 We're here live at Dell World. I'm John Furrier, the founder of SiliconANGLE.com. This is theCUBE, our flagship program at SiliconANGLE.tv. We go out to the events, extract the signal from the noise. And we've got a great segment on this one with IDC to share a market research perspective. IDC is the worldwide leader in market research data in the enterprise. Again, I'm John Furrier. I'm here with my co-host. I'm Dave Vellante at Wikibon.org. And we're here with Crawford Del Pratt, who's the executive vice president and chief research officer worldwide at IDC. Friend of mine, Crawford, welcome. Thanks a lot, good to see you. Yeah, so, see you guys. Welcome to theCUBE, IDC and theCUBE. We love it. We love it, I see it. theCUBE is about extracting the signal from the noise. So you guys are doing that with IDC. You guys are number one worldwide research firm on market share, all the top enterprise clients, you have them all. What does, what do the numbers tell you right now? Obviously, everyone's talking about transformation. The data center no doubt is in a transformation. The consumer web is bubbling. Convergence, convergence. What's going on? Give us a view of how you're looking at the research and how's it all shake up? Sure, so what's interesting about the market today is that, you know, the market historically has been a market that's been waking up every morning, growing 10, 12, 15% as you all know. That's no longer the case, right? We're going to struggle in the market this year to see anywhere between five and 7% revenue growth overall. What you're seeing is an industry that's sort of growing up and going from growing very, very rapidly to not growing so rapidly. So we're seeing convergence. We're seeing consolidation. We're seeing suppliers that, you know, are, again, they have to work harder. So that means going into uncharted territories, that means expanding into markets that maybe are adjacent to where you are. It's nothing is more apparent than Dell strategy in terms of doing that. I mean, three years ago, they bought Poro Systems to expand into a very, very large but relatively slow growth services business. They bought, you know, Compellent. They bought Wise. You know, they bought many, many companies. They bought Force 10. They bought Quest. They bought many, many companies to sort of expand their footprint beyond where they are today. This is what happens, right? You know, if you can't grow just by showing up, you got to grow by looking left and looking right. All right, so let's talk about the growth in terms of like, in the enterprise. So we had Tarkin Maynard on who came in through the WISE acquisition. We also had the CIO from, ex-CIO from Safe Street Bank. They talk about this line. Below the line is all run the operations. Budgets are all focused on the above the lines, innovation or top line revenue projects. Everyone wants to invest in the top line but where are we on that investment? What's the IT landscape look like in terms of what's going on? Is it more of just operational? Do you want to hear to that? Yeah, so a little bit of background. So I spend about a third of my time out there talking to IT leaders, running our end user business. So I've been all around the world in the last two years talking to IT leaders. I kind of throw the CIOs and senior leadership of IT organizations into two categories, right? Ones that are looking for the Ataboy for cutting their expenses a percent of revenue and ones that are really trying to grow the business. The first group is very interesting because the first group you can sort of see where the movie ends, right? I mean, eventually, you know, the last pink slip, you know, kind of goes to you. Race to zero. Right, the race to your exactly. It's a race to the bottom. The other group is really struggling with how do they have that conversation around growing the line of business, around helping the line of business grow. How do you transform the business by enabling technology? But what's tough is that the technology they've been touching for so many years is the infrastructure guts of the organization. And that is the stuff that's really being delegated lower in the organization. To basically say, yeah, you know, spin up another server, buy some more gear, buy some more storage. But, you know, if we're going to think about the new way to transform our retail experience, that's going to come from the line of business. So really, you know, helping the line of business transform and grow. But that's where the action is, right? That's absolutely where the action is. What IT leaders need to figure out is how do you start having that conversation? How do you start being a part of those leaders? That's why their services business is booming, right? That's exactly why services is booming. That's also why Dell wants to move to the cloud. That's why Dell wants to get people, you know, sort of take more cost out, simplify all the stuff that, you know, the customer can no longer be the system's integrator, you know, the customer has to have someone do that for them so they can focus on growth. So Dell's strategy is very fascinating that way because they're moving in both directions. Let's talk about the competition. Dell, HP, Northrow, Cisco in there because, you know, you talk about, you know, acquisition, you know, looking left and looking right. You know, they've been looking, all 360, Cisco has been. But let's talk about like how the world's changing. With virtualization, you're seeing footprints change, power and cool, we saw two landing sample on the keynote and a variety of other, you know, marketing sticks that these guys have. Truly, how do you measure market share? I mean, I'm not a market research guy but like it seems like they've rearranged the deck chairs by looking at, we had ports here, we have shares of units. How do you measure units? How do you measure with virtualization? If the footprints going down, can the shares still go up? Sure, because you guys have measured it traditionally. Ports, servers, shipments and now, now you're in this virtualization kind of gray area. Yeah, so when you start looking at virtualization, right, what you really want to look at is a few aspects, right? You can survey and try to figure out how many virtual servers are someone running off of a specific server and try to make some estimates on that. You can also look at instances of virtualization. So basically how many instances of a specific piece of software are there? And then try to, you know, size the market around that software. But, you know, it is much more end user driven. It's much more demand side. It's not so much supply side because quite frankly, a lot of these virtualization vendors, they ship the software but they don't know how much it's kind of turned on and how much it's being used. You know, if you ran a parallels on your Mac right there, are you running Windows or are you running Mac OS? You know, which one are you running? Well, you got to figure out, they're both kind of there, which one's being used. All right, so let's talk about units, like Cisco, Cisco, HP and Dell. Yeah. They all claim to be number one in servers. That's the thing, Barbara. Everybody claims in using your data because they slice it and dice it in a different way. They all claim to be gaining share on their competitors. Right, right. Now, as a group, the whales, we call them the whales. It's like an oligopoly. These people who can try to control the market. Are the whales gaining share as a group? Yeah, so as a group, the market continues to consolidate, and those whales are gaining share. So Cisco, the little lily pad they stand on, is a big lily pad but when you compare it to servers and when you compare it to storage, those are also big opportunities. They can only gain share in those two markets because of networking. HP, who continues to gain, I think they're up around 11% in terms of total networking share, has been growing like crazy off the broker life, taking that out of Cisco, primarily, and again, Juniper and some other folks. Dell, on the other hand, is gaining across each of those three markets more so in servers than any other. And now networking. And they're going to try to network, although they have some holes, right? They don't have core routing, right? They have some things around the edges, but they do have sort of a top-of-the-rack switch that they can. And they had nothing before. And so, again, off a very, very small base, they're going to continue to grow. But make no mistake, and then in storage, Dell's got some more work to do to kind of work out their product lines and we saw some changes last week in terms of the storage relationships. So they're going to be making some changes to try to grow off their base. But it is, it's definitely kind of what sort of porthole are you looking through. But in the aggregate, yes, the whales are gaining share, the stronger you're getting stronger and that tends to be what happens. Can you tell us any more? Do you see the conversion infrastructure being just one big bucket because we were just talking to Michael Dell yesterday and then we've been talking to some of the top Intel people. And you're seeing some reorganization of the Intel storage groups now part of the data center group and who gets credit for the sales, is it the servers, storage? Everything's kind of being bundled now with Flash, it's more server. Michael Dell said it's bolted out of the servers. So you can't say, oh, storage market share, but it's in the servers. So you're just going to bucket that into one thing? So Michael Dell, it's funny, I had a conversation with him just yesterday and we were having a conversation around the industry and he was recounting some things around, when he sat there and looked at a PC motherboard, right? He saw the industry, back in the early days. Literally, you could see it like, look, there's Sirus Logic doing sound, there's Emula Access and he literally could see the industry as he laid it out. And guess what? Pull out a motherboard today, you see just a couple of chips left, right? You don't see this because you can't see it. And you could also measure the units too. You can say, here's a bar chart of shipments. Right on, Brian, you could see the industry consolidate on that board. The data center is a perfect metaphor for that. The same thing is happening, right? You used to open up a data center and you would see the industry laid out across the floor. That's now all starting to come together in this converged infrastructure. And I promise you, we'll be talking a hell of a lot less about these piece parts eight years from now in this converged infrastructure. We'll be talking about just an over-integrated data center. So I go back to my point, the customer can't be the integrator. So let's talk about Dell a little bit. So, Crop, you and I spent a lot of time on Wall Street. Dell's a nearly, about a $60 billion company with a less than $20 billion market cap now. And an 11 billion of that is in cash. So that can't make Michael Dell happy, obviously. So what's your prognosis for Dell? Obviously, they're undergoing this huge transformation. Are you optimistic, pessimistic, neutral? Yeah, so I've been very, very neutral, right? Because, again, as you and I know, studying business models over the years, this is kind of an interesting business model Dell has because it requires a tremendous amount of cash to kind of buy all the components. So you have a lot of cash, but it required a lot to be kind of fed. Having said that, going forward, they haven't been getting the valuation for the cash flow that they generate. And they do generate a tremendous amount of cash flow. And it really comes down to something that was said in the keynote, which is profit pools, right? They have to go take share from profit pools that are larger than the ones they currently swim in. And that means going after services and really high value services. It means going after the software business because what Dell has is an infinitely scalable business model. So to answer your question directly, I was neutral and I'm getting a lot more positive as they take this business model that scales so well and applies it to more profitable segments of the industry. The problem is, and I was just tweeting about it, they're telling an evolutionary story, but the IT leaders I talked to still think of these guys as a piece of parts gear supplier. They don't think of them as someone who can come in and help me, again, transform my retail experience or transform my channel experience. They think of them as you go buy a server and you go, okay, I'll go on the website and buy a server. So thinking about Dell differently is really what they have to start getting customers. Are you saying that they're not buying the end-to-end strategy or Dell is not seen as a consultative partner like Deloitte or IBM? Yeah, what I'm seeing is that outside of the very deep relationships that Perot had so they can sort of compete with an Accenture or something like that, they're not viewed that way. So it's not really about buying the story, it's about not hearing the story. Because Dell is still on everyone's desktop and Dell is still on everyone's server reaction. So you're saying Dell's scale is a competitive weapon. So it's obvious, I mean, you observe Dell, it's almost like they refuse to shrink. So they're using that as a competitive weapon and trying to drive that supply chain advantage into the enterprise. That's the problem. Absolutely, and how do you start to do that? So we're just having a conversation with the head of cloud computing at Dell just before I came over here. He was talking about on the server page where the person in the cleared for credit, small or medium business at Dell is buying a server, there's a banner now and there'll ultimately be a button to say, do you want to do that in the cloud? And give us your credit card and move that into the cloud. That's using the weapon and applying it, the model to cloud computing. What do you make of this whole ODM trend? I mean, we used to follow disk drives, right? It reminds me of some of those days. You know, a lot of people poo-poo it, but they seem to be getting some traction and ODMs come and go, but what's your take on that whole thing? Yeah, so the ODM trend is fascinating to me. I don't view them as ankle biters, I view them as, this is a real deal, right? This is the real deal. I'm going to tell you, if you've been to Taiwan, which I know you've been to Asia, I'm assuming it's me you have in your career, John, you know, these guys have major factories and you look at what some of those, as HP calls them, the hyperscale segment, they want a board, they want a drive, they want a connector, they don't want it to blow up, but they know eventually it will blow up and when it does, they want to swap another one out. So this is a very scary trend because it's a classically disruptive trend where the pieces of it are going to take a while for it to get moving, but once it gets moving, it's going to be a train that's going to be very hard to stop. And I think the scales to our earlier point of the discussion around scale, can Dell compete with those guys? Because they're obviously a huge supplier to the cloud. Can they compete on cost with those guys? You know, I've asked that question to a number of Dell executives, they believe that they can compete in the segments where they have to compete for that kind of business and I think that, I have no reason to believe that's not true. The question is, as those guys get massive scale and get larger and larger and larger, do they start adding features to their products? Do they start expanding their products such that, you know, they can start doing business directly with American Express or doing business directly with Texaco? Right now, it's hard to kind of see that. So what you have is, you know, sort of a world where the hosters and the cloud guys, infrastructure guys are doing business with them, nobody kind of else is. And I think we're going to be there for quite some time, but it's a trend I absolutely like. Crawford, one of the things that we look at Dell and look at numbers obviously on the desktops are fine. His workstation is still out there. It's, you know, nice and humming along. Mobile, which is their notebooks and below, getting crushed, right? You know, so anything over $2,000, Apple's dominating that marketplace on PCs, but underneath, you've got mobile. You've Android, Windows 8. We're calling it a jump ball. How do you see Windows 8 outlook in terms of that low end? Tablets, you know, tablets are eating away at the notebook market. And you've got BYOD. That's not going to help if Android's there. So what's your take on that? So a little perspective on this. So as Michael said today, you know, PCs are an industry where 400 million units should be here. You know, I saw a tweet from one of our competitors the other day where, you know, they talked about PCs being irrelevant. I think that's just laughable. Yes, right, it is laughable. I mean, it's laughable. I mean, when you think about a lean forward, create kind of form factor. Personal computer, the personal. I'll give anybody the opportunity. That's a personal opportunity. So I hadn't created something though on a tablet and it's hard to do. It's not as easy. What we're finding in PCs is PCs are going to find a bottom. They're going to find a level where they will then ultimately grow off of. I use Windows 8. I use the early one all summer long. It has got some advantages, right? It's got some disadvantages. But ultimately, it was a great piece written recently about, you know, Microsoft basically every other release having problems and then fixing them and having problems. And guess what? Windows 7 was a rockin' release. Windows 8, not so much. It might have some problems. They might end up doing it much better with sort of a service pack too on Windows 8. But I am one that believes the PC has a very, very, very long life. And what you're seeing is the melting of form factors. There is a computer in your pocket. There is a computer that you're reading on and there's a computer that you're going to continue to create on. It's really about outcomes and it's about the job that you want to get done. But also, we were having a debate earlier amongst the SiliconANGLE team around, you know, say we have some window purists. You know, I used to be one. I still love Windows, but I don't really use it much anymore, you know, Mac. But the OS was stable back in the 90s when you had a lot of churning competition on hardware, for example. So differentiation was supply chain, built-to-order, reliability. Windows was there. Now you've got Android in the low end. So, you know, that's an issue for people who want to. Yeah, so it is an issue, right? And people will continue to use Android. I use Android all the time. You know, it starts to make you wonder if the asset of Microsoft, you know, if it isn't sedimenting, is the operating system sort of commoditizing and the next layer you're going to move to is office fidelity. And will Microsoft start leveraging office fidelity as a differentiator and you can get a really great set of office fidelity between all your devices. If you're using Windows phones, if you're using Windows PCs and if you're using, you know, again, a Windows enabled kind of tablet situation. I'm not suggesting that Apple, Apple's done a fantastic job. Android is, you know, the wild, wild West in terms of applications. You know, you see certain studies where, you know, over, you know, I think the number was over 40% of the apps on the Android store tracking you or have some level of spyware or malicious, you know, wear there. So, you know, you start saying to yourself. They have a lot of market share. There's a lot of security issues. There's a lot of security issues. There's a lot of, there's a lot of, you know, thing that can happen there. Call weirdness, John. But the point is that if, you know, again, there's going to be a role for Windows 8 going forward. And while that's certainly betting the ranch on Windows 8, not one word of Android here at Dell World. Yeah, and again, they do have, you know, I have to give Dell credit of all the PC suppliers kind of that are huge market share leaders. These guys have done a tremendous amount of experimentation. They really have, you know, Acer's done some as well. But these guys, you know, they've been with the streak and with Windows phones and with different Android based devices. A lot of interesting stuff. So what's your take on HP? I see we're digging into them as well. Autonomy acquisition, you know, embarrassment, black eye aside. They're trying to integrate autonomy into the organization with big data. They have that same kind of message. I mean, Marius Haas came from HP. He did the three com deal. Good score by Michael Dell to get Marius. But where, you know, how do you rate HP right now as the alternative to Dell in this market? Yeah, so look, HP has got, you know, some tremendous issues that they're dealing with right now. I mean, you know, to say the least. The company is right now, I think, you know, really focused on being able to stabilize their story. You know, what I find fascinating about the Android, about, pardon me, the autonomy situation is, yeah, they spent $11 billion on it. Yeah, they've written it down. They could have had it too, okay, whatever. Well, they've written it down, but the bottom line is it's not as if that asset isn't there. It's not as if they can't kind of leverage that asset. They are, right? And they are. And information management is one of Meg's, you know, key strategies. I think that the problem is, you know, as one, you know, CIO said to me, you know, you kind of, you know, you turn the jack in the box and you don't know when it's going to go off and you don't know what's going to come out of the jack in the box next, you know? I mean, because, you know, this was supposed to be a quiet year of them kind of getting things under control and it hasn't turned out that way. You know, they have, you know, now it's the autonomy kind of thing that's cropped up. I think that it's all about stability and it's all about execution more than ever at Hewlett-Packard. And if they can do that, then I'll go back to what I said. You know, people look at the debt situation of HP. The debt situation of HP is big. However, go look at the amount of cash. Hewlett-Packard. That's balance sheet issues. I mean, you got, you know. They threw $4.1 billion in cash last quarter in a pretty average quarter. Over 10 in a year. So they're executing somewhere. Well, they're every day, right? I mean, the printer business is- They actually have a business. It's producing cash. Now, declining market, but they have leverage. Well, they have tremendous leverage. But if they can get it under control, they can have a base to grow off of. But they have competitors- IBM was running out of money when they did their turn around. I mean, HP- So was Apple. Yeah, so they turned around. Yeah. So, but the point is what's changing now is they have to be very careful about the sentiment in their customer base. Because now customers are starting to scratch their head and say, you know, you don't know what's coming next. And it's, you know, buying servers from HP or buying storage from HP is one thing. But engaging with them around the sophisticated services engagement, it's a little bit different. And I think that's where they really have to stabilize the ship in order to get those engaged. Crawford Dell Prep from IDC. Last word before we break the segment. Final words to the audience around what is happening at Dell World? What's the big takeaway from you and IDC here on the ground for your team? Yeah, sure, sure. So, you know, again, this is a great show. I mean, we have, I don't know the exact numbers, but it's thousands of people. Really, it's the evolution of Dell, right? It's the company is adding functionality. The company is adding new disciplines. The company is really not the Dell that I think a lot of people think they are. And I just, I would say, you know, you shouldn't invest some time if you're an IT leader to come down and really spend some time with this company. Because I think you're going to have your eyes open to some different characteristics and different big companies. That's the Cube. Crawford Dell Prep from IDC. We'd love to have research analysts on here, especially the chief research analyst on IDC. We've got Dave Villante, chief analyst at Wikibon.org. We love it. The Cube loves to extract the signal. And you've got the analysts here on the ground, poking holes at everything, looking under every rock. I'll see a huge market transformation in the enterprise. IT, convergence, consumerization, bring your own device work, data center of the future, modern infrastructure, all great stuff here happening at Dell World, and we'll see how it does. We'll be right back with our next guest after this short break. First time on the Cube, baby.