 From around the globe, it's theCUBE with digital coverage of Dell Technologies World, digital experience brought to you by Dell Technologies. Hello everyone and welcome back to theCUBE's continuing coverage of Dell Tech World 2020. This is Dave Vellante and with me is Dennis Hoffman. He's the Senior Vice President and General Manager for Telecom Systems Business at Dell Technologies. Good to see you Dennis, welcome. Thanks Dave, great to be here. So let's talk a little bit about corporate strategy, which is kind of your wheelhouse. I'm curious, has the pandemic at all altered your thinking on Dell's strategy? Interestingly enough, it hasn't. I suppose it would be standard for me to say that, but if anything, it's just given us both a sense of the challenge of what we had to do as a company to keep doing business, but also it's been really illuminating because it's kind of given us a glimpse of the future. And fortunately, I think we've been pretty well prepared for what's happening. Well, I think in a way, there's a bias inside of Dell because you guys were probably more work from home than the average company. And so in a way, you might've been more prepared for this and maybe your thinking was already headed in that direction. What do you think about that? No, I think it's a reasonable thesis. The company is very much work from home oriented or mobile in terms of where we work. Kind of an overall, I guess, hypothesis that works something you do, it's not a place. And, but we also had a portfolio that benefited from the pandemic and an overarching strategy that was really to help our customers transform digitally. And if anything, the pandemic's accelerated all of that. So, again, not without its challenges. And I certainly feel for the folks who get an awful lot of their energy from working with people every day, because that's kind of what's missing for an awful lot of folks. We're doing an awful lot of what you and I are doing here. But otherwise, I think we were biased toward it and it worked out pretty well so far. Okay, so it hasn't changed your strategy, but I would imagine some of your assumptions have changed. I mean, obviously more people are gonna be working from home now, probably at least double if it was 15 to 20% pre-COVID, it's gonna be what's called 30, 35, maybe even 40% post-COVID. Maybe it's gonna take a while, six, nine months to get there, but I would imagine some of your assumptions have changed. Is that a fair statement? Yeah, I think ours and the industries at large, most companies' business continuity plans really centered around natural disasters. No one, in most of those plans, 30% of the population working remotely was kind of the high watermark. Right now, we're seeing whole industries redoing their business continuity plans, factoring in 60, 70% bogies for how many people or what percentage of their population would work from home. As we surveyed our employees, 90% of people said we'd either like some form of hybrid work experience or completely remote. So again, if we're a bit of a leading edge on this, we're probably gonna be tilted even more toward it, but there's been a big change in assumption about what remote work looks like and what you've got to do to make it productive. So we're a decade and a half into the cloud, or at least the sort of modern cloud era. What's your take on where the industry is today and how it affects your business and your cloud strategy broadly? Yeah, it's fascinating. We're kind of in the midst of an ever-accelerating set of cycles or pendulum swings from centralized computing to decentralized computing back to centralized. We went from the mainframe era to the client server era and then even quicker to the cloud era. And now we're seeing the emergence of the edge. The one thing that's constant through all of this is workloads are like water. They seek their ground. Workloads have characteristics they need, performance, economics, security, data gravity. And so we've been firm believers through this whole time that a certain amount of workloads gonna end up in a very centralized model. Some's gonna end up very decentralized. And our job is just to enable our customers to put the workloads where they need to run best. So as you point out, we're quite a ways into the cloud era now. It looks like the edge era is emerging. I like to think of it as really three legs of a stool. You've got work can run in a private data center. It can run in a public data center or it can run everywhere else. And increasingly everywhere else is being called the edge. All of it by the way, in a cloud operating model. So big distinction between cloud the model and cloud the place. And so in many ways, as we talked specifically to certain vertical markets, the cloud era is already beginning to give way to the beginning of the edge era. Well, and at the same time too, you're seeing the hyperscalers, recognizing the need for whatever it is, for economics, for legal reasons, for preference or latency, moving on prem. And so I was having an interesting discussion with the CIO the other day and I asked them, well, what do you look at as cloud? The cloud is everywhere. I got my cloud on prem. I got my multiple clouds, which is clear. They're all, everybody's going multi-cloud. And then he happened to have 17,000 stores that he was looking after. He goes, that's edge to me. That's all part of my cloud. And now, of course, part of your role is telco. So let's talk about that space. You've got the over-the-top providers or they're sucking off the infrastructure that have been built up by the telcos. Cost per bit is coming down. Data usage is exploding. And the telco industry really has to transform its infrastructure. They're not agile enough and they can't wait to get to this new era of 5G. So I'm interested in your thoughts on that and how you see Dell helping. Well, I'll tell you, you characterized it right on. I've, in the last several months, spent a lot of time with telecom executives all over the world because of how easy it is to do this sort of thing. And they need to transform. The digital transformation, sweeping the rest of the world has caught up with telecom for a whole bunch of reasons. And some of those you pointed out, right? Agility, cost, economics, they're in a funny place. Never has demand for communication services been greater and yet never have their financial positions been more challenged because they're kind of stuck between an old fairly proprietary closed architecture and a handful of vendors. And on the other hand, embracing this cloud computing data era where there's thousands of vendors and they somehow all need to be cobbled together into an open software defined system that runs on industry standard hardware and yet most telecoms aren't prepared to do that integration themselves. So for us, we see immense opportunity. It's literally as if a massive $100 billion plus addressable market has effectively decided they need to start buying the kinds of things we've been making for years. And moreover, they are by definition fundamentally a distributed model. The big difference I think between a Dell Technologies and a Hyperscaler is we as a company we're built in and for a distributed computing world. We deal with very mundane topics like how do you get a person on site within an hour and how many spares depots do you have and all of those sorts of things. Whereas Hyperscalers were built for the exact opposite, a world in which they said, hey, give me your data, give me your workloads. I'll think hard about it and I'll give you a very flexible economic model. The edge kind of puts all of that up in the air and telco is the leading part of this edge, right? They're the ones that own a great deal of the edge and as you pointed out, 5G is really the thing that's got everybody excited. Well, you bring up a good point about the Hyperscalers. I mean, their challenge now as they go on-premise, okay, how do you service and support those customers at scale? And everything they do is at scale, it's all highly automated. So that's kind of interesting. At the same time, I wonder, you're a strategy guy, you look at what Amazon retail does. They're putting up warehouses everywhere, they're putting points of presence. I wonder if there are analogs to the technology business. It's probably more complicated, right? Because you're not servicing, you're just delivering. No, I think you're right on, there's analogs. Look, we all are what we are as vendors. We all have our business models. Ours is to sell equipment and software and services to somebody. Amazon, since its founding, has really been about how do I insert myself in a transaction and ease that transaction and take a slice? Google's been about democratizing and monetizing the world's data. So Amazon needs access to transactions. Google needs access to the world's data. All the Hyperscalers want in to telco because they want onto the edge. The same point you made about on-premises, right? Like Outpost or Azure Stack. It's fundamentally admission by a Hyperscaler that yeah, I guess all workload doesn't belong in the public cloud. It's not all gonna end up here. And I think they've got the same challenge when it comes to the edge. And so people are trying to build their way out because they need connectivity to the edge. For us, we know that telecoms have to become multi-clouds. You kind of referenced earlier the over-the-top profit problem. Well, they lost the profits from the consumer. B to C, they built the networks, they ran the networks and everybody else took the profit. So now here comes 5G with the promise of business services, real B to B revenue opportunities for telecom. And once again, they're faced with a choice. Either they become the cloud operator and allow the Hyperscalers in as part of their multi-cloud or they give up the cloud to the Hyperscalers and there go the over-the-top profits again. So it really, I found a fascinating set of dynamics and an industry that can really use the help of somebody like Dell Technologies. Well, that's interesting because as many markets, consumer leads and then B to B markets open up. Well, how do you think this plays out? I mean, the telcos have a very specialized hardware, they got this hardened fossilized infrastructure. So where do you guys fit in that transformation and how do you see it evolving? Well, it's already started in a way, you know? I mean, it's kind of from the inside out. So telecommunications companies, as I look at them, as we look at them, they're almost like three companies in one that they have conventional IT organizations that in many ways look no different than a bank. They have, you know, their businesses, of course the network where they spend the vast majority of their money, but it's not homogenous. There's a network core, there's a network edge and then there's an access network. And then most of them, you know, of course, sell services, business services. So they have lines of business. So we look at them as an IT organization through the CIO, as a massive network operator through the CTO, and then as a business partner, some of whom are even in our channel program and they're cloud services partners. And that's all through their line of business. So, you know, they're starting to open up from the inside out. Data center is going through transformation. It's begun in the network core. Now the edge is the next thing. And the RAND, in case of mobile operator, the radio access network will ultimately come. And so you're right. There's a fossilized infrastructure in some places, but we've already seen the core start to disaggregate and it will now ripple all the way out to their edge. And I think frankly, through it and right onto the enterprise premise with private mobility. And so do you see them sort of taking that, you know, infrastructure model, you know, all the way out to the edge and sort of trying to replicate their, essentially there would have been monopolies for years. Or do you see them? It sounds like it's going to be a mix. Some of them are actually maybe going to lean on the hyperscalers and try to become more, you know, over the top content providers. Well, I think, you know, I meant two challenges in business, right? I guess they say there's three great motivators in business and life, make money, save money, stay out of jail, you know, like revenue, cost and risk. They got a cost problem. They've got to get off the monolithic closed infrastructure architectures. They've got a revenue problem. A lot of the additional revenues and services went to somebody else, the OTT, the over the top folks. And so I think you will absolutely see a mix, but nobody can afford, no telecommunications company can afford to simply hand their network over. Unless they've reconciled, I'm just going to be dumb pipe again. Right? And none of them want that. But I think in many ways, they're waiting for somebody to walk in and say, but here's the answer. And, you know, I can tell you that at Dell Technologies, and by that, I mean both within Dell and certainly within VMware, we're very strong proponents of the notion of an open software defined network architecture built on industry standard hardware. And we're pretty well positioned, I think to provide it, or certainly that's the hope and thesis behind our business. Yeah, so that then allows them to compete much more effectively to provide, like you say, new B2B services, but it really is their infrastructure has been the big blocker, you know, up until recently. You're right. I mean, network function virtualization has started to seep through. We've seen some of the benefits of that. And then now they got to take it to the next level, your point about the edge. Well, in the 5G standard, you know, or 5G, the next cellular technology generation, is actually defined by, you know, the 3GPP standards. Release 15 was the first one that came out and it specified both standalone 5G networks where you can get all of these benefits and non standalone, where you basically have to mix 5G into the core, rely on the 4G edge. And that's the only thing that's been deployed so far. So as in many things, you know, the hype leaves the reality by a little bit. So we've been talking 5G for a while, but the release 16 that would get you some of the really hyped up features of 5G just released this year. So it's coming. And, you know, there's a lot of talk about it. Right now there's a race to have the largest 5G network in America and the largest 5G network in the UK and so on and so forth. But this isn't really the true power of 5G. That window's still open and it's coming. So how much of your strategy, I mean, if you do a lot of strategy work, you obviously see the opportunity at the edge. It's the TAM is just, it's enormous. So, you know, you got to be wetting your chops at that at the same time, the requirements are totally different. So I'm curious as to how you as a strategy expert, you know, dovetail into the architectural decisions that have to be made. And, you know, the connective tissue between strategy and architecture and actually, you know, the whole go-to-market, that whole value chain that you think about, how are you thinking about that in the world of edge? Well, you know, there's at the end of the day, two strategy decisions you got to make. Where do I play? And if I decide to play there, how do I win? So where do you play on the edge? It's a very interesting question. Anytime there's a new computing paradigm shift, you go from something that's been pretty stable and frankly, pretty horizontal and it becomes pretty verticalized. So the edge is thousands of things right now. And, you know, it's many, many, many highly verticalized use cases, manufacturing, mining, retail, even something as simple as, you know, campus Wi-Fi replacement. So you got to pick your spot. And for a company of our size, that really kind of comes down to thinking about which of these edge use cases are going to pop first? Which one's going to teach you the most? Which one's going to have the right level of scale? And this is kind of where telco and edge intersect because it turns out one big and easily reachable use case for edge is to partner strongly with the telecommunications industry where something like 30 companies in the world make up 80% of the capital spending. I mean, you know, you don't have to run a Super Bowl ad, you can get all of your customers in a bus, right? So it's kind of, that's why I think there's really kind of this somewhat silent, somewhat subtle and somewhat not so subtle competition for the architecture of the telecom industry as it refreshes, both because of 5G as an inflection point, but also just because of the stuff we talked about earlier, the economics, the need to modernize and embrace open software defined industry standard architecture. And do you see, do you have visibility at this point as to how portable, let's say the race to the telcos identify the sort of new standards? Do you have a sense as to how portable that would be to some of these other use cases or is it really like the software industry of when that started to grow, it was just so fragmented now granted it's consolidated now, but do you have visibility on that yet? A little, I mean, the basic building blocks are quite portable, you know, there's radio technology, 5G radio technology, and there's a distinction between what might be required say to replace the Wi-Fi at the Dell round rock campus versus what AT&T needs for Manhattan, right? But basically there's radio technology which is increasingly becoming software running on industry standard hardware. And then sort of the same sort of virtualization layer that is helpful in basically pulling all of this together plays there as does the underlying hardware where edge servers can be built for telco spec and easily modified to be an edge enterprise use case. That's the base. On top of that, however, is often a vertical solution like in retail is very timely, temperature sensing and mask detection and distance determination, right? It's like, so somebody's gonna wanna take that capability and that's not something you're gonna bounce off of some public cloud. You're gonna wanna actually understand in real time as people walk in and out of the place, are they being compliant with whatever policies I have? So on top of some of these, you know, this compute and virtualization and to some extent, sometimes storage on the edge, what else goes on that? You know, is it a video surveillance solution? Is it an automated mining RFID solution? And so we've got a little bit of insight and we know which verticals appear to be largest right now and which ones are gonna pop first and that's where a lot of people are putting their attention. Well, it's gonna be interesting because it sounds like there's a real long tail there and you mentioned industry standard hardware and software but, you know, maybe a new industry standard emerges for some of those use cases that you just mentioned where you need very low latency, you know, very low, maybe that's where arm, you know, gets in and maybe get some massive volume because it is, while it's a long tail, it's also huge. It is. I mean, some people are estimating the edge economy to be four times the internet economy. There's a big stuff that's gonna be written that we don't even, you know, it's no different than we went from at one point, the only software in the world was mainframe software and then some knucklehead wrote client server software and it was considered a niche. You know, fast forward 15 years later, mainframe is a sub-segment of the computer industry and it's all client server software. And then we go cloud native and at first it's a couple of cloud native apps and pretty soon it's a bunch. And, you know, and it's this thing just goes back and forth. The difference is for the, I think the interesting thing is the cycle times are really compressing. You know, I don't know if you've read Tom Friedman's latest book, Thank You for Being Late, but it's all about how do we thrive as humans in the age of accelerations because the theory is we're not getting enough time to catch our breath now between pendulum swings. It's interesting. Same thing happened in cellular technology. I didn't know until I started doing this job, but, you know, one G was real for about, it was like the dominant form of networking for 17 years for mobile networking. Then two G was for around 11. Three G was seven-ish. Four G looks like it's gonna be six. So technology just keeps quickening. And, you know, it makes the amount of time we get to be horizontal and catch our breath as the industry is stable. There's always an inflection of some sort going on in our industry. And so change is absolutely the new normal. Yeah, and some of these things are really hard to predict. I mean, I remember TCPIP used to be this old, reliable, you know, protocol and how it runs the world. I wanna ask you about, last question, is this as a service initiative, Project Apex or Apex it's called. And that's obviously not just some kind of gimmick. I mean, that affects the strategy of the entire organization, the way in which customers wanna consume the product or platform strategies now. How does that as a service, you know, pricing model affect, you know, the business that we've been talking about for the last 10 or 15 minutes? Well, the good news for us, those of us at the company working on Edge and Telecom and all of that sort of stuff is we're actually building the business under the Apex philosophy, right? So our design center out of the gate is as a service. You know, Michael made the observation a long time ago within our leadership team that, you know, back to my comment that workloads are like water. They kind of seek their ground. There's a difference between where a workload belongs and the interest in a particular operating model or excuse me, in a particular consumption model. And yet they've been combined for a long time, right? The only way to kind of get the as a service consumption model was through public cloud infrastructure. But it turns out that the right place for a workload may well be on-premises, not in a private data center or it may well be on the Edge, not in a public cloud. But people still want to take advantage of the consumption model, right? The economics are the economics. And so for me, doing the telecom stuff, it's as a service is kind of the heart of the design center from a consumption model right out of the gate, which is frankly easier than trying to retrofit everything else. But nonetheless, for us as a company, it's just an opportunity to give our customers the choice that they want in terms of not only what they acquire, but how they acquire it. Well, Dennis, I always love talking to you. You're such a clear thinker and you've obviously gone deep into some of these topics and good luck in the role in the telco world. It's obviously a huge opportunity. Everybody's really excited about it and thank you for coming on theCUBE. All right, thank you, Dave. It's been a pleasure. Nice chatting with you. All right, and thank you for watching everybody. This is theCUBE's coverage of Dell Tech World 2020, the VirtualCube. Keep it right there, right back, right after this short break.