 Las Vegas, it's theCUBE covering EMC World 2016. Brought to you by EMC. Now, here are your hosts, John Furrier and Dave Vellante. Okay, welcome back everyone. We are here live in Las Vegas for theCUBE, SiliconANGLES flagship program, where we extract the symphony. I'm John Furrier, my co-host Dave Vellante. Our next guest is David Golden, CEO of EMC's and information infrastructure EMC too. And now as announced, today, Dell EMC which is the enterprise division, congratulations. You run the show, congratulations as always, we predicted that on theCUBE, congratulations. Thanks John, it's actually nice to have a name for the new business, right? We've all been speculating, so I think, obviously Dell Technologies has got a nice ring for the overall business, but we're all excited about Dell EMC for the enterprise business. That's going to give us a strong identity. It shows the commitment to EMC, to the technology, the services. So it's a nice combination. You start to see essentially a federation-like model but under one company, Dell Technologies, where there's a lot of components on the umbrella, where you now Dell EMC, obviously focused, which is kind of basically validates that EMC's not going away, it's only being expanded. What are some of the synergy points that customers should know about? Because that's going to be the key, right? The key is continuing the mission of the present that you pointed out in your presentation, but then being positioned to invest in the future, there got to be some sin one, cost reductions, you pointed that out, but where's the synergies? It's actually not really cost. That's not where we focus. We're focused upon the innovation and bringing together the technology families that are completely, almost completely complementary. There's so little overlap. So if you think of what EMC brings to the party, number one player in storage across the whole board, except for the super very low end of mid-tier storage. We're obviously number one in a CI. You bring together from the Dell enterprise business, the number one server technology platform, and actually where Dell does have strength, it's more in a super low end of the storage marketplace where we're not quite as strong. So combined will actually be the market share leading in every single one of the IDC price bands for storage. And then if you think of where the industry's going towards convergence and software-defined technologies, hyperconverged, basically this whole server and storage industry is recombining over time. And the ability to bring these number one technology positions together to really offer our customers the broadest and best range of infrastructure and CI, as well as the overall family message around your VMware and virtual stream and pivotal and all that is really very exciting. So that's what we're doing. Well the first thing that gets commoditized is the hardware, right? So hardware gets commoditized first and now with the global scale of the supply chain, the software takes the focus. Well, software is- I think you had pointed out, what was the box you pointed out that's now two U? Was that the- That's the unity. Right, so software is taking over the world, but let's not discount innovation in systems, right? And by systems I mean the combination of hardware and software is something that's very smart. So you can look at something like Unity, which is clearly a very powerful hardware-software combo for traditional applications, but also look at something like DSSD, which is a complete game changer that leverages combination of hardware and software for super high performance in these new data-intensive apps. So the world is combining, but I wouldn't discount it all as commoditizing because obviously the basic building blocks themselves are becoming more standardized, but then there's always room for innovation around them. I knew that C-word would kick off an interesting conversation because since Michael Dell's been building PCs in his dorm, observers have said hardware is going to be commoditized. Yet the business has been able to throw off, for the leaders, the Cisco's, the EMC's for example, even now a small upstart like Pure Storage, a 60% gross margin model. So it's actually been quite a profitable business that's sustainable. It's interesting what you're saying about, it's really not about the cost. There's a lot of people think that the merger has been about you being able to compete in this new era of lower cost and commoditization. You're saying something different. I'm saying that we can leverage some of the things that Dell does great from a supply chain point of view, from a volume manufacturing point of view, but also there's still a value play on top of that. If you look at EMC, for example, we have a storage business that's 50 points plus gross margin, close to 60 point gross margin storage business. Everything that we build in those systems, you could buy off the street as a commodity. The drives, the memories of the sheet metal, et cetera, but we put it together in an appliance type package that includes hardware engineering based on the standard componentry and a lot of software and a complete enterprise services and support model that creates something of great value to our customers. So we shouldn't confuse commoditization with the ability to innovate around commodity components and bear in mind, neither EMC or Dell builds the components. We're taking advantage of the innovation and the cost reduction of the supply chain. We're actually adding value on top of that. And that off the shelf dynamic has been around for decades. It's been around for decades. And you implied on the last call, maybe I inferred, that the margin model is cyclical, right? The ebbs, it flows, but you're still in the business of making good money. That doesn't change, right? The business that we're in is one where we provide a lot of value to our customers. And my view is very simple. The gross margins you get on anything is directly proportional to the value you create for the customer. So the more value the customer perceives compared to your raw componentry, the higher gross margin you get. So you're not micromanaging gross margins. You're micromanaging value creation. We are building value in a gross margin simply by product, right? People can get focused on, it's now almost looking through the wrong end of the telescope. The value is what's created. The value results in gross margins which are higher or lower, based upon the value that you create. It's a derived number, not a planned number. It's derived based upon the value that you create. David, we'd love having you in the queue because you're the triple, classic tech athlete, triple threat. You know your finance, corp dev, great operator. Also strategy in the chessboard. And you made a comment on the stage, this is one more about strategy fees, that you saw this coming a while ago, the two divisions. Core, tech, traditional, and then emerging. And I want to get your thoughts on this because a lot's changed since those couple years, three years ago. We were talking this on the queue. So what has changed in that area because you were operating on the premise a few years ago. Okay, we saw a flash coming. You saw the margins. You still have to have the strategy changed. And you saw it coming. You made a good call. So that's good for you. But now what's changed between core tech and emerging? What'd you get right? What'd you have to sharpen and saw on? What'd you have to do differently? Bear in mind, people often confuse these things. So core technology and emerging technology about the applications, right? In the case of traditional applications, their client server, their scaler applications, the applications expect a lot of services and resiliency from the infrastructure. In the case of cloud native, the apps themselves are different. They're based upon microservices. They're sitting in containers. They're scaler apps. They've got built-in resiliency. So what they want from the infrastructure is much more basic. They want performance and they want some basic persistent capacity. So that's the shift to which we saw. And here's where I say people get mixed up sometimes. People say, hey, Flash is to do with the new world of the scaler apps. Well, actually, it's much to do with accelerating the performance of the core apps. You look at the most successful Flash product in the marketplace today is Xtreme.io. It talks about the commanding market share. Free time to share of an nearest competitor. What do people do with Xtreme.io? They run their traditional applications better. They run databases in exchange of BDI. So it's slowly new technology into existing applications. In the case of emerging technologies, the applications are new. In fact, in many cases, they're still forming. Most enterprises probably don't have a lot of cloud native apps in production yet, but they're all starting to build them. Which is why Cloud Foundry becomes so successful. And before I know it, I just got a question. I want to get to the underpinnings. You mentioned the underpinnings of traditional obviously data domain, backup and other things. And then the cloud native, its capacity planning and the capacity. It's data performance optimized. So cloud native applications are basically going to be two-tier applications. They're going to have a very hot performance tier. And that's where something like DSSD can play at the super high end. Where scale.io sitting on hyperconverged can play for things that don't need such quite fast blazing performance. And then they have a massive capacity tier. Because these cloud native apps have a hundred times or a thousand times more data per user than your traditional apps. So that's why you have massive scale out capacity underneath our performance tier. So think of it as a very hot core. Capacity optimized. Capacity optimized. So performance optimized for the transaction piece. And then capacity optimized is massive data sets. So think of things like data lakes where you're storing a petabytes and petabytes of data. And you analyze it using things like HTFS. Massive amounts of data. Go back to your traditional apps. Think of ERP. A 20 terabyte database for an ERP customer is a big database. Now what do you do with that? You create backups. You create replicas. You have free site recovery. That's what you do with the traditional app. But a 20 terabyte app is tiny in the new world. So that's why we talk about the fact the infrastructure is going to have to be different. I could, I know you're tight on time. I got a zillion, I could go an hour with you. I'm going to ask the virtual streaming question. So we were talking about value creation before. Your strategy with virtual streaming appears is not to just try to take Amazon head on. Try to create a value play and some kind of solution and integration with your core portfolio. Can you confirm that and talk about that a little bit? Completely. I think it's really important to understand where EMC is strong and therefore where virtual streaming plays. So historically, look at our market sharing storage. It's about 30 points of market share. But take that now and apply it to mission critical data center applications. That market share goes up close to 50% half. That's where we live. Mission critical data lives generally on EMC, at least half here, around the entire world. So think of what we've done with virtual stream. That cloud is designed for exactly those applications. It's not a general purpose platform-free cloud. It's designed initially for those mission critical workloads that live on EMC environments today. So it's the natural parties, the natural counterpart to live hand in hand with EMC because we're going after the same apps and today those applications are not going anywhere. You can't run those mission critical apps in a general third-party public cloud because you can't guarantee IOPS at the virtual machine level in those environments. But what we've done with virtual stream, you can. So you can take things like SAP and move it into a very cost-competitive but performance-guaranteed public cloud and that's where virtual stream plays. So have you seen any evidence that Amazon can play there as an example or some of these public cloud guys? Amazon is an example, but... I mean obviously Amazon is a very broad range of services but you double click upon what you need to try and create out of an Amazon environment with multiple availability zones and even then you couldn't guarantee the managed services levels that we can produce out of virtual stream cloud because they're building it on a fundamentally different architecture. Bear in mind that Amazon is building up from a software-defined hyper-conversion architecture and try and move that back into the traditional enterprise and this comes back to my fundamental point. These traditional apps and cloud-native apps are going to live on different infrastructures. You want to try and obviously cross-pollinate the data between them and have some common management schemers but the apps are so different that if you are born in cloud-native from an infrastructure point of view which is kind of more where Amazon came from you're going to really struggle to retrofit that into the traditional app world. And you believe that can be a growth business for you guys? We believe that'll be a huge growth business for us because again, it's helping our customers do what they do with EMC today on-prem of course which will help them to modernize that into a private cloud but if you really want to take those mission-critical apps we've got really one of probably only two in the world what I call enterprise-optimized public clouds that type of application which plays to our strength. So without chasing Amazon and Amazon's game we can even use the Amazon cloud for some commodity level, your compute or storage capability to augment what we're doing we virtually, we don't basically exclude it but our core is aimed at a different place. David I want to use the next couple of minutes we have left to talk about the culture of EMC a Dell and culture match came up as Michael pointed out on stage I saw some of the results but there's a lot of people always like to speculate with mergers and stuff what's going on their job, who's going to get fired which product groups will win, lose all that good stuff always goes on and you've got a real boost of confidence with EMC with a Dell EMC name okay Michael was just talking about that you're the CEO of that company or president or they get you whatever they call you but that's EMC nothing's really changed but yet will Hopkins evolve? I mean will it be downsized? What's the future going to look like? Certain things come and go share your thoughts on that and obviously customers too want to know you know the future of innovation sure so the core of Dell EMC is both Dell and EMC I don't think so it's both parts so obviously basically all of what you know from EMC information infrastructure goes into our business our storage our CLI Virtustream, ECD, RSA but understand that from Dell we're bringing the entire server business in the entire storage business in their solutions business their converged infrastructure business so it's going to become the biggest infrastructure business on the planet but it's really a combination of both and you look at the revenues and how much comes from Dell and how much comes from EMC they're roughly similar so essentially we double the size of this business and the innovation agenda is huge I mean I think anyway we'll listen to my keynote today we have to believe that our foot is on the accelerator in terms of innovation the number of announcements and innovations and the speed at which we're moving it's a growth strategy and that's only going to accelerate when we get the Dell technologies in and then from a customer point of view for a culture point of view it's been great obviously we've now had a number of months to start working together as teams I've started to spend much more time with the Dell teams and by the way the Dell businesses aren't all basically round rock either they're kind of round the world so I know you're talking about maybe having an Austin headquarters and a Hopkins headquarters but the truth of the matter is that not many of the EMC businesses are based in Hopkins in these days right they're based on the West Coast they're based in India they're based in Israel and the same thing you can say for the Dell businesses so it's just a hub where if you like the headquarters of the new Dell EMC infrastructure business is going to come together and as such that's going to be a growth business we've made a big commitment to the Boston community that's going to be based there we now show how prevalent the EMC name is going to be so it's a good new story thanks for clarifying that really appreciate that thanks for taking the time out of your busy schedule great to see you and the pedals to the metal here at EMC Dell EMC the new business unit the CEO is here David Goulden of Dell EMC newly announced business unit thanks for spending some time with theCUBE I'm John Furrier Dave Vellante extracting the signal from the noise you're watching theCUBE it's always fun to come back to theCUBE because you know that