 Live from Austin, Texas, it's theCUBE, covering Dell EMC World 2016, brought to you by Dell EMC. Now, here are your hosts, Dave Vellante and Stu Miniman. Welcome back to Dell EMC World, everybody. Chad Sackich is here, he's the president of the Converged Solutions Division at Dell EMC. Good friend of theCUBE, it's great to see you again, man. It's good to see you, Dave, Stu. How's life, fellas? Life's good, it's good, you're traveling around like crazy. You're fighting a little cold, I see, but. You know, I'll be a slightly less energizer bunny version of myself. I am sick as a dog, but energized by all the awesomeness that I see here, not only at theCUBE, of course, but everything going on at Dell EMC World, which is great. Well, so, very exciting times for the industry generally, but specifically for Dell EMC and you. You got a new role, relatively new role, and that's not so new, but so talk about from your organization specifically and how the merger or acquisition has affected that. So, what did you eat for dinner last night? Salad with shrimp. And were you here at the hotel? You ordered it from a menu, right? Yes. Was it a good salad with shrimp? It was really good, excellent. Austin, good food. And you had a fixed set of choices and it came out and it was nicely delivered, right? It was a good solution, yes. Fantastic. I didn't want to cook. More and more customers are realizing that while it's fun to cook a meal every once in a while, that if you're not in the business of cooking meals, it's very nice to be able to have something that you just order off a menu. I'd pay extra for that. In fact, many customers do. Frankly, between that realization, the trend towards SaaS, as well as public cloud IaaS, is making it clear to customers, don't waste time, money, and effort on the things that aren't uniquely you. And frankly, every customer doesn't deploy vSphere or Hyper-V in some radically different way. So the trend towards converge and hyperconverge platforms, turnkey IaaS, turnkey PaaS platforms is overwhelming. It's the biggest growth part of our business. And then being able to give customers an on-ramp if they're not ready to go there the whole way with solutions that are maybe not fully engineered but de-risked is a way for them to get on that journey and realize, frankly, you know what? I want more of this, just order stuff off of the menu so I can actually focus on doing what makes me a better bank, a better hospital, a better retail. Of course, then there's my Italian aunt who say, why buy sauce from the jar when you can spend a week making it, freeze it, and then eat it for a year. So there's still those pokes out there. It's a dying art. It really is. But you still serve those, so chefs. If you look at the entirety of Dell EMC and Dell Technologies, there are many, many more humans, innovations, dollars spent still in the ingredients, building better storage products, better servers, better networking, better virtualization in VMware, better software development tools in Cloud Foundry and in Pivotal, then there isn't converged platforms and solutions. We're still a smaller but increasingly important part of the business. So yeah, I mean, the reality is that many customers still are building their own meals. What is changing though, Dave, and this is a, Wikibon has done their own research that validates this is, that is declining. And it's declining as people are realizing that they have better things to do with their time and their money. Excluding your aunt and your uncle that make their own sauce. You know where we stand on this, Chad. We think the industry forecast are low in terms of the percent that's going to be converged by the end of the decade. We think it's going to be much higher than what we've seen. And look, I jump out of bed every day, sick or not. My team jumps out of bed every day sick or not because we're passionate about basically getting customers to stop building things that they should instead consume, which is a simplification. It forces some difficult decisions because there's always people inside those customers that say, hey, this is a risk for me, my value and all that stuff. But inevitably what we're really giving them is an opportunity to do something that's more differentiated, right? And we got to do that across multiple stacks. We're clearly going to do it with VMware. We're clearly going to do it with Pivotal. But we got to do a ton and we already do with Microsoft, with Red Hat, with the container ecosystem. It's a big, exciting world out there. All right, Stu, I know you're dying to jump in. This is your wheelhouse. Yeah, absolutely. So Chad, we know that Michael saw converge and hyper-converge as one of the biggest reasons that Dell and EMC would be better together. Yep. Okay, I think, what's the thing I heard? You know, the power of two is one of the key messages of the week here. So now, we've been talking to you since you took this job. It's there. September 7th came, you're one company. So tell us, you know, what's the power of two? What's good? What have you done? What are you still left to do? So I've been sufficiently public about this that I can tiptoe around an announcement that will come out tomorrow. Tomorrow. But look, in HCI, something that is fascinating and it wasn't really evident to me until we became HCI powerhouse under our own right. VxRail has been wildly successful. We've gone from in at the end of Q2, you know, 1700 nodes, roughly four nodes per appliance. Now it's 3,800 nodes at the end of Q3. That's a 123% quarter on quarter growth. I learned something fascinating, which is that while the value of the offer and what makes up the offer, a lot of it is software. The majority of it is software. Trying to be in that business without a wicked awesome, as they would say in Boston, x86 server supply chain is really, really hard. And again, people are like, I don't get that. Well, when you have customers in Nigeria, in Timbuktu, in Paris, and in Beijing, and they all want to have slightly different variations, and they want to have the latest technology inside those platforms, trying to do that through an arms-length ODM relationship doesn't work. So, we've already done a couple of things that are public. We did the Scale.io ready node. That has a massive effect on the ability to bring in the latest flash, latest Broadwell, and lower the cost entry and top scaling mark of what we do with Scale.io. Awesome. We already actually have made a VX rack with PowerEdge quotable. There's one other HCI thing that isn't yet there, which if you tune in tomorrow. You might hear about VX Rail. What? No. Well, I mean, it's something that starts in a VX and hyper-converged. I don't know what you're talking about, buddy. What's the top-selling HCI solution that EMC, Dell EMC sells today, Chad? I don't know what you're talking about. Look, it's had great momentum, great response. It's a fascinating, I think, lesson, actually not just for me personally, but I think for a lot of the part of the company, where basically we listen closely on what didn't work, went back to the start, and basically have built what is one of the fastest growing products that I've ever seen in my life. So, I mean, Chad, I wrote about a year ago that Dell at the end of the day, we've talked about Cisco for years, Chad. At the end of the day, Cisco mostly cares about selling core switching. Michael has big aspirations and a lot of things for the company, but if he can sell more servers, that's goodness for him. And if you look at the converge and hyper-converged space, he's got a lot of horses in this race, especially in HCI. You've got your VX Rail, you've got your friends at Nutanix, which is the booth sitting right behind you here, which I think you were at their headquarters with your arms around two of the chief executives there. You saw some good tweets there. Even, you know, SimpliVity's base configuration uses Dell servers, you know, Pivot 3 uses Dell servers. There's a lot of options out there for Dell, you know, on the server side, Dell EMC to win. Of course, I know you want VX Rail to be the lead horse there. I want customers to be happy, number one. I think that if they've standardized on vSphere, which is some subset of the market, it's a large proportion of the market, I think that they offer the Dell EMC and VMware built together in VX Rail and VX Rack SDC is the best. However, there are customers that don't want that. They want to either not have VMware, in other words, they actively do not want VMware, or there are customers that really, really need hypervisor choice. And I'm happy to say that Dell EMC XC, which is done in partnership with our friends at Nutanix, is also wildly successful. I think that the mistake that sometimes people think is they think it's zero sum game. It's not. The HCI market is still early, nascent and growing. The primary competition against HCI is business as usual, more than anything else. Is this software defined storage stuff ready for prime time? That sort of thing, right? And it's actually quite interesting. I mean, Dell EMC XC is roughly just over a quarter of the overall Nutanix customer base by count. And growing like wildfire. So I think you're right. I mean, there's multiple ways for us to help our customers. There's ways where we add little value, some value. There's ways that we add some moderate amount of value. There's ways that we add high amounts of value. We're going to do all of those. And that's good. Yeah, so you know that zero sum game comment is interesting. I mean, at the macro level, the IT business is not quite a zero sum game, but it's getting there. You got to gain share to grow dramatically. What's your share gain strategy? You're right at the macro. If you zoom way, way, way out, the $2.7 trillion of enterprise IT in all forms, everything, that's actually still growing. The portion of it that is shrinking is classic on-premises IT. Classic, right? It's shrinking because workloads are going to SaaS, which means we have to win to the SaaS providers. But that represents a business model challenge, because it's a different business model selling to a sales force than to selling to 100,000 people who are deploying ERP. It's moving to public clouds and hyper-scaled cloud players. It's moving to people running cloud native apps on those public cloud models. The proportion that is there that is shrinking has got islands of awesome, right? So it's shrinking at about a negative 2% cagger, right? And I think it's an interesting time to see everyone's got to take strategies on what to do when that is the case. There's a subset of it that is the server market, a subset that's the storage market, a subset that's the networking market. Those are all shrinking standalone within them there's islands of goodness. All flash arrays, for example, within the $70 billion storage market is a growth area in a place where we're at about 40% share, which is 10% higher than where we are anywhere else and higher than the next top three. However, the island of CI is growing at about 20 to 40% cagger. And the island of HCI, which is still smaller still, is growing at about 150%. In CI, we're already at 50%. In HCI, our aspiration is to be 60 or 70% of the market, right? So as on-premises enterprise business is challenged, there's great opportunities for us to help more customers gain market share, deliver a more holistic offer, at the same time that we win by selling to the SPs and to the SaaS providers. Well, the FC's always done that well. I mean, a lot of companies, they get into that vortex. The FC's somehow always been able to get the new stuff big enough and growing fast enough to offset the decline in the old stuff. It's a... How? I've spent a lot of time thinking about this because as much as I'm a nerd, a geek and a technologist, and that's my root DNA. And you are? And I mean that with... Thank you. I mean that with love. Nerds of the World Unite. As I continue to basically expand in my career and learn and grow from other human beings, culture is such a potent force. And we're blessed to have a culture which is pragmatic, right? So we don't kid ourselves when we're behind. So there's a hazard when you're a leader that you can delude yourself when things start to go sideways. So the first thing you need to have is a willingness to go, hey, what we're doing isn't working. And a fierce amount of paranoia where we tend to overreact to potential threats and challenges. Now sometimes we don't get it right on the first go, but there's been very few times where I think we've been asleep at the wheel. And we're not always first. We try to be, but very rapidly you can see what we've done in the all-flash market. You can see what we're doing in the software-defined market. You can see what we're doing inside the hyper-converged market. We created the conversion for structure market. And then it's not just the stuff that you would normally associate with us. Cloud Foundry, would you say it's doing well? And you feel frank, you can answer however you'd like. In pockets, it's doing very well. And it's an emergent space. And it's got some big backers. Huge backers, customers dig it. It's great. What people don't realize is Cloud Foundry was born as a small project within VMware. And it went through multiple phases and variations before eventually we rallied a whole company, pivotal around it. Right? Right. Well, interesting point just to follow up on that. When we talk about cloud. Yep. We used to argue that I don't want to just take a full hypervisor and throw it in a cloud. That's one of the reasons why VMware created Cloud Foundry. Yet, last week, VMware made an announcement with Amazon to take bare metal servers, put full hypervisors in there. You know, it seems counter to what we've been talking about on how I should build a cloud. So I'm curious, your reaction. The first time that I talked about it with Raghu and with Ray O'Farrell at VMware, my colleagues, my respected colleagues, I was like, guys, this is a terrible idea. Just being very honest, right? And they were like, Chad, you don't fully understand. I'm like, okay, explain it to me. The first reason I was wrong was that I thought that it was an IaaS on an IaaS. Right. Right? In other words, I thought that they were going to take the STDC and Cloud Foundation stack and deploy it on top of EC2, EBS, you know, and basically creating two layers of abstraction, which in essence do a similar function. Doesn't make a lot of sense. Just natively. As I got exposed to actually how they were doing it, it started to go, wait a second, basically an on-premises infrastructure stack like VXRAC, SCC and VXRAIL has got a certain economic strength and weakness. Like if I've made it super easy for a customer to acquire a VXRAIL, they can have it, they can order it and it'll be there in seven days. And then the process of installing it takes minutes. And if they wanted to add more, they could easily add more. That is pretty darn elastic relative to traditional infrastructure. However, it's even more elastic if you say, it's already out there and I can go and I can just deploy it inside an infrastructure which is sitting there in the public cloud. And the reality of it is that in that sense, what they've done with AWS and SoftLayer, they are emulating hardware, right? So it's completely natural for VMware in the same way that they sit on top of servers and networks and storage thingamabobs, that they sit on top of servers, networks and storage thingamabobs that are not on-premises. And the sweet spot for those are gonna be the workloads that literally are so elastic that you can't wait for me to ship you a VXRAIL, right? However, there's truckloads of workloads that are not that elastic. And I think the answer to get them as easy, as a fundamentally transformational operate is converge and hyperconverge infrastructure on-prem. I think that that's where the world is gonna, that's where the puck is going as a Canadian would say. Yeah, and your description makes a lot of sense to me, the way you just described that. I still think, I know what you think about this, Stu and Chad is, it also makes sense to take that cloud stack and put it on-prem on a hyperconverged infrastructure. So what Azure Stack is doing is smart. And we do that today with VXRAC, SDDC and EHC. We do it with Cloud Foundry with NHC. I can tell you, I'm very excited to take the great stuff that Dell has been doing with Microsoft. So the precursor to the Microsoft Azure Stack was CPS. Doing great, we've got customers. There's more customers with Dell and Microsoft doing that today than anyone else. You can bet your bottom dollar that we are going to lean in heavily into mass together with Microsoft. If it's not a zero sum game, that's a game you want to play. And if you think about VXRAC, SDDC and the Enterprise Hybrid Cloud being our VMware opinionated stack with SoftLayer and AWS running Cloud Foundation as the public extension, you can bet your bottom dollar, there will be a VXRAC Azure Stack with a Azure public cloud extension, just like we're already doing with CPS. Chad, I can't let you go without asking you the Cisco question. Dell EMC together now, VBlock, VXBlock, I know it's a robust business, but there's got to be a little bit of tension there. I saw the video between Chuck Robbins and Michael Dell and that's good, but with all the hyperconverged stuff coming, VMware, Microsoft, everything you're doing there, UCS versus PowerEdge, what's the response? So first things first, customers, if anyone's watching that is thinking about this question, the first thing you need to understand and hear from me is you have nothing to worry about. Our partnership is solid as a rock with Cisco. Our commitment to them is solid and their commitment to us is solid. We are their single largest customer in a sense. I think that's a lot of people don't understand the nature of the VBlock and VXBlock business is that they are an OEM to us. I struggle to imagine a scenario where they wouldn't happily take our hundreds of millions of dollars that we spend being their single largest OEM source for UCS business where they would say, no, I'm not interested in doing that anymore. In other words, it's fundamentally sound for business and structural reasons, not just alliance squishy reasons. Making money. It's real, and by the way, it's a huge business with 6,000 customers who love it and are happy and it's growing, it's 20 to 40% per annum. So I said it once, I'll say it again, rule number one of business, don't punch your customer in the face, right? So keep doing what you're doing, which is good. The second thing I'll just say that will make it pretty clear is, and I'm trying to figure out how to do this in political soundbite land, which is not my forte, right? Who's the number one server vendor on the planet? From Revenue or Units? HP Revenue, Dell Units, Dell Units, right? So basically, by the way, who's number one in blades? From Cisco, yeah, Cisco. So who's number two in blades? From a unit standpoint? Unit and Revenue. Revenue? HP is, yeah, absolutely. How are these statements all simultaneously true? Well, it's because the server market is big and broad and wide and sometimes system architectures are a better fit for blades, sometimes they're a better fit for modular, sometimes they're a better fit for rack mount, and each one of those has a sweet spot in a system level design. When you have a thing which has a SAM, it biases towards blades. Sure, and it's because there's an external storage thing. You know what's like that? A VX block. Why would we make an incredibly compelling, competitive offer with an OEM ingredient less compelling or competitive? Conversely, why wouldn't we take PowerEdge and make our hyperconverge portfolio which doesn't have an array and therefore biases towards rack mount and modular and heavily leverage that? And I think it's because people don't think of it and go, when you're buying converged or hyperconverged, the server component is an ingredient. And when you eat a meal, that great salad with shrimp, did you think and decompose it and go, well, I think that this is a marvelous iceberg lettuce. Oh, I mixed it all up. That's right. When you're eating the meal, you care about how the whole meal comes together. And frankly, Cisco and UCS makes great V blocks. PowerEdge is going to make incredible VX rail and VX rack systems. Well, it's been a great partnership. As has the partnership with you, Chad. Thanks for coming on. You win the prize for the biggest crowd today. Hey, yo, everybody. So thanks for coming on theCUBE. It's great to see you again. Thanks, everybody. Feel better. Thanks, dude. All right, keep right there, but we'll be back to wrap. This is day one at Dell EMC World 2016, right back.