 Live from Las Vegas, Nevada. It's theCUBE, covering EMC World 2015. Brought to you by EMC, Brocade, and VCE. Hello everyone, welcome back to day two of theCUBE live in Las Vegas for EMC World 2015. I'm John Furrier, the founder of SiliconANGLE. I'm John Michaels, Dave Vellante for a kickoff of day two of three days of wall-to-wall coverage. Two cubes for the SiliconANGLE.tv. There's two channels, and you can check out all the action. We're kicking off day two. Today was a big day, big three big keynotes. We're going to discuss quickly with Dave, Dave, you know, Joe Tucci. We had Paul Moritz, Pat Gelsinger, obviously Jonathan Martin, EMC, showing you the big data use. What's going on? What's your take? We've got a big day lineup here. All the heavies are out today. Well, tonight was a better day than day, John. It's not a side-axe, it's kind of funny. Joe's a little uncomfortable, but he did a good job, and then Mr. Spock came out the end. Tucci was relaxed, and he's dressed in pink shirt. Looked good, looked tan. Talked about sort of really wanting to focus on the Federation, that was the theme today. Introducing his CDOs, in particular, Gelsinger and Moritz. Both gave presentations. Moritz really spent a lot of time up there talking about the whole pivoting strategy and the sort of tip of the spear, which is the old pivot of labs, creating digital experiences, and then Cloud Foundry, spent a lot of time with Cloud Foundry, and the open-source foundation that they're building, and then the big data app platform that they're talking about. And then, I tell you, I was surprised. Actually, Moritz went much longer than Gelsinger. I would have thought for this crowd, Gelsinger would have been the main highlight, but it was Moritz. Well, Moritz threw in the mainframe comment again, all the goods of the mainframe, interesting. IBM's earnings, the Z Group's doing very well. So we're going to fly back to the mainframe, and what they're doing is in the Cloud Format. Gelsinger's talking about OpenStack runs better on VMware. Absolutely, OpenStack's a big part of their strategy. We're going to have SDN focus as well, conversion infrastructure. But the big thing that I like about EMC is that they're really, and this is Tucci brought this up, is that they're talking about digital transformation, and digital transformation is the key to their strategy. All their customers are transforming Dave, and this is a new positioning for EMC, not new in what they deliver for outcomes, but you're hearing things like, you know, most of our engineers are software developers, we're focused on business outcomes, and then you hear words like digital transformation. What does this mean? So, I mean, I think everybody's talking here at this show about digital transformation. Tucci talked about it, Moritz talked about it, Pat talked about it. I thought that Gelsinger had the best sort of visual. He had a bridge over some river in Pennsylvania. A whole client server bridging to the new, you know, what they call third platform, the cloud, mobile, social, big data, you know. And, you know, that's the big challenge. I think the interesting thing for this company is, Dave Goulden talks about platform 2.5, which is, it has to be like a half way house, to use your term. That says, Pat had to comment, you know, cloud is not like a rest stop, you know, it's a, or hybrid cloud is not a rest stop, it is the destination. And I think that, you know, remains to be seen, John, the big question that people have that I've been talking to is, you know, the sort of visionaries is, can VMware specifically and EMC and the Federation generally, from a cost structure standpoint, you know, play in the open stack, you know, open source world? That's what's going to be really interesting. So, you know, you're in Silicon Valley, John, you see all the action going on. What are you, what's your take on all this? Well, I mean, I love what VMware's doing with Pivotal and EMC. I think the Federation strategy is really brilliant. And it is a lock-in spec with all the window dressing of choice, as a Joe Tutti says. We don't want lock-in when a choice, but the de facto lock-in is going to be functionality at a cost structure, you mentioned. That's unprecedented. And I think the elements of the Federation will allow customers to deploy solutions that are agile, more flexible, more business driven for outcomes. And to me, that's going to be the key. Now, what's interesting is the ecosystems of all three. You got EMC, trying to develop an ecosystem from being a box pusher now to a solutions provider. VMware's got an amazing ecosystem, and Pivotal obviously has an ecosystem on the app side and with Cloud Foundry growing very fast. So, those three seem to be awesome. Joe Tutti mentioned also M&A activity. Classics always talks about the M&A piece. I think EMC will be a big buyer of startups. I think you're going to have a crop of tuck-unders. I think there's going to be startups that are going to be unicorns that are going to flame out. You know, companies that are raising billions of dollars, valuation-wise, are not going to make it. They're not going to hit escape velocity. We've heard that on theCUBE before, and I think there's a huge opportunity for M&A activity in the next 18 months where you will see companies in the $250 to $500 million range be acquired, be plugged into the machinery of the Federation, and fill in the white spaces. So, you know, Dave, I want to get your take because you and I talked about this, about companies that get massive funding that go all in. We talked about Lumio yesterday with John Thompson. We talked about Pure Storage briefly. Yesterday's competition to EMC. These are companies that are way overvalued from an M&A standpoint, so they're going for broke. What's your take? Can they get an escape velocity? Will they be formal competition against the Federation? And if EMC continues to execute with ExtremeIO, with the Federation, playing an open source, they've got a pretty killer formula, but the question is, who is going to challenge them? Well, I just want to follow up with something you said. So EMC spends 12% of its revenue on R&D and then another 8% on acquisitions. Joe Tucci, as for years, talked about his string of Pearl strategy, tuck-ins. You know, obviously, VMware was more than a tuck-in. It was a blockbuster, but I think in general, you're absolutely right. There's going to be continued consolidation. EMC has been one of those companies that we've noted on theCUBE as a sharp acquirer of companies, Oracle, IBM, Cisco, EMC, and there are others, but those are the big ones. And so I think, yes, you're absolutely going to continue to see more of that. In regards to escape velocity, generally, and specifically for those flash guys, I think that only one or maybe two are going to see that escape velocity. I think actually Pure is going to make it, believe it or not. But I think they're going to make it in a different way than a lot of people, certainly the Pure people are positioning. I see ExtremeIO as the VMAX and I see Pure as the VNX, which is not a bad market, but I see that Pure is sort of that mid-range, two-controller, not super, super, super scale out, and I think the beast is a good name for ExtremeIO, so that's really where I think Pure is going to be successful. And I do think they'll get escape velocity, but I don't see a lot of those guys getting it. I think it's going to see a lot of acquisitions or some kind of shakeout. We talk about Amazon all the time, about Amazon always releasing new features and new products. If EMC continues on this torrid pace of innovation, Pure Storage will have a hard time innovating at that pace, so therefore on the competitive heels, they might settle into a more of a mid-range, but in general. Yes, I mean, as dominant as EMC is, two-thirds of the people don't buy from EMC, so there's a big market for guys like Pure, but I think that to your point, HP, IBM, EMC, to a certain extent Oracle, all have their storage and flash strategies in place, NetApp maybe to a lesser extent, but the rich going to get richer, John. That's my prediction. Well, you're watching theCUBE. We've got a lot of great guests coming up here. We've got Jonathan Martin, the CMO. We've got CJ, who's the president of the Emerging Division, Technology's Division. We've got Pat Gelsinger at 320 here. And remember, we've got two cubes, so there's two channels on silkenangle.tv. Check out the two channels, check out the videos. We're going to get up on YouTube as fast as possible. And as always, there's always a ton of content flying out of theCUBE. Join CrowdChat.net slash EMCworld. And tomorrow we're going to have an exclusive CrowdChat with Jeremy Burton, ask him anything at 12 o'clock Pacific. Go to CrowdChat.net slash EMCworld at 12 o'clock tomorrow for Jeremy Burton, ask him anything on CrowdChat. So bring on the questions. He's very transparent, loves to talk, and he's very candid. So join the conversation. And of course, we're theCUBE, adding to the conversation, creating the conversation. Here all day, wall-to-wall coverage. Here at EMCworld 2015 in Las Vegas. We'll be right back after this short break.