 Live from Austin, Texas. Extracting the signal from the noise. It's theCUBE, covering Dell World 2015. Brought to you by Dell. Now your hosts, John Furrier and Dave Vellante. Hello, it's theCUBE, it's our flagship program. We go out to the events, extract the signal noise. I'm John Furrier, my co-host Dave Vellante. We are excited to be here live at Dell World 2015. The hashtag is Dell World. Join the conversation. Go to crowdchat.net slash Dell World and join the conversation. Dave Aquino, Michael Dell was up there. Big, big swagger. I mean, he's got some serious mojo. He's 50 years old. He's at the next chapter of his innovation entrepreneurial venture. 69 billion dollar acquisition of EMC. I call it the Dell 5.0. It's his new mojo. He's got the attitude now. And all these mega mergers that we've been talking about since EMC announcement really has been about can the deal work? And ultimately, I had blog that tweeted, I put on Facebook is that this, if you look at all the mega mergers and acquisitions, the ones that have worked have been founder-led. If you look at Larry Ellison, Michael Dell, the founders at the helm, and what I saw today with Michael Dell was someone who's totally pumped up. He just swallowed the canary. He's sitting in the cat bridge. He, what are the metaphor is, he's got a swagger. And you know what? He's super excited. He essentially bought the best company he could buy in EMC with the cadre of management team that he bought, VMware, Pivotal. That's Paul Moritz. Okay, he's on stage at Satya Nutella. He's got all the assets from EMC, and we've had a great management team in the Federation. So to me, this is a huge deal. And this whole debt question, I think is going to be some financial engineering, but the cost of capital is so cheap right now. It actually looks like a great deal on paper. I love this deal. I'm one of the people that are like very positive. I think from a CIO, it's the best time to be a CIO. Only a few throws the choke. You know, you've got leverage and the costs have to be reduced. That's a message we've heard. Lower the cost. You've got some supply chain innovation. But the innovation is the message. This is not, hey, we bought EMC. We're going to start cutting, selling everything off. Yeah, there's a spin-off's going on. But there is a clear message of innovation. Michael Dell has it in his eye. He wants to build the future. That was the core theme. What's your analysis? Well, I think that, as I said on Twitter, if you're an entrepreneur, you have to always look at the glasses half-fold. There's a lot of critical analysis that we should do about this deal, which we will do. And it's, I think, quite appropriate to do. But Michael Dell has to be super positive on this. I mean, I think one of the few things, or one of the things that's overlooked in these deals is the human resource aspect of all of this. And people are concerned, right? They're concerned about, okay, what's going to happen to me? What does it mean for me? I got to put kids to college. I got to buy the groceries. So, first and foremost, you want to make sure that the troops understand that there's a positive momentum to this deal, even though they got the zillion questions that aren't going to get answered. I think that's number one. I think the second takeaway that I had with Michael's keynote was he was talking about the benefits of being a private company. It's interesting to note that Michael Dell can write his own narrative as a private company. He can talk about his growth. He can talk about gaining share. He can talk about 14 consecutive quarters of gaining share. And there's not public information that, you know, the Wall Street, you know, Wolves can pour over and say, yeah, but, yeah, but, yeah, but. So Michael can write his own narrative. And one of the comments that he made was, EMC, 67 billion, controlling your own destiny as a private company, priceless. Yeah, and also the word game changer came out. He mentioned DSSD, which is the EMC technology. He also launched the Nutinix relationship box. We saw that all flash array. He had some product announcements, but the number one thing he led with on the keynote that I found fascinating is to me is a tell sign of where Dell's going with this. Is that I believe that Michael's going to put that the ranch, so to speak here in Texas on Internet of Things. Internet of Things is the confluence of all these trends coming together. It's the connected devices down to the cloud, down to low cost infrastructure, but high yield, high scale, large scale infrastructure. I think that's a key message. The questions that I'm looking for, we will be discussing here in theCUBE and throughout the day and tomorrow and ongoing is, what is the configuration? Is it okay to play horizontally and be a horizontally scalable business playing in every field, skirmishes in every corner of the universe, and be vertically integrated? If you believe that the Internet of Things is a trend in mobile analytics and cloud, that points to an Amazon model. And the deal here is, Dell's got a horizontal strategy. So the question is, can they blend best of both worlds to give that feel of engineered systems like Oracle has, which is a vertical stack as an Amazon, at the same time, play horizontally across multiple partner bases, multiple ecosystems, and certainly a hodgepodge of serious product overlap, which will be. Dell has always had kind of an all-the-above strategy. It's got one of everything. And Joe Tucci's fond of saying, hey, the gaps are worse than overlap. You know that well. I think the big issue here is leadership. There's been a leadership vacuum at EMC. EMC put together this federation. David Goulden architected it, which I thought was quite brilliant actually from a financial and company configuration standpoint. But there has been a leadership vacuum for the federation. I think Joe Tucci will admit that that was one of his failures in defensive Joe. He's been trying to retire for the last three years. We had some questions in the crowd chat. Phil Dunn says, when you're spending 67 billion, your blood must be pumping to my comment about Michael Dell's pumped up. Otherwise it's going to be very simple. You got to get leverage out of the deal. So I think leverage is going to be key. But also another point came up from Sean on the crowd chat was, who's cloud do you go with? VMware stock is down 12 points this morning. The Azure is up on stage with hybrid cloud. Virtuostry is being spun out as a cloud. Someone in the federation or in the Dell ecosystem has to be that cloud vendor. I get the relationship with Microsoft. Makes a lot of sense. I think that has to be VMware. So let me finish my point and address that sort of ROI question because I think as I said, there's been a leadership vacuum. Michael Dell's got to provide that leadership. There's got to be a, there certainly was a shared vision within EMC but the execution was lacking. So Michael has, that's on Michael now. Obviously in Goulden, whoever stays from EMC. The ROI comes from, can you de-lever? Do you sell Pivotal as an asset? What do you do with VMware? Do you sell that? Or do you get ROI by vertically integrating? I mean, those are big questions. We're going to ask Michael. He's not going to answer definitively. But those are the questions that he has to decide obviously with his team. So personally, I think Michael Dell is going to do and Silver Lake going to do very well in this deal. They will get ROI, they will de-lever and they will increase the value for the current Dell shareholders. That's my opinion. I had a chance to speak with Michael Dell yesterday on the phone for about 30 minutes and I talked with him and I said, why are you doing this deal? And essentially the answer, you wouldn't really give me the real answer but I was, I squint through between the lines is that there's not a lot of other deals to do out there. The EMC deal gives them a tremendous leadership. He mentioned their leadership in 22 categories on the Magic Quadrant. But what you actually now have is an ability to actually replicate a Lego block design. And let me just take that and get your thoughts on this. If you believe that the DevOps movement changed the game in the cloud where the developers were in charge and the developers are clearly in charge and that's dictating change, hence the success of Amazon, then you see the rise of the cloud. If you believe that the customers are in charge, the CIO, then you believe that the appropriate strategy has to be freedom and choice. And that means it's a Lego block, whether it's the API economy, he mentioned Uber and Airbnb. If there will be build out in IT, in a new form of IT, if build out is the deal, the new workloads is the CIOs are in charge. The customers are dictating terms, just like the developers are dictating terms on the DevOps and the cloud. If you believe that, then having a portfolio approach with more overlap rather than gaps is actually a winning formula. What's your take? Yeah, well I think there's no question about it. I mean, we heard the group CIO from Coca-Cola was on stage with Michael, his name was Javier. Guys like Javier have invested billions in assets, IT assets globally. So they want to see something like this merger work, they have to see something like this merger work. So Dell and EMC's biggest advantage, customers get a return on asset. Now how they do that is going to be really interesting because if I were Michael Dell, I would be a longing product cycles for VMAX and VNX and probably Data Domain. I would be cutting R&D. I would be raising maintenance prices and managing that declined business and taking that money and investing it in the future growth of the business. So they've got a partner with CIOs and that's a fine line to walk. If they can do a good job, they actually can beat Amazon because that's Amazon's Achilles heel. Amazon really doesn't have an on-prem strategy. Amazon's on-prem strategy is to sweep the floor and bring it all into the cloud. That's not realistic for people like Javier. That is Dell and EMC's, really they're ace in the hole in my opinion and how they execute on that is going to determine whether or not this deal returns value to shareholders and to customers. Okay, so let's talk about the keynote and then talk about what Dell has to do to be successful. Actually the keynote theme is build out. They brought on some great customers. They don't want the future. They want entrepreneurial, essentially small, medium-sized business as I had tweeted during the keynote actually represents the same consumption environment that the enterprise want. The shadow IT market we saw in the cloud is kind of an indicative of the consumption of IT. You're going to see small, bite-sized chunks of IT that look like an SMB sales motion, if you will. I'm a technology department standpoint. So I thought the keynote had great message and then there's so many moving parts of this deal. The virtuous tree being spun out. There's all kinds of things going to be sold. A lot of overlaps. A lot of things will not be answered. There are things that have to be addressed quickly. What's your take on the keynote and two, what are the first five moves? The quote Bill Walts, the famous 49ers. Script those first five plays on the first drive for Michael Dell. Well, I think that the piece of the keynote that we haven't talked about, we had to run back here to do the Cube Live, was the Microsoft announcement. So I just talked about Amazon's Achilles' heel is on-prem. That is Microsoft's strength. So Microsoft and Dell are creating purpose-built hardware and custom solutions for on-prem infrastructure that mirror, that mimic cloud-like functionality. That is the very first play that you're going to see come out of Michael Dell. We're seeing it today. And I think from there, what's subsequent is really try to replicate the value proposition of the cloud on-prem with that trillion dollar install base of assets. Okay, well, we are live here at Dell World. This is the Cube, silkenangle.com. Silkenangle.tv is where the live stream is. Go to crowdchat.net slash Dell World. That's our new social media engagement application. It's a live feed. There's also an engaging conversation happening there on the hashtag Dell World. And of course, go to wikibon.com for free research and also subscribe to the Cutting Edge research. And if you're watching right now, you have to tune in at 12 o'clock. From 12 o'clock on, you're going to see Marius Haas, one of the architects in Corp Dev. You're going to see Michael Dell come on, Paul Perez, who gave a great speech at Gardner's and Posting last week. He's the Chief Technology Officer of Dell Enterprise. Michael Dell himself is coming on at 2.30. Mark your calendar, 2.30 live here on the Cube. That's local time. Local time here in Austin. And then Garo Chan, Global VP of Marketing for Dell. And then a slew of other ecosystem partners, alliances. We're going to get down and understand what the future of Dell is. This is the Cube, extracting the signal from the noise. We'll be back with more after the short break live here in Austin, Texas for the Cube.