 from Las Vegas, it's theCUBE covering Dell EMC World 2017. Brought to you by Dell EMC. Hello everyone, welcome to theCUBE special coverage of Dell EMC World 2017. This is theCUBE SiliconANGLE's flagship program. We go out to the events and extract the signal noise. This is our eighth year of covering EMC World, but now called Dell EMC World. I'm John Furrier, your co-host on our set one and with my co-host, Paul Gillin this week as well as Keith Townsend and John Walls and Rebecca Knight on set two. Double barrel shotgun of content here at Dell EMC World in theCUBE. Thanks for joining us for three days of wall-to-wall coverage. Paul, so much to talk about here this week. Digital transformation, a little bit boring theme has been being played out in real time, but this is a historic moment because one, theCUBE started at EMC World in 2010, eight years ago. But this is the first official EMC World, where it's Dell EMC World. They had kind of a mini event in Austin, but since Michael Dell took over, or I'm sorry, merger of equals, a combination. Combination as they call it. A combination. This is the first instantiation of EMC World as Dell EMC World. Jeremy Burton's now the CMO of Dell Technologies, which is the holding company for all the companies. It's the same EMC World flair, now the integrated content, notable, absent, CUBE alumni and executives from EMC. We'll talk about that in the EMC Mafia segment shortly, but your thoughts, because now Michael Dell is putting the rubber to the road. Kind of nothing earth-shattering in his keynote, but certainly private company, all guns blaring, smiling and dialing. He's got the swagger on stage. Well, Michael is nothing if not an optimist. He's always good at seeing a brighter future. And at his keynote this morning, as you said, it was blissfully free of content, but it did talk a lot about digital transformation, which is, of course, the buzzword of the year in the IT industry. A little surprised that Dell adopted the buzzword, the same buzzword that HP and Cisco and all these other big companies are adopting. I don't think what happened in the keynote is less interesting really than how the mood changes here. And this is the first, this is the coming out party for Dell EMC. Yeah, there was a conference last October, a month after the merger, but this is really, things have finally settled out now, six months later. And it's a chance for customers and for the partners to get a sense of how well this is all working out. And one of the things I'm watching is how the story's unfolding. Because now you're starting to see the big company certainly in the consolidation side of the business market of infrastructure and data center and enterprise IT. It's a consolidating, mature market. It is transforming. There is a cloud story requirement. There are new software requirements, software defined data center, as well as new growth opportunities. So what I'm looking at is, what is the story? What is Michael packaging? And how does that compare to the competition? We're going to hear from HPE and HPE just cover coming up, we'll be covering that for the seventh consecutive year. We're seeing Amazon story playing out in real time. Oracle story, everyone's got their story. It is certainly digital transformation, but what's interesting is Michael's got the packaging. He's packaging it up. Your thoughts? Michael kind of dissed the cloud this morning actually in his presentation. He said, you can't have a successful business or your business is not going to grow as quickly if you're 100% cloud based. So he was very much making a pitch for a data center infrastructure. Really not surprising coming from Michael. One thing we want to, there'll be a sub-team here, I think is how this merger is working out. And as we wrote on Silicon Angle this week, you know, if you go back through the history of big mega mergers, particularly in the hardware industry, going back to Burroughs, Sperry, Decc Compact, HP Compact, Wellfleet Synoptics, and NCR AT&T. I mean it goes on and on and on. Pretty much all disasters. And we really haven't seen a merger anywhere near this scale between two IT companies that has worked well. All indications are right now that they're doing the right things. They even have some people on board with Dell EMC who went through some of those mergers. But it's going to be interesting to see how they break a pattern that has been decidedly negative. What a great point. I love your post by the way. And I would add that interesting observation, at least from my perspective, is as we sit down with these billionaires and interview them one-on-one on theCUBE, is you look at Amazon, Andy Jassy and Jeff Bezos, Bezos in particular, Larry Ellison and Michael Dell. You have essentially captains of industry at the helm. Michael Dell is no spring chicken, but he's also not over the hill either. He's 51 years old. He's a kid relative to all the leaders in this industry. You hear Jeff Bezos talking. I was watching his talk in DC just this week. He's saying, we're taking the long view. So if you look at amazon.com, see Bezos, look at Michael Dell, look at what Ellison's doing. They're all playing the long game card. Now I don't know if that's the hedge against, we don't have our story right, or give us more time to bake out our stuff. But I think what's different about Dell technologies is, Michael's 33 years into the business, $1 trillion later in sales, and he's young. So I think that is a wild card. Ellison's still running the show. Bezos is still running the show. Dell's certainly running the show. So I think the wild card on this is the fact that you've got a strong founder and a privately held company. And Ellison, it's a question about how long Ellison will be able to run the show. I mean, he is over 70 at this point. Dell certainly will be around for a long time. You have to take a long-term strategy. If you're not Amazon, you have to take a long-term strategy because what other choice do you have? I mean, you've lost in the short-term. So it's not surprising to hear these guys going that way. I'll be interested to hear from Michael and from his team about the cloud and how they really design a differentiated strategy. I think IBM has taken its position in the cloud out pretty well. I think even HPE has done a differentiated position. HPE, of course, has the configurable hardware. That's a point that I think Dell has come back on. And the big question is software. John, as you pointed out the other day, VMware is worth more than HPE by a substantial margin at this point. So they've got this huge asset in VMware, not to mention Virtue Stream and Pivotal and the other good software assets they acquired. What are they going to do with them? How are they, they're just going to let them go free like Michael has done in the past or are they going to try to mold these into some sort of coordinated whole? Well, great point. One is on the HPE valuation thing, market cap. VMware is actually worth more on market cap and public markets than HPE. Interesting but not significant in my mind yet, but it does point to the fact that Michael Dell's rhetoric on stage today, he didn't take any shots at HPE last year. He took a big shot at HPE. He's been his rival from day one. I used to work at HPE when he was just a mail order company selling white boxes and then he grew that business obviously the rest is history, but no shot at HPE because VMware has to work with HPE, right? So that's interesting. Two is on the software side, Dell is a hardware company, let's face it. But they have more software now than they've ever had before. So that is a good point. We're going to be getting into this data software to find data center to find out how much they actually have. A couple core themes that I see already popping out of the keynote, one, Pivotal. Pivotal and Cloud Foundry instrumental in the keynotes. NSX was mentioned, Pat Gelsinger is going to be on tomorrow. NSX is VMware's secret play. If you look at what NSX is doing with the Amazon public cloud deal that they did recently this year, NSX could be the real lever in that intellectual property that lock in that kind of differentiation. The cloud is not a place, it's a way of doing IT is another message we heard all day today. To me and your point about bashing cloud, I think that's a stake in the ground to kind of hold the line because they have no cloud strategy. Now their cloud strategy is kind of hand waving right now with multi-cloud, which I buy, but multi-cloud is still a fantasy in my mind. Latencies are too low, it just isn't the kind of plumbing yet in place on the clouds for multi-cloud. But certainly hybrid cloud, I think will be multi-cloud role. So those are the key things. And then I'm going to ask Michael directly, you blew $60 billion on this deal, is there any cash left for M&A? M&A right now is hot market, you can do some nice chuck-ins, fill in the white spaces on the products, get those software assets and really start cobbling together a growth strategy. There's no doubt in my mind, Paul, that they're going to win the mature, classic business school move of consolidated market. Own the consolidated market and try to get a growth strategy. So to me, that's going to be the big question. What is Dell Technologies and Dell EMC's growth strategy? And you would have to think it's either through M&A, perhaps an acquisition of HPE, if the valuation continues to go down. Or it's in software. It's a good point you made about VMware. VMware also has a strategic alliance with IBM. So if you're Michael Dell, it's hard to give a compelling keynote speech these days because you can't really offend anybody. His companies now are in hoots with all these other firms. Of course, dissing the cloud is even dangerous because cloud foundry is such a critical part of the pivotal strategy. So I think it's important, boy, you've got a company that is almost trying to reassemble the old IBM, the old IBM of the 80s, which dominated every segment that was important. Dell is almost doing that now. I mean, the only piece they really don't have is networking. So are they going to make a big play to become the Mongo IT company in the world? And can they raise the kind of funds for that? Yeah, and we're also going to talk about the cloud transition as well as what I'm calling the EMC mafia, folks that have been on theCUBE and big executives at EMC, we'll get to that in a minute, but I just want to talk about that cloud play because you're right, the growth strategy has to come from software. I just don't see the cloud growth yet for these guys. Although Michael and the hallway conversations are, growth in the cloud is really doing really well for EMC. Not sure, but on the growth strategy, Pivotal, Boomi, VMware, VirtuaStream, and software-converged infrastructure are an interesting place. So I think that's where we have to look here. I still think there's a lot of holes in the product line. So to me, that's important. Now, trends so far, and what we're expecting to hear at the show is, some of my notes, Paul, share with you and let's get your reaction on. All flash arrays are going to be big, continuing to grow that. Hyperconverge, VxRail, we heard that on stage today, claiming to be number one, PowerEdge 14G. Again, back to the speeds and feeds, you know, storage. Storage is the bread and butter of EMC and now Dell EMC, I still think it's going to be a real critical beach head that they're going to continue to expand. Storage is not going away. Obviously the Iceland all flash is coming out and then SSD, data protection in the cloud. It's starting to see them going where their roots are. Cloud, stuff is coming out of the data domain, kind of their core storage first, makes sense strategy-wise while they buy their time to fill in the cloud. Well, it's a good point about storage. They have a comfortable lead in storage. According to the latest IDC figures, they're a good 15 points ahead of their next biggest competitor. They have a comfortable lead in the Hyperconverge infrastructure. Four different product lines in that area. These are beach heads that they have to shore up. They have to be sure that their market share doesn't erode in those areas. The question is, where does the growth come from? You look at a company that's going to a very similar transition right now, Cisco, which has finally really bought in to software-defined networking and is remaking its company around it. That company is having to change the whole culture in response to a technology trend. Now, the same thing is going on in the data center. Everything is being remade as virtualized and VMware is at the center of that. So, Michael Dell has the asset to be able to lead that conversion, but are they psychologically going to get there? Great point, Juan, I would agree with you that the whole Cisco example proves the same challenge with Dell EMC is, can they move up the stack? In this case, they're hardware guys. Can they add software? Cisco, they're transforming themselves to be more cloud native. The classic moves happening. Cisco's been trying to move the stack for over a generation. They're plumbing guys, they're networking guys. These guys are hardware guys. Can they get the DNA to truly become software providers, not in the sense of selling software, just providing a software fabric is going to be the key differentiators? Because digital transformation is about IT transformation. That is certainly the reality of what we're seeing when you start to peel back the onions. And that to me is going to be the big discussion because as David Goulden said on stage, apps provide the value. As the enterprises build more apps, you got to have a platform, you got to have a cohesive horizontal end-to-end software fabric. And the question is, do they have it? Well, they certainly have the foundation for it. I mean, they have Pivotal, they have the, there's a whole developer community around Pivotal. Dell itself doesn't have a developer community, nor does EMC, but they have elements of that to build upon. The interesting thing about the conversion to software, about software-defined infrastructure, is that it requires thinking from an application perspective. And that's not something hardware companies have ever been inclined to do. So how does Michael Dell make that transition? Has he made it himself? Is there other leadership he's going to have to bring in or going to make it for him? The whole leadership of the Dell EMC company right now is ex-Dell and EMC people. It's hard work guys. I'm going to put pressure on Dell on the question on software. But you wrote a post, a two-part series on silkenangle.com worth checking out, getting a lot of viral buzz around open source and the value of open source. Because if you look at, say Cisco for instance, what they're doing with the cloud native strategy, they have actually pivoted, and Chuck Robbins, the CEO, has acknowledged, actually retweeted one of my tweets of the day with, as we were talking about this new program called DevNet Create. They're taking the developer program from Cisco and moving it into an open community model, which basically is a toe in the water for saying we have to figure out open source. All the critical big vendors that are transforming from the, call the old guard, as Amazon calls them, Amazon Web Services, Annie Jassy, Dell's an old guard guy, but still young, but they got to get to open source. What are you finding is the success parameters here? Because you got to play in the open source, be a contributing member, again, back to the DNA of the culture, and two, there's real value there. Well, there's no question that open source has won when it comes to infrastructure. I mean, the biggest IT companies in the world, which are Google and Facebook, are both built on open source platforms. I mean, game over. This is where IT infrastructure is headed. Cisco, interesting case because they are an infrastructure company, and they are being eroded. Their traditional market is being eroded by open source. They have chosen to embrace it through their developer community. Cisco is one company I would never bet against. They're such a great company. If anyone's going to make the transition, they will. Open source is still an infrastructure play. I don't see open source in the applications area being a major driver, but Dell is an infrastructure company. So you have to assume that everything they're doing in managing, in securing storage and servers is going to be under pressure from open source at some point. They have to embrace that as Cisco is doing. Paul, we had a thought leader chat with some experts on our digital panel, software crowd chat. Everyone knows crowdchat.net. Check it out. And comment and conversation was taking place among the influential folks saying, what is a software company? Now you go back to the web. Shrinkwrapped, download software to now fully SaaS based and platform, SaaS now platform, what is a software company? So the question was, is Facebook a software company? Or are they an app company? Which begs the question, you have to be a software company but it's not the classic software company, category, business model. You need software to run stuff. So you can be a hardware guy like Michael Dell and have Dell technologies. You can be a network company like Cisco but you've got to be a software company in the new way. Well I spoke to a forester analyst in writing that piece on open source who had a great point. He said, Facebook and Google are the two big, are two big successful software companies, neither of which makes any money, a little bit in Google's case, licensing software. So they create a business model that have nothing to do with the traditional software model that have leveraged their expertise in the software that they've developed. And maybe that is the business model going ultimately the business model is building software in order to do something else with it that customers will pay for. I think you're onto something, I think your post illuminates that. I think that this is going to be one of those things where in the history books of the tech generation, as we're on our whatever wave of open source generation, this is it. It's not about the business model of the software. It's how the software is being used in the business model of the transformation. That is really, really key. Paul, I want to just talk about really quickly about my observation at EMC and we're a little bit editorial moment here because Dell took over Dell EMC. We've interviewed now eight years, pretty much all the executives at EMC over the years, but there's an EMC mafia developing. There's a lot of people who have left EMC that we know we're friends with. Guy Churchwood, CJ Desai, Josh Kahn, Rich DePaletano, Brian Gallagher, B.J. Jenkins, Sanjay Merchandani, and many more have left because of the consolidation. Certainly you can't, EMC's going to get consolidated down, but no major layoffs, but still enough that some eagles have flown from the nest, as they say, and are running other companies. So you have this EMC culture out there, a very sales-oriented, very customer-centric, now running other companies, and I want to give a shout out to all those EMC alumni and mafia out there. Good luck on your new ventures, but the impact here to Dell is a mash-up of the two cultures. What's your observation? What's your reaction of that? And have you heard anything? I mean, I have some thoughts, but I wanted to get your reaction because, okay, some eagles fly away, you still got the worker bees inside EMC, and now Dell coming together. Thoughts on the culture clash? Well, I live in Boston, and so I've been through the acquisition of a prime computer, through EMC acquiring Data General, through the DEC acquisition by Compact, all of which were disasters and all of which were culturally, the cultural issues were much bigger than the technology issues. So I think that that is something that Dell has to be front and center for, Michael Dell, is how do you mash up these two cultures? As you pointed out, EMC, very aggressive, techno prisoners, enterprise-oriented sales force. Their salespeople make a lot of money. I used to live in a neighborhood where everyone was- Buying new houses. They were making a million dollars a year. And you've got Dell with its direct model, with its channel model, and without a particularly strong roots in enterprise sales force. And how do you coordinate those? It's not surprising to see people leaving, of course, in the early days after an acquisition, choices get made, people get promoted and moved in new positions. Those who lose out tend to leave the company. But I think the sales issue would be something that Dell have into too. How do you, does Dell want to adopt EMC sales style or the other way around? Or is there some way that they can live both in harmony? You know, I follow a lot of companies in Silicon Valley as well. I'm out there on the West Coast, as they say. Where all the crazy ones are, as they say. But I got to say, I mean, I got to say there's been some shrinkage on EMC. But for the most part, I haven't really heard any really negative horror stories. I've heard, actually it's been going pretty well. And I think you bring up an issue of effectiveness with the sales folks. Dell's an efficiency guy, right? So you got effectiveness and efficiency coming together. But I think they've handled it well. I really haven't heard any real horror stories. Again, I think that has to do with the founder being actively involved. They're a private company, so they have some room. And I think they've invested in making that happen. So I think generally, props to EMC folks and for the Dell folks on the acquisition. Still not clear the woods yet. It's going to surely be in the products and the revenue. But for the most part, we're going to unpack that. So Paul. But you can't, I just want to jump in just quickly. You can't minimize customer touch. And EMC was always a high touch company. Outstanding service, they put people on a plane and in the middle of the night, charter a private jet in the middle of the night to get someone on site at a customer to fix a problem. As you mentioned, Dell is an efficiency company. That's not a very efficient way to operate. Can they absorb the best of EMC and the best of Dell at the same time? Yeah, well, we'll certainly tell. I mean, they got a lot of competition, Michael Dell's saying on stage, they're going to have people start up. Essentially what he's saying is Amazon there, in my opinion, that's not probably what he really meant, but that's my interpretation. But I'm expecting to see the same old EMC world with a twist. And that is, we're doing good. The messaging's out there. We're going to see how the products compare vis-a-vis the competition. I'm interested in VMware piece. Paul, what are you looking forward to? I'm looking forward to hearing how this is all going. How this company is culturally, what kind of a cultural chimera they're putting together here that's going to make sense that the market is going to understand. I also want to hear how they're going to differentiate in cloud, internet of things. We just heard a little bit about that this morning. That's something where I think you're seeing Cisco. The way Cisco is dealing with the cloud these days is to say, don't worry about it. It's all going IoT. It's all going to distributed intelligent devices. The cloud is already history is what they're saying. So does Dell have a similar differentiated position on that? I'm least interested in hearing about the new products because it's speeds and feeds. But really, how is this company going to dominate an industry? How is it going to get over some of the speed bumps that we've been talking about for the last 20 minutes that have foiled so many merger attempts in the past? One of the tell signs that I look at a conference when I see a lot of AI washing. The good news is there's not a lot of AI being talked about here. It's usually that's just lipstick on the pig, as they say. I would, except for the case of Google and Amazon web services, they do have some AI story with some real props to back it up. For the most part, you're not seeing EMC glob on the whole machine learning, rah rah. They did talk about it, but it wasn't like a big theme. I think they really talked about the packaging of the value of the brands together. Comments around it costs for public cloud. Nice little ding there. I'm going to dig into the story. I'm going to really test the story. And I'm going to look at the customer traction. I really want to see who they have on stage. I really want to hear who's really going down the road. How that growth strategy, because I think they're going to win the data center consolidation market pretty handily. And the question between HPE and Dell, for instance, is that's really the, to me, the two big horses on the track, who's going to win the growth? Who's going to be able to lock in their beach head on the core market, traditional market, and have access to the growth of what cloud will bring, and IoT, and among other things. I think at this point, HPE has a better story in that area with their configurable infrastructure, with their pay-as-you-go on-site model, really interesting models. I was at HPE World in Europe in December, and I came away from that feeling like, these guys have some unique talking points here. So they at least, they have a strategy that I think I understand, and that is different. Dell is still working through this huge merger. Bottom line is, Dave Donatelli, who's an executive at Oracle, told me he's also an EMC executive at HPE. The business of provisioning servers and storage is not going to be the growth strategy. Now it might be a component of the overall business model, like software, but ultimately, that business is in decline, and that's a fact. Okay, this is theCUBE bringing you all the coverage of the kickoff from day one at Dell EMC World 2017, our eighth year, three days of wall-to-wall coverage. We have two sets, the blue set and the white set. Go to silkenangle.tv to find the coverage. Also go down Twitter, follow us on theCUBE. I'm John Furrier with Paul Gillan, kicking off at Dell EMC World 2017. We'll be back with more. Stay with us after this short break.