 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 we're back, this is Dave Vellante with Jeff Frick and this is the Cube, we're here to wrap up. John Furrier's not here, he had to head back to Palo Alto but Jeff we're going to cover it for him. This has been an amazing week, three days, wall-to-wall coverage, two cubes, 75 interviews, plus? Yeah it was 55 when I looked at the playlist this morning before we came down for day three so a lot of interviews. It's been fantastic and so here's the thing, we've been covering EMC World now since 2010 with the Cube, our first Cube ever. And we have seen the transformation of EMC, it's tracking with the industry and of course EMC's growing somewhat fast in the industry but the whole transformation from back in 2010, the journey to the private cloud starts now. So there was an intense focus on getting the private cloud up and running on-premise, we talked a little bit about hybrid but it was really all about the private cloud, the on-premise cloud and how that's evolved and then we saw cloud meets big data, we talked about IT transformation, transforming your IT, transforming your business, transforming yourself was one year and now it's redefined. Kind of interesting, John Furrier and I were talking to Jeremy Burton about redefined, sounds like reinvent, which is of course Amazon's theme and Jeremy said, hey don't fight fashion. People understand, the trend is your friend, why re-educate them? So that's interesting and it's not just some throwaway term, redefine is kind of easier and more gentle to IT people than reinvent, I don't want to reinvent myself. No rip and replace, you're going to want to do that. Right, exactly, so there's that subtle message there. The other thing that you're seeing is a year into the federation, EMC last year at its analyst meeting in March announced the concept of a federation, spun out pivotal, took certain assets out of EMC and VMware, I called it the misfit toys and put it into pivotal. They're still shuffling, last quarter they took some assets and put them back into EMC and so that's the value, one of the benefits of the federation, you can move stuff around pretty seamlessly without a lot of hassles. The other thing the federation does is it allows EMC really to sell up into the organization. EMC even five years ago really was not selling to the CIO, they were selling to either the storage admin in the case of EMC or the virtualization admin in the case of VMware and the vision of Paul Moritz and Joe Tucci and Pat Gelsinger and we had Howard Eliasson and others have really taken EMC to a new level as they're becoming a strategic partner. Jeremy Burton was also a big part of this with his messaging and marketing campaigns. You see EMC, one of the things Jeremy Burton said to us years ago is we're a $20 billion company, this was several years ago, we're going to start acting like one and they do. You saw Pure Storage taking potshots at them this week, EMC's attitude is bringing on we love that because it's just interesting to watch. HP was here with 72 hours of yes and so everybody wants a piece of EMC. Yeah, David, you've been coming here for a long time. This was my first EMC world, great energy and the thing that I enjoyed most about the time here the last couple of three days was all the number of customer interviews that we had. Like I was joking earlier when we were doing the schedule we did it in alphabetical order and we went everywhere from the Vatican to the Shavuigan in one slot. We've had a lot of old world industrial companies, we've had new companies, we had cars.com, you know who was birthed during the internet boom so we had a lot of great customers. But again, David, a couple of questions I have for you because you've seen this movie unfold. One is can you drill down a little bit about this concept of a federation? I think it's kind of interesting. I don't know that I've ever heard any other kind of assemblage of companies come together in that way and then there also seems to be the RSA seems to be kind of hanging off the edge of the federation. Where do they fit? Sometimes you see them on a slide, sometimes not. Yeah, it's interesting. They're like a 1A in the federation. So to me it goes back to when Joe Tucci came in, you know he was a very acquisitive CEO. He bought a number of assets. Documentum was one, he bought Legato. Which at the time, you know I would say didn't really work pan out for those guys. Documentum is sort of they've reinvented that into the IIG business. And Legato eventually came around and EMC's goal was to, Legato's backup software. EMC's goal was to be number one and backup software to number two now. So that's taken a long time. Something that didn't take a long time to pan out was VMware. EMC bought VMware for about $630 million back in the early 2000, 2004 timeframe I want to say. It's kind of a lot of dough, $630 million. It's kind of strange, a storage company buying a virtualization company. And initially EMC housed VMware inside of EMC. And it was okay, but it wasn't really working that well. You had a CEO, Diane Greene, who really wanted more freedom. You had a very rapidly growing business, a very disruptive technology. And so it didn't make a lot of sense to have that company, VMware, and all that value locked up inside of EMC. At the same time, EMC has been very forceful, Tucci in particular, that we don't want to give up that ownership. Yeah. So they allowed some people to buy in, through Cisco, gave them an opportunity. John Chambers, I'm sure, kicking himself for not buying VMware. And that model, what they did is they maintained ownership of 80% of VMware. And they maintain that today and they maintain that by buying VMware stock. And they spun it out as a separate stock, which has done quite well. It's got about a $40 billion valuation. If you take 80% of that valuation and divide it by EMC's valuation, it's about 50 billion, about 60 plus percent of EMC's valuation is a direct result of the VMware valuation. So people are essentially undervaluing the core of EMC. Tucci doesn't care. He's saying this is the way to drive shareholder value. Now, Diane Green left, they replaced Diane Green with Paul Moritz, very visionary, did some wonderful things at VMware, really set the tone. Also interestingly, in this timeframe, EMC lost one of its key executives, Dave Donatelli, went to HP. EMC is known for doing this in the past. When Moshe and I, who was the father of Symetrix, left the company, created a vacuum and EMC filled that vacuum and Clarion at the time, which is now part of VNX, blossomed. You've seen this historically, this company. What did EMC do when David Donatelli left? They brought in Pat Gelsinger. Now Pat Gelsinger is running VMware. So you're seeing EMC consistently be able to attract talent. When Pat went to run VMware, everybody was saying, well, what's Moritz doing? Is he ill? Is he going to retire? Well, it turns out, he said he was running strategy. Okay, that's cool. And then all of a sudden, last March, they announced we've got this Federation model. And it was a way for EMC to say, okay, we've got all these assets that are sort of big data related. Let's put them in here in Pivotal and let's create a big data platform. Let's appeal to application developers. Let's start doing some stuff in open source because we don't really have an open source mojo. So you see, look at the growth rates. Pivotal, a couple hundred million dollars growing at 40% per year. And VMware growing at 15 to 20% a year. Five billion dollar company and then you got EMC, a huge company. 20 billion plus growing, not that fast. You know, one to 2% throwing off a lot of cash, 5.8 billion dollars in cash. So what EMC is able to do with that cash is they pay back dividends. They've just increased their dividend 15%. They buy back their stock, they buy VMware stock and they finance acquisitions like AirWatch, VMware's end user computing play. So the Federation to me is one, an awesome way to cross the chasm. We had Jeffrey Moran last week talking about crossing the chasm. Why can't big companies do this? They just seem to have a tough time, couldn't put a finger on it. I just don't think they innovate from a business model standpoint and that's what EMC is trying to do. Now the challenge is the classic EMC is huge compared to the others. So the others have to grow so much faster to offset the declines or the flatness and eventual declines in EMC's core business. But this is the other use of cash is EMC buys companies and they invest in R&D. So they are hitting a groove swing on all cylinders right now at the direction of Joe Tucci and he's been able to attract some really top notch executives. So that's sort of my take on the Federation. So the other thing I find, you know, fortuitous for the EMC, for the Federation, right, is to leverage the expertise and the knowledge and really the core virtualization expertise that comes out of VMware and be able to ride that virtualization wave throughout the balance of the computing stack into storage and more and more into networking and then have an external source like AWS really pushing them and helping push them in that direction. So it seems like it's kind of the best of both worlds. They've got an internal asset that they can leverage across now multiple platforms and multiple stacks within the data center as well as having a nice external push from a fast growing Amazon who's really the core cloud driver. And so they get to leverage the trend as your friend in terms of cloud virtualization on both sides with internal development across an ever expanding piece of the stack as well as having that external push from Amazon. Yeah, and the other thing, so let's talk about some of the stuff that went down this week. We found Viper 2.0 last year, the big story was when are you going to allow us to run software on commodity infrastructure? EMC's checking that box, adding in some other capabilities. So it's growing beyond the initial HDFS and object, your file, your block, they got all kinds of new stack functions that they're building out with Viper 2.0. The other piece is Nile, they announced Nile last July. They've rebranded it, the elastic cloud storage appliance. Nile, River, bigger than Amazon. So that's sort of a tongue in cheek, classic Jeremy Burton. But that's essentially cloud in the box. We'll see, we'll see if it really is cloud in the box. I mean, I don't know. I mean, I think there's certain attributes of it, but I think Amazon is the reference model. We heard KK talking about within internal EMC IT. They looked at Amazon and said, okay, why can't we build something like that? So we'll see if the ECS appliance actually can live up to that very high watermark that Amazon has set. The other big blockbuster announcement that was made is the acquisition of DSSD, a rockstar team of developers and engineers, Andy Bechtelstein and others from the three-part team. These guys, somebody, I think it was, might have been Jeremy Burton called Andy Bechtelstein, the Rembrandt of hardware design. And obviously, huge mojo in the marketplace, a lot of credibility. I think it's unclear where this fits. I mean, I think it's clear that it fits in the very high performance, high low-latency marketplace, bringing flash closer to the CPU. This is something we've talked about a lot. Essentially, spinning disks are the bottleneck in computer science. Spinning disks in the protocol, the disk protocols, the SCSI stack, if you will, a lot of overhead there. The concept of eliminating that and allowing ISVs to write to an object-based methodology, an object so simple, block and even file, sometimes complicated, block especially, but object as a get, put, put get, put it there, grab it. Now, it's unclear what EMC is actually gonna do with DSSD, but I'm sure they have specific plans. They were an initial investor in DSSD, as was SAP. They bought out SAP, and so they know this technology, they've been tracking it for a long time, and I'm sure they have big plans there. So that was sort of the DSSD. And then, of course, a lot on Extreme I.O., a lot of benchmarking, classic EMC, when they announced VF Cash a while ago, they were trying to take out Fusion I.O., and they put up benchmarks. They didn't say who it was, but we know it was Pure. Pure is coming after EMC and growing like crazy. So obviously, they're gaining share. Pure is growing at 50 to, so maybe not 100%, but close to 50 to 75%. I don't know what the top end is. It's more than 50% sequentially. So, since it's doubling every two quarters or less. So that's phenomenal growth. Where is that growth coming from? It's coming from the VNX and VMAX install bases. So it's gonna be really, so that's why EMC is so forceful about going after Pure with the benchmarks. EMC has great benchmarking capabilities, a lot of labs, they'll bring customers in, they'll hypnotize them, and they're very good at this. And so they announced a million dollar guarantee that the services are in line, D-Doup services. The fact is, Extreme I.O. right now is services light. It's a later to market than the Fusions, the Pures, et cetera, so they're gonna take some time to build up that stack. We'll see what that impact of all those features is on performance. Of course, benchmarking, you got to be really careful. There's always ways to make a system look bad, but it comes down to really good marketing. EMC was essentially depositioning Pure as sometimes as slow as a floppy disk, which is quite hilarious. I think if you talk to the customers there, they're seeing that it's run slightly better than a floppy disk. Pure customers are pretty happy. The intelligence that I have says that pure customers that buy a system, a very large portion, not quite 50%, but 30 to 40% actually buy another system within a few months, within a quarter even. So that says to me you got a player that's bold, making some moves, but then line that up against EMC. It's a $25 billion company with Pivotal, with VMware, with huge services division, massive partnerships. It's gonna be interesting to see, but I've seen a lot of startups over the years try to take on EMC. They end up getting bought, or EMC buys them. Really depends on how hard they heard it, but that was a big theme here at this event. I don't know what your take was on it. Well, the other theme that we are getting a lot, the other cube is really the increased virtualization of some of the bigger and more important applications, and specifically SAP SAP HANA and Oracle, and as the virtualization is moving into those applications and the impact from the business, and not just more the periphery, but really getting onto the shop floor and getting into the core pieces. So I think that was an exciting development that just, again, trend is your friend is continual march towards cloud and virtualization of all this computing, horsepower, storage, and the applications. But Dave, I want to ask you, you've been coming to this thing for a long time, launched theCUBE here in 2010, a lot of excitement here in 2014. What do you think is going to be next year? What's the next big mountain? Yeah, I think that, well, I just wanted to add, there's a lot of core stuff going on too. The VMAX, the VNX, the data protection services, the global services business, VCE, which by the way is hitting on all cylinders again, 50% growth, $1.8 billion pipeline. So a lot of good stuff going on in the core, it doesn't get as much attention, it's not the new stuff. Again, sharing me Burton said it best. If you're not relevant to your customers in the future, if you don't show that you're relevant to their future, you got no business hanging around today. So EMC's trying to be relevant for the future, that's why they talk about future so much. People will criticize them and say, well, you know, all they talk about is futures. The key is do they deliver on those? So you saw that with Viper. Now, here's the big thing. One of the things that I'm tracking is EMC has not had in the last decade a great track record of organic investments paying off in a big way. You know, you might get some quibbling on that, but as far as home runs go, most of them have been acquired, whether it's VMware, data domain, Isilon, it's the acquisitions that are really innovating. The internal R&D has mostly gone toward incremental improvements in existing platforms to essentially keep customers locked in. I mean, they don't use that term locked in, but that's what it does. If you keep progressing your services, you make it less attractive for them to leave than to stay. And that's the form of lock in. That's what I mean. Well, the other thing though, Clayton Christensen would say, that's what your customers that are paying the bills want you to do. They're spending money, they're giving you revenue, they're asking for incremental changes on the stuff that they're already buying. And therein lies his crux of the innovator's dilemma is you're being financed to make continuous change, not discontinuous change. Incremental improvements. Right, which is why it comes from, typically, the startups who are not encumbered, not so much necessarily by a technology that they've got to support, but even by a revenue stream that they have to support. And so what I'm tracking, yes, what do you expect next year? I want to see Viper uptake. I want to see where we are at with ExtremeIO. I mean, EMC claims, and I believe them, that they're number one in all flash arrays. I guarantee they're pushing that stuff hard. They're jamming it down their customers' throats. But if what they say is true, that architecture matters, and they got the best architecture, then they should do very well in this market. And our David Floyer has always said that he feels like ExtremeIO is going to kick butt. And they're already out of the chute as the leader, as measured in shipments. Now, EMC is masterful at managing these product transitions. So I want to see Viper uptake. I've talked to a number of customers that have Viper. You know, they like the concept. I've said a number of times this week, is Viper a way to consolidate the EMC stovepipes, or is it the future of storage? The answer I got from EMC consistently was it's both. So they're at least admitting that that's sort of one of the strategies. So I'm looking for Viper uptake. I'm looking for ExtremeIO. And the third thing is I'm looking for more progress on the Federation, especially traction with Pivotal. And I want to see VMware execute on its March to that $50 billion TAM. And I'm also tracking the decline of some of the large businesses, like VMEX. How much of that is reversible? And obviously continue to track, you know, other businesses, core businesses, whether it's VNX or VCE. So that's a wrap here, Jeff. It's been a pleasure having you. Yeah, we had a great team. They're giving us the hook. They're setting up for the Imagine Dragons, I guess, are coming in shortly, but we had two cubes. I think we had seven hosts. We had a crew of five. So good shout out to the crew, to Mark, and Mick, and Matt, and Greg, and Andrew working two simultaneous cubes. Michelle, our greeter was helping us with all the traffic. So it was a busy day, a new day, first time ever, for two cubes simultaneously at the same venue. Dave, you and John just were going bananas. And a lot of folks at the back end, you don't see in Silicon Angle, Wikibon, Art Lindsey, Kristen Nicole, all our writers that you do see on Silicon Angle. Bert Latimore running the crowd chat. The crowd chat here has been phenomenal. Crowdchat.net slash EMCworld, if you want to check it out. 21,000 plus views, almost three million timeline impressions, 549 posts, that's engagement. We'd love to see it. Thank you so much for coming in. Tim Crawford and others. All right, that's a wrap. This has been the live production, the cube, Silicon Angle's the cube, EMCworld 2014. We will be at OpenStack next week, so look for that. Thanks for watching, everybody, and we'll see you next time.