well, I think this is an area that has been a gap in EMC's portfolio. This is, you know, I know Fusion I.O. past year or so. Actually, EMC World last year, Fusion I.O. replaced its founders and brought in Shane Robison. We had him actually on the Cube remotely. But I always felt like, and even though the stock's been a little bumpy, I always felt like where Fusion I.O. played was at that server-side flash that's a memory extension. And that, to me, could be a super game-changing capability from an application development standpoint. All flash arrays are great. Hybrid array is great. Putting flash into a traditional array, great. But when you start to talk about flash as a memory extension, not only eliminating the spinning disk, but eliminating all the overhead associated with the storage protocol. We're talking about more than one order, maybe more than two orders, perhaps two to three orders of magnitude, greater performance. I think that's what this DSSD acquisition was about. Number one, number two is, it appears that from looking at some of the things that have been written, Storage Mojo had something written on this, it appears that object is a focus. So they're taking object-based storage, which has always been known as slow, even though, you know, DDN has sort of attacked that problem a little bit, but not bringing that into transaction processing. So why is this exciting? This is exciting. We always talk about on theCUBE about big data analytics real-time and bringing transactional data and analytic data together so that machines can make decisions instead of humans making decisions before you lose the customer. But the EMC question, Dave, I want to ask you, is that EMC, you know, we were always speculating two years ago when they bought Extreme IO, that, you know, Flash is a Hail Mary for EMC, was it the right acquisition? We talked to the founders here today. Pat Gelsinger, now the CEO of VMware, was in charge of products at the time. Then Jeremy Burton took it over. Now he's the president of products. Damn good execution. They filled in those holes. They moved quickly. What's your take? Do you agree with that statement? And how far are we yet from seeing any meat on the bone here? Well, I think it's still early. But having said that, EMC claims that it's number one in Flash, and I believe that because, you know, what they don't say is they bundle Flash into their deals. I mean, I'm sure it's still used to be at EMC. You know how they sell. And when they want to sell something, when they want to make it work, they will bundle it in, they'll send the sales force to do it. And so I'm not surprised that they're number one. Now, the big question is, can these other companies, A, live up to their valuations? You know, I'm talking to Pures. Nimble's not really all Flash array, but Violin's valuation is down. And B, you know, can they compete effectively with EMC? Now, Pures would say, well, we are competing effectively with EMC. We're growing at 100% per year. Okay, so what's next for them? IPO, they got a lot of money in. Let's now see what happens in that fat middle of competition where EMC obviously kicks butt. Dave, you know, interesting comment on that. I mean, one of the things people always use to say, EMC stands for the Execution Machine Company. I mean, they've got a huge sales force, they've got a huge channel. And when they point those guns- There's another acronym there. Evil Machine Company, here they go. Yes, Execution Machine, right? Right, so, you know, when they came into the all Flash market last year, I mean, they did what? You know, $60, $65 million at the end of last year in the all Flash array. And they said that was the number one revenue for any all Flash array company because they've just got such presence in the marketplace and they've got a channel and a sales force that can go out and sell anything. It's like Cisco's got that power on the marketplace. You know, very few companies can just go load up the field and go attack a market. There's not a lot of examples of where they fumble. I mean, Invista was the one example that everybody always points to, but you don't get even Vplex, right? I mean, really, really interesting that now that thing you're seeing throughout the portfolio. So, Joe, John, we're kind of geeking out in the portfolio here. Up level a little bit. What's your take on EMC? I'd like to get it, David, into some of the geeky stuff about the shop. VCE, Tom Roloff's business. VCE was actually a good interview today. We want to get into why that's working. Obviously, the hybrid cloud, the Pat Gelsinger. But to me, the big high level thing that's happening here is the name of this conference is called Redefined. Now, that's not a coincidence that it's kind of similar to Amazon web services event called Reinvent. Amazon is reinventing the cloud business and now moving into the enterprise. EMC is clearly putting up what I call that C-Wall, Dave. And they're using the word redefined because they're saying, why reinvent when you could redefine? Clearly, a subtle message around Amazon that they want to differentiate with the value that they have, one, two. Chuchy actually came out on the keynote. Joe Chuchy, the CEO, our chairman, if you will, the federation of EMC, talked about Amazon. He actually used the word Amazon web services in the same sentence as Google and Uber as a disruptive force. That means that EMC is now publicly recognizing Amazon web services as a viable competitor and putting the stake in the ground or that C-Wall so that that tsunami of Amazon does not brush up into the enterprise. So to me, that is the big thing right here that I'm seeing. And that to me is a really big deal, Dave. Amazon has put the mark on it. Now Jeremy Burton's messaging is actually, include other words, elastic into the storage engine. Another announcement. So Stu, that's Amazon-like. Yeah, yeah, John, I had time to really dig in with some of the cloud providers, the cloud solutions from EMC today, hybrid cloud, service providers. EMC's making sure that they've got a pretty good cloud story, but it's the federation story now. So VMware's got the vCloud hybrid service, Pivotal's got services they're offering, and EMC is trying to help build the solutions and put their infrastructure into a lot of cloud providers. So big announcements on news front guys is the hybrid cloud innovations, elastic cloud storage appliance, not a service. And the Viper- That's essentially cloud in the box. And Viper 2.0 and obviously the big mega announcement on the M&A deal. So clearly EMC's checking the box is big announcements. The pomp and circumstances is what Jeremy Burton now president. Other notable fact is Jonathan Martin, now is the new CMO, really I was impressed and actually really happy for him because I really like him a lot. He walked on the stage of the guitar and I actually thought he was going to be air-gataring him, like okay, nice gimmick. He actually was playing and then flipped the guitar to the guy, almost hit him in the face with the neck of the guitar. Trending on Twitter, great show for the new CMO who's now out in the open. So big change at EMC, Dave. Yeah, that was cool. He definitely pumped up the crowd. Here's the thing, let me go back to the cloud situation for a second. I mean, I know it gets kind of academic but the point I keep hammering home is that online cloud services are starting to take on the shape of software marginal economics, meaning they go down, the marginal economics of software at volume go down to zero. It means every new one you sell, it's pure profit. That's why Microsoft has 90% gross margins. So online services are starting to look like software, so that's huge. The key is volume. I don't yet see how EMC, the Federation, Cloud Foundry, Pivotal, VMware, I don't see how they get volume. We asked Pat Gelsinger that question. He said, well, we have a lot of partners and okay, they do have a lot of partners but that, Stu, in your opinion, can that thousand points of light get the volume that an Amazon or a Google has and be able to get down that curve of online services economics? Dave, I'm with you. I'm very skeptical about some of those. When you look at EMC put forth that their four-year TCO is cheaper than the big cloud guys, the question that you have is the price drops that happened from EMC and their partners versus the race to zero that we're seeing in the public cloud right now. And while today, the four-year fully burdened cost and everything might be there, if I go two years from now, I'm going to say it's going to be a very different equation. I want to see that analysis. I want to see the assumptions. Yeah, I totally agree. So one of the things I want to talk about, Pat Gelsinger, you mentioned the cloud. We asked about Docker and the container trend, Stu, and then he said, the container's been around and oh, if they want that container, we'll add that on. Oh, by the way, the only one container that's been successful is VMs. So it's interesting to get his perspective. Again, Pat can be a little bit about that, but I think once it gets on its radar, obviously we saw all the rage of Docker at Red Hat Summit, so that's interesting. The other thing I asked him about was valuations, Dave, and he mentioned before we went on camera about Intel Cloud Air, right? He said, that's a great move for Intel. It gets them out of the distribution business, and, but he thinks they paid way too much on the valuation side. From a sizable investment, I thought that was pretty big. Well, here's what he said. He said, I think we just saw the peak of valuations. Now, we'll see. You know, I've heard that before. I mean, if the market is really as big as we think it is, then maybe not. You know, maybe the best is yet to come. I want to ask you guys about VCE, because we had Praveen on, and that was actually a very good interview. You had the most votes on CrowdChat today at crowdchat.net slash emcworld, Dave. We've been covering this too. You have as well. VCE makes a good run, the naysayers. I mean, there's been naysayers from the beginning. Joint ventures don't work. Dave, we speculate on this a cube many years ago, you know, that it's going to be, you know, either implosion or success. V block is validated. What's your take on this? How did they get here? Why the market fit? Is it timing, execution? What's your take on this? I mean, as Stu and I have been consistent on this, maybe for different reasons, Stu, because you kind of came out at EMC and you saw that whole VCE thing grow up. I just look at it from a business standpoint. First of all, it made evolutionary sense. I always felt like EMC had nothing to lose in this equation and everything to gain, essentially attacking the server market with VMware. And I always felt, despite everybody saying, oh, they're losing money like crazy, they're spending money like crazy, I said, I quantified it. They said, this is a $400 billion tam and it takes billions of dollars to go after that opportunity. They went for it and I'd never had a problem with the accounting where, yeah, okay, fine, let VC lose the money and let the division, let Brian Gallagher take the revenue. Beautiful, I have no problem with that. Let VMware take it, let Cisco take it. No problem with that. The entity just made so much sense. Now they're at a $1.8 billion run rate. I don't know how they account for it. I don't know, they've never said they're profitable, but it is good business. It's driving business, it's dragging along services. I guarantee this initiative, VC, is reigning green for EMC. Yeah, Dave, what still surprises me is I think the competition still underestimates VCE. I've never seen a company that did over a billion dollars worth of revenue last year and is still, it's kind of quietly growing. It's growing at 50%. It's growing at 50%, you know, they could be a $2 billion business within the next 12 months. Oh, they will be. You know, they should be. And the competition still kind of just, oh, well, Cisco and EMC are going to fight or they're not this or they're not that. I'm like, they are raking in money. When the startup from the space are talking about having a billion dollar valuation and VCE is bringing in billions of dollars. Here's what's relevant about that. Name another, let's say, $2 billion plus company growing at 50 plus percent a year, Amazon. Oh, it's not a coincidence in my view that what, what, why is VCE doing well? It's because people internally are trying to replicate the cloud, the public cloud, and they don't want to go to the public cloud necessarily. They want to build their own cloud and they don't want to do all the non-differentiated heavy lifting. So the same, let's put in a block of infrastructure. So John, that's my take on why VCE. Okay guys, great wrap up for day one. Again, day two tomorrow, we're going to have Jeremy Burton on a bunch of folks from EMC and VM. We're going to pivot along and a bunch more, a bunch more cube action, double cube, hashtag, double cube. Users, but John, we got the Vatican Library CIO coming on. I'm really excited for that one. It's a great mix issue. We've got the thought leadership, double barrel, double barrel shotgun of thought leadership here on theCUBE. That's what's happening here. It's a wrap up from day one live in Las Vegas for EMC World. We'll be back tomorrow. Stay with us for more continuous coverage of EMC World. This is theCUBE in our fifth season kicking off here at EMC World. We'll be right back. Tomorrow, stay with us.