 Live from Las Vegas, it's theCUBE. Covering Dell Technologies World 2018. Brought to you by Dell EMC and its ecosystem partners. Welcome back to day three of Dell Technologies World, the inaugural Dell Technologies World. My name is Dave Vellante and you're watching theCUBE, the leader in live tech coverage. This is our kickoff of day three. We got a little analyst round table. Keith Townsend is with me. Stu Miniman, Peter Burris, the co-host, tri-host, quad-hosts of this show, longtime Dell EMC watchers. And guys, let's unpack what's going on here. We've seen, we're a couple years in now of the merger between Dell and EMC. I've said all along this was inevitable because of the pressures of cloud. It's very clear that Michael Dell is taking control of this company. It's the Dell brand, Dell Technologies, Dell Technologies World. EMC is sort of fading into the past. We'll talk about that, that Stu. We'll talk about the culture and the implications there. But I want to start with you, Keith. Let's talk about the customer perspective. What are you hearing from customers? What are the challenges that they're facing, some of the concerns they may have with Dell or in some of the positives? So one of the challenges, customers were worried that Dell EMC, Dell Technologies would just be another HPE too big to solve their challenges. Just how do you find solutions in a company with such a large portfolio? In reality, customers are pleasantly surprised that Dell Technologies has been able to surface up solutions and not just surface up solutions but compete and also partner with their existing ecosystem of vendors, which is a surprise. One of the things I challenged Michael on as a customer was, hey, you know what, this deal with Nutanix, this deal with XE, what are you leading with from a hyper-converged solution perspective? Dell has been able to walk that line extremely well. We had Datrium on, a Datrium customer on on day one. Couldn't be happier with the relationship. Then we talked to a couple of folks from the product team. 62% of the client meetings this week has been about VX Rail, VX Rack. Talked to another Fortune 500 customer that's all in on VX Rail, VX Rack, not just for standard workloads, for SAP HANA, which is not even certified for VX Rail, VX Rack. So customers really happy with the overall ability of Dell to solution solutions, bring solutions to the table. I think we still have some time to tell if they'll be able to keep that momentum as they grow, as they continue to consume a partner and if they can continue to find solutions to challenges. Keith, if I can actually just follow up on one thing there, it's very clear that Dell will streamline the portfolio. Had Michael Dell, Jeff Clark, people from the marketing organization said, absolutely, and we're telegraphing to customers as soon as we've sorted everything out, we're going to communicate it. Is there any concern from the customers? Michael says we won't leave any customer behind, but absolutely the, you know, past of what EMC had with so many storage products that they couldn't figure it out. There will be less of them by the time we get to next year. So I think one of the things that you'll hit on when you talk about culture, I think customers still are very happy with the EMC brand. I think Dell did a really great job of not having shot of just getting rid of the EMC brand. Customers still very much trust EMC. EMC had an extremely capable support organization. There's questions around whether or not that support, that white glove support that we've gotten in the past from EMC will exist going forward. You know, they all got rid of EMC code. They brought ScaleIO to a hardware only solution versus the open ecosystem. So there's questions around where the cost cutting will affect impact customer operations and support, but overall customers are happy with the progression. Peter Burris, one of the questions that Stu asked, both Michael Dell and Jeff Clark yesterday, is look, you got some of your bigger hardware competitors like IBM, like HP and HPE running away from end to end. And I think Jeff Clark said, well, I don't know how you can do end to end without both ends. So from your standpoint, from a customer perspective, is there an advantage to that end to end? We've certainly heard it over the years. We used to hear it from HP a lot. We used to hear it from IBM a lot. They've retreated from that. Dell's sort of banging that end to end drum. Does it matter from a customer perspective? Well, of course, but it matters not just from what the customer wants, but also what the applications require. So look, the biggest challenge, the most obvious best end to end solution, if you take a very narrow view of it, it's going to be AWS, Azure, and some of these others. But the question is, is all of your data going to be in that public cloud? So the fundamental engineering challenge that every enterprise is going to have is where am I going to put my data? Some of the data is naturally going to go to the public cloud, some of the data is not. What Dell needs to do over the course of the next couple of years is pick up on that as aggressively as they possibly can to try to not just convince people, but to show them that their organization of their digital business increasingly is going to be defined in terms of where their data assets are located, the practical realities of what that means, and therefore what types of fundamental support are they going to have to bring to bear on it? And Keith, you said something interesting about HPE. The reason why Dell is not an HPE, a little bit less so on IBM, is that Dell EMC over the past 10, 15 years have made good bets. HPE did not make good bets. You want to understand the history of HPE over the last 10 years and why they're not the same, it's because HPE gyrated all over the place to try to buy companies that were kind of like, at that moment, good price, let's just go for scale as best as we can, and Dell hasn't done that. Michael and his team have stayed relatively close to a simple vision of what types of engagement model they want. They've delivered on that vision and they've got the assets that they can put into play now, but they just have to convince the enterprise that the play is where do you put your data because you're going to put your processing close to your data and you're not going to put it all in one place, right customer? And that's not going to be an easy, that's going to be a very challenging set of conversations over the next few years. We think how it's going to play out is that Dell EMC is going to be just fine because the enterprises are not going to want to give all their data up and they can't give all their data up, so we'll see what happens. Well, Stu, let's talk about that. I mean, Dell's cloud strategy is pretty clear. They want to be an arms dealer to the cloud. HPE has, that's early, their only choice. Obviously, IBM owns a cloud, so it's a little different there. Oracle owns its own cloud and they have software. That's a whole different ballgame. Dell clearly is comfortable being a high volume, lower margin supplier, throwing off cash flow, throwing off profits. What's your take on the lack of a public cloud and are there issues there? Well, Peter talked a little bit end to end and you see what Azure and AWS are doing. What one of the surprising things for me is to see pieces of the public cloud and how the Dell technology portfolio are fitting into it. So VMware and AWS, we absolutely understood. There's actually an Icelon with Google Cloud solution that I had an interesting discussion with Manavir Das on day one here and really explained that. Scale out architectures, really getting the files. IBM cloud, there's a booth for them. They're here in the Expo floor. So we've seen that maturation as hybrid cloud is not that transitory state that people thought, but as that pits out, as we know, data and applications are going to live lots of places and a company like Dell needs to be able to live in many of those environments. Edge, of course, IoT, hot issue that they're talking about, but they have portfolio products that will live in many of those places. So good maturation. Public cloud is not enemy number one, but of course they are a little bit more towards the private cloud. They highlight a bunch that if you go all in, your price is going to be bad, we're going to pull it back. Keith mentioned the EMC code team. Kind of got killed, a bunch of them actually over at VMware now with an enhanced team. So it's still, we're not at the steady state of where the shift from my data center to public cloud is, but it is definitely matured and nuanced and Dell has a lot of good partnerships that are growing. Well, and selling servers to tier one cloud guys, it's not a great business. HP exited the business, Dell's in the business, but it can't be a high margin. It's not a great business. I mean, we know that, but it's none the less, there's a lot of non tier one clouds out there. You had a point to make? Yeah, really quickly. The thing I was going to say is, and we've talked about this in the past, and if we think about two things about Dell's portfolio. First off, if we look back at what happened with the mini computer business, and everybody says, oh, the microprocessor killed it. Well, that probably contributed, but we really killed the mini computer business with TCP, IP and Cisco. That's what killed the mini computer business because before, you know, a Dell or a deck executive or a DG executive would walk into a shop with stuff all over the shop floor and the customer would say, I want to integrate this. I said, oh, bridge it. And Cisco said, flatten the whole thing, bring TCP, IP and all those mini computer companies went away. There is a gem in this portfolio, which is NSX. And the degree to which VMware NSX can in fact become that technology for flattening the cloud network. Because that, to me, that's going to be what the next big play in this industry is going to be. Is AWS is going to have its approach? Azure is going to have its approach? You're going to have a bunch of on-premise stuff. But the question is, are you going to be able to flatten those networks and really achieve that end-to-end? And if there's one good option on the table right now in the industry, it's VMware NSX for doing that. The second thing that I would say is, and I had a couple of conversations with some folks about this this morning, we're talking about end-to-end, we're talking about greater convergence, hyper-converged, converged, et cetera. And yet Dell is still organized by server storage network. And it's going to be interesting to see how that evolves over the course of the next few years as customers increasingly do want to leverage this end-to-end to diminish the distinctions and take advantage of convergence and whether or not we see Dell have a series of interesting warfare about where that ends up. Because we don't, Dell does not want to be, Dell does not want to be RCA, right? Well, that's really interesting because some of the near-term moves that they've made are basically to take some of that converged stuff and put it into the, to the, right? So I love the analogy for TCP, IP and NSX completely agree with you. The one thing that Dell is definitely missing from a customer perspective is the control-playing blue. They want to lead with a VMware story, you know, any cloud, any workload, any cloud. I'm not going to take my VMware approach to Google. I'm not going to take that to Azure. So this any workload, any cloud thing, I'm not buying. I don't think customers are buying that. HPE is leading, I think, well, for pretty good message on an, on brokering cloud services. It's a really, really difficult problem. The one-spere story you're talking about. The one-tiered story. It's a very difficult problem. Enterprise customers want a single solution to consume all clouds. They want that TCP, IP, set of protocol standards. They want the cloud to be flat. They want the cloud to be flat. NSX flattens it from a networking perspective but from a control-playing API perspective. The industry is a long way before that. And I don't think Dell even has a plan for it. So, Stu, you know well, when people were talking about, you know, Michael's going to sell VMware. You were very vocal about it. No, he would, he's not. Only an idiot would think that. I mean, you know, there's no way that's going to happen. Right? So, I mean, what a gem in the portfolio. Talk about end-to-end. The other thing I wanted to bring up is, if you look at Dell's business, about half is the client business. It's doing better than expected. So it's throwing off more cash than expected. Especially with the storage business being soft and Dell's been pretty transparent about that. Well, I guess it has to be. But nonetheless, there's upside there. But half, so VMware is about 10% of the revenues. It throws off half of the operating cash. So why would you get rid of that? It's such a strategic asset, 500,000 customers. It's a key part of the end-to-end. And it just makes this such a much more interesting business. Yeah, I mean Dave, I know you've loved teasing apart this complex, the tracking stock, all the things there. One of the interesting nuggets out of the Michael Dell interview was, he said, oh, the tax changes really had no impact. That's not it. People really misunderstand. They understand these finances. It's not that they're hurting for cash. They can't make acquisitions. And the bar's capital's still pretty high. I mean, my sense is it's probably a slight negative, but the tax legislation, you're right. It's basically a net neutral for these guys. It's way overblown. Yeah, but, you know, what's changed? We knew, look, when Dell went private, there were a bunch of change in the company. I knew a lot of people that left the company on for different things. The EMC acquisition, and a lot of change in the last 18 to 24 months, it'll still be rolling out there. You know, I live right in the heart of the old EMC country. And there's some changes there. Who's running it? You see a lot of former Dell executives up on stage, but still some strong people from the EMC side. But Jeff Clark, very strong engineering culture. Actually, the more I've gotten to know him, the more he reminds me of what EMC was 10 or 15 years ago in a good way, sharp, technical, getting on it. So I think the EMC brand, by the time we come here next year, will be gone, but it doesn't mean the EMC people or products like the PowerMax are going to be going. Well, let me push up that a little bit. Yeah. Because one of the things that Jeff Clark's doing is he's simplifying the portfolio. And Joe Tutsi did the opposite. He complexified the portfolio because it is an overlaps are better than gaps. And Jeff Clark's taking a different approach. Is there a concern for customers that, wow, I might be left behind? I mean, they got to be a little bit careful with that message, don't they? Yeah, but I mean, we touch on a little bit, Dave, if you, there's still some of the core products. You know, PowerMax comes out there. You know, this is the legacy of VMAX and Symmetric Support. Still supports mainframe. You know, there's a business for this. They're not going to leave their customers behind. But what we said, Dave, when they put this portfolio together, they need to turn the crank a little bit to get the operating margins where they need to be, not be overlapping so much with marketing in some of these other places. So they're going to be very smart as to how they do this. They say they're going to over-communicate not only their customers, but their partner. One of the years I've talked to a bunch of channel partners, they're pretty happy. You know, there were some little bit of bumps over the last 18 to 24 months as to, oh wait, I had this account rep and now they brought in this overlay and then they flopped who owned it. So it's been interesting to watch some of those dynamics because it's a people business and some of that change, but overall strategy. At the end of the day, Dell's portfolio is, can all be placed in service to the customer with relevance and competency today. That's a much better problem to have than a company that has either been building a bunch of stuff that's not going to matter or has bought a bunch of stuff that's not going to matter. It means that they can sustain a degree of focus that allows them to pay down their debt and do the financial engineering and Tom Sweet's a stud, the CFO's a stud. It means that they can listen to customers and continue to service what the customer needs because their portfolio is easily applied to customer problems unlike a lot of other companies. That's a pretty decent position. They can pursue all of these things because the portfolio's relevant. Now, are there going to be some challenges? Well, one of the reasons why EMC complexified the portfolio was because they had sales people who were deeply engaged with their accounts and they used that as an advantage. And so the sales people said, I need something and Dell EMC like Cisco did for years, went off and, or EMC went off and found it. Dell still has a different channel organization and a different channel approach, much more partnership oriented. So if there's tension in the model, I don't know what you think about this Keith, there's tension in the model, it's we're going through a major transformation in the industry right now. How close do you have to be to the customer? Is this going to be a partner led transformation or are you going to want your people handling the transformation? EMC's approach was your people led to complex portfolio. Dell's approach, simplify the portfolio. Are you simplifying the relationships as well? Are you making the complex, the relationships more complex as a result? Well, we did a great point. We touched on this with Marius because essentially in Marius's organization, you have an overlay EMC sales force which is used to belly to belly. And he said, look, we're working it out, you know, and it requires great leadership. But the complexity is going to be somewhere. Is it going to be in the portfolio or the engagement model? Well, from an engagement point, just look at the Dell Technologies family themselves. When I was a EMC VMware customer, I didn't have combined meetings with EMC and VMware to belly to belly relationships. When that Dell EMC merger took place, Dell came in and flexed the muscle, you know, desktops, end to end, vision VMware became, you know, you could sense the tension in the room. I just talked to another big Dell EMC VMware customer and they'll say, you know what, at VMworld Dell Technologies world, very great messaging. The messaging here has been incredible. You get it in the real world, you talk to Dell, your Dell Technologies or Dell EMC rep, one message, one set of products, you talk to the VMware rep, completely different set of product. And then you talk to partners and what are they saying? So where's the complexity you're going to be? EMC said the complexity is going to be in the portfolio, the engagement model is going to be simple. Dell's saying the portfolio is going to be more simple, but what's going to happen to the engagement model? Because customers, this transformation stuff we're talking about is hard. Let's break down, we got a couple of minutes left. Let's break down the competitive landscape, the horses in the track as we like to say. You obviously got AWS, you know, the mega trend factor, sucking up a lot of demand. Everybody says, people are coming back on-prem, more people are going to the cloud. 49% before that was that growth. So that's clear, but you got traditional server competitors, which really is, I guess, HPE and Lenovo, right? We're going to focus on the enterprise stuff because that's kind of our wheelhouse. You got the storage guys, you know, NetApp seems to be back, Pure has continued to do its thing, small in the grand scheme of $80 billion. They're best friend of me, Nutanix. Right? Right, and you got that funky relationship, you got an interesting Cisco relationship going on. So how do you describe the competitive landscape? Start with you Stu. Yeah, it's a little bit complicated. Listen to what Peter was saying there. EMC was pretty cut and dry, you know. Storage, you know, that's where we're going to live and you know, everything else, we're going to partner. I mean, even the, you know, all the server companies that used to sell storage, they had great partnerships with IBM and HPE and everything like that was the first one you had to partner with EMC because they were dominant in that space. Dell at the core of it, you know, server companies still. So it was interesting, you know, one of the interviews I did, it was, you know, VxRail, you know, if you're not in the hyperconverged space, you know, in the storage space, if you don't own the server, you know, you're not in the right thing. And I'm like, we've got Datrium and Nutanix and all these other partners that are here in the ecosystem that are living on top of the Dell platform. So there's a little bit of that give and take. It's more co-opetition than I used to say, when I used to go to Dell World, they'd have that rack of OEMs with all those different bezels out there. So, you know, where does Dell want to go? How do they maximize, you know, the investment that they made in the biggest merger in tech history? So it's still playing out. I hear relatively good things from the partners and, you know, the customers at least aren't getting stuck in the middle. You know, Nakaido has at Cisco sometimes would really punch in the face and be like, if we're not 100% on board, we're not going to let you have it and then the channel would just sort it out themselves. I mean, AWS, the cloud, it is what it is. You know, the VMware partnership, you know, good move, gives them some, you know, near-term, maybe even mid-term runway, we'll see what happens long-term. In the server business, it's HPE, right, is the main competitor. What do you guys think? I'm IBM. Yeah, IBM, for sure, yeah, for sure. So, how are Macs that just got announced? When that comes out the second half of this year, that goes right after Cisco UCS. Not a lot of talk about Cisco. The VxBlock business is a three to $4 billion business between, you know, the Dell family and the Cisco family and this is going to put them at loggerheads really soon. Yeah, I talked to customers, they love, they love the Dell EMC hardware certain, PowerMEX has been one of the top conversations. They can't wait to connect their PowerMEX to their HPE blades was the response. That's going to be awesome. Which is good. The other piece of that is the NetApp story. NetApp did a great job of talking about data fabric and being a data company. I don't know if they're there yet. Great job talking about it. Dell EMC, they made good investments and they got good engineering parts and great people. So they're on that path. To a man in my peer community, they have said that to a man and woman that NetApp's cloud story is legit, they're good. They're a software company. They're a software company. Dell EMC, cloud story specifically around storage. You know, the Iceline announcement was partnership, but you know, I think customers are really looking at that. Again, that API is about the data and how do I move my data on-prem, off-prem. I don't know if Dell EMC has that story yet and if they have the product portfolio to back it. So here's what I'd say, Dave, that at the end of the day, there's a whole bunch of transformations and I'll try to be as succinct as I can. First off, data has to be acknowledged as an asset. Number one, that's a transition in itself. Number two, investment in technology has to be regarded as an investment in improving the value of that data asset, which means that ultimately, the money in this industry takes place is going to follow the value of the data. That's the simplest, most straightforward way of thinking about this. So when we think about, for example, the server business, we're saying you're not going to put all your data up in the public cloud because the data's not going to allow you to do that. Well, what's the difference between saying you're not going to put all your data in the public cloud to saying, oh, you're going to move all your data to some server somewhere? There's, you know, yeah, it's a little bit more approximate, but it's still not, you're going to move your data closer to more intelligent storage, more intelligent networks, and they'll go find the compute that they need and that's not how Dell is set up today. That's just not how they're set up today. So if we think about five to 10 years, we're talking about a whole bunch of processing power being moved closer and closer and closer to the data in the form of, you know, routines that are being run right there at the server or at the storage machine. We're talking about much more programmable control planes being data-driven, data-first control planes that are being in the network and defined by what the network can do, and the compute is increasingly going to be, regarded as important, not unimportant, but it's going to be an increasingly distributed world where you can't have your cake and eat it too. You can't say, don't go up to the public cloud, but go up to our big honking server. There's something that doesn't quite watch there. Well, you have great analysis, Peter, and to your point, organizational structures really matter, and I think today Dell's organization is really optimized for the continued integration, streamlining that piece, getting that right, making sure the processes are there, and then we'll see how it goes over time. All right, thanks you guys, that was awesome. Good kickoff for day three. Okay, this is day three. You're watching theCUBE. Keep it right there, we'll be back with our next guest right after this short break.