 from Las Vegas, it's theCUBE. Covering EMC World 2016, brought to you by EMC. Now your host, Dave Vellante. Welcome back to Las Vegas, everybody. This is theCUBE. We're here at the Sands Convention Center. This is day two of EMC World, the seventh year of theCUBE at EMC World. We've got Adele playing in the background. Saw the Saturday Night Live skit, the Dell guy. They were making fun of that this morning in the keynotes, it was pretty good. But yeah, a lot of SDS and hyper-converged and CI and all kinds of buzzword bingo going on here at EMC World. But the big news, of course, yesterday was Dell Technologies, Dell acquiring EMC, $67 billion acquisition. Really enormous, Michael Dell was here. He's still here and basically impressive that he's staying at the show and participating in that way. So I'm here with Peter Burst, the new head of research at SiliconANGLE Media and running the Wikibon research team. Of course, Brian Gracely is here and as well as Stu Miniman. Gentlemen, thoughts on the morning? Stu, maybe we start with you. You were in the keynotes, you saw that. A lot of heavy detail, VMAX, VMAX, all flash stuff. Kind of a lot of good stuff going on there if you're a VMAX customer, but it was heavy. Yeah, so Dave first, we got from the analyst session, got a little Q and A with Joe Tucci, which you talked yesterday was kind of passing the torch from Michael to Joe, so Joe after, I believe it's 15 years as the CEO, always very frank and open with the analysts, talked a little bit of retrospective, said it wasn't going to be about him, what was going forward. Two statements I want to mention. One is, he's asked, hey, Pat Kelsinger's not here this week. I mean, shout out to Pat. It's actually 70 year doing the show and Pat's been on every year, so it feels a little weird to be at EMC World without Pat on the program and they said basically, long and short of it is, Michael was going to take a good chunk of the keynote and it was about Dell technology, so therefore there wouldn't be room for a full Pat Kelsinger keynote. VMworld's here, of course there'll be a VMworld. I'm going to be interviewing a couple of VMworld executives today, we've got a couple more tomorrow. They're baked into a lot of the solutions, but where VMworld sits, in the discussion, it wanted to be more kind of the Dell and Dell EMC pieces. And secondly, Joe made a bold statement and he said, would the Dell move kind of convergence, hyper-convergence specifically is a big reason, one of the biggest opportunities that they see and Joe said that by the end of this year, he bets that EMC will be number one out there. Of course, VMware already states that they're number one. They'll say, who is number one right now? Yeah, so from our standpoint, VMware has 3,500 customers, so if I was just viewing a pure customer account, they're probably the leader. How about revenue, baby? Yeah, from revenue we, you know, money talks, everything else, you know where it goes. So today, Nutanix is obviously the lead and actually Nutanix is OEM by Dell. So I got a good note from the head of sales from Nutanix and he said, you know, Dell number one, Nutanix number one, you know, is that mutually exclusive? And you know, of course today, kind of Dell, EMC, VMware, Nutanix, it's this interesting co-optition dance between where those sit. Today, Nutanix is growing. We expect very soon Nutanix is going to go IPO and the relationship with Dell and how the EMC VMware fits into it will be really interesting to watch over the next year or two. So Brian, it's only day two here, beginning of day two, but what's sort of missing in your mind? You follow the DevOps crowd, you used to sort of run that initiative for EMC. What's not here that either needs to be filled in in day two and a half, three, or needs to be filled in? Well, tomorrow we're going to get a lot of the, what they call cloud native, the new stuff. The thing that's interesting to me today, that today was all about sort of the status quo. It was the cash machine. Essentially, it's the perfect analogy for this merger because it's, hey, do not screw up this cash cow. I need this cash to pay for the deal. Customers sort of want to maintain. What really bothered me a little bit about today's keynote was we've got a big piece about what we call true private cloud. And David talked about yesterday, you've got this sort of downward sloping curve of today's going on. We've been saying, look, if you're going to roll out private cloud, if that's where you're going to do it, the way you're going to make it at all cost efficient is you've got to drive automation. You're going to have to drive a lot more efficiency. And what I saw all day today was same things, same way of doing storage, same way of doing click, click, click, instead of automation, very little push around automation. So it's great for this storage crowd. They don't tend to want to go a whole lot and make a whole lot of change very quickly. But in terms of how fast will that downward curve come into play here? I think if EMC wants to be really aggressive, Dell Technologies wants to be really aggressive, they're going to have to lead that. And right now, they're sort of doing the status quo, which is going to leave them in whatever position it leaves them in. Peter, you've seen a lot of industry transformations, a lot of cycles, the waves, lived through many of them. At the heart of this transition is digital. It's an area that you've been studying for a while, writing about for a while. Describe in your view what's going on here in the industry. We know well the whole, remember Dave Michele's disintegration theories and vertical integration, blah, blah, blah, and the internet, et cetera. How do you describe what's going on in the industry today? Well, what's going on in the industry is increasingly customers are demanding that their brands provide some digital mechanism so that they can get more out of whatever the products are. And as a consequence, businesses are having to respond with new ways of engaging customers through digital technology. And that's driving a lot of the change that we're seeing. So the status quo, there's a lot of money that's still being spent on this stuff, but increasingly the new designs, the new speed imperatives, the new approaches to how you think about organization and institutionalizing work as a consequence of digital technology is having an enormous impact overall in the industry. I think building off of what Brian just said, what I'm hearing as I walk the floor is that there's this kind of emerging battle between Dell Technologies and HP and Dell Technologies and HP. And those two companies are both going to have to, even as they engage each other, make sure that they don't have this sumo wrestling match that leaves them both in the dust and out of the key picture because they have to connect back to what the businesses that they're selling to are really trying to do with technology because the business is trying to do more than just storage, server, cloud. They're actually trying to, you've talked about this notion of cloud, not as a technology, but as an operating model. And Dell needs to, Dell Technologies is going to have to find a way to connect with their customer agendas that goes beyond just taking share from HP and some of the other big players. Well it's interesting that Michael Dell calls out HPE or HP in the stage yesterday, talked about how they're winning the market share war and you're right, if they get into this inter-nascene battle, but their business models are quite similar. Contrast that with, for example, what IBM's doing. If you look at IBM, HPE, EMC, certainly Cisco would be in there, Dell, et cetera. They've all, I said yesterday in theCUBE, they've all got their different approaches to dealing with the Amazon effect. And IBM's got, my line on this is Dell is buying EMC, IBM's buying the weather company. So stark contrast, driving Watson, AI, natural language processing, big data, in different ways, analytics. So Oracle is the other one. They've got the advantage of having software value up the stack. Guys like HPE and Dell and EMC, not so much. So what do they do about that, Brian? Well, again, I think this is the real challenge they're going to have. To me, the big Dell technology merger question becomes, do you use the cash that gets thrown off by VMware, gets thrown off by EMC to go invest? And they've proven, EMC at least has proven, VMware has proven, they're very strong at wiring. They're going to go find those new growing areas through opposition. Or does that cash go back into retiring debt and trying to make this less leveraged? If they go that way, which the accountants would love, they're in a whole lot of trouble because you don't have that money to invest in what's going next. You don't have that money to figure out how to drive developer-centric things. That to me is going to end up being the real central question. But again, it's different. And it's going to be, your question's going to be answered pretty quickly too. Yeah. Don't they have to go that way though? They have to. I mean, Michael has said we're going to de-lever. I mean, they have to pay down that debt. Well, it's how de-lever, right? I mean, you could simply take off the top. I mean, you've got VMware buying a billion dollars back in share. You've got EMC every year, two billion. That's absolutely not doing anything in terms of driving innovation. Shareholder value, maybe. It's not affecting stock price. So that goes away, obviously. Maybe that goes away. And then it becomes, okay, it's three or four billion dollars a year enough to service the debt and then you throw off cash. That's going to be an interesting question. Well, I mean, Dell's, so we know EMC's got pretty good track record at the client companies, obviously, with VMware. Probably, I don't even think it's arguable, the greatest acquisition in the history of enterprise tech. Not necessarily tech, but enterprise. YouTube is a pretty good acquisition, but in enterprise tech. And Dell's been acquisitive. How would you rate Dell's acquisitions, Stu, in their prowess? I mean, you put Oracle up there, IBM, EMC, very strong, I'd say Cisco, very strong. I don't really have visibility on Microsoft. You guys may have a opinion. Or HP. HP, the HP Compact acquisition, did not go. Yeah, HP is the opposite. I mean, you think you could really, I mean, HP's one of the better acquisitions is Vertica. You know, I guess the move they made recently in wireless is good. But what about Dell? How are they? EMC's done pretty good. And especially their best acquisition VMware was one that they kind of put them off to the side, gave them more resources, let them do their thing. Dell has done a good job of when they buy a company, so look at like, compelling and equal logic. They increase resources. They really enable the core team to stay there and build down on it. So what we know from this, that Dell buying EMC, David Goulden's got a very prominent role. We've got Guy Churchward coming on soon. He's going to have a big piece, a growing piece of what enterprise is going to be. So they add the server pieces. So it's not like they're saying, oh, I've got a couple of pieces of the EMC I want. EMC is the enterprise arm of what Dell's going to do. And they're going to empower that. They're going to grow that. We've had discussions with Alan Atkinson yesterday, who said that going private is literally like flipping a switch. We can actually make investments faster. We can make more bets. And we will be able to do things differently than what EMC had done in the past. So Peter, let's talk a little bit about the research agenda that you've been working on lately. We've got a number of the analysts from the Wikibon side here. What's the key themes that your team is focusing on? What are you driving in the next six months? What should we be looking for? So at the top of the agenda is this notion that companies are going to have to build digital engagements to engage their customers. Companies are going to have to build digital capital to engage their customers better. And that's kind of the overarching consideration. And how do you go about doing that? And so we're looking, for example, at what Brian's doing around what we call the digital business platform. The idea that you have to put in place a set of resources and capabilities with the associated assets to make sure that the company that a business has the flexibility in a number of different areas to move with speed, to move with certainty, with a high degree of alacrity so that they can actually participate in whatever opportunities are going to pop up as a consequence of customers being able to do things very rapidly themselves as a result of employing digital technology. We're also going to be looking very closely at big data because the process of building out some of this digital capital and some of these digital assets is going to be how do you go about transforming more of what the business does into data? And that's going to be a big piece of what the big data story is. Additionally, we're going to look increasingly at what's the CXO, what the senior level guys are going to have to do to prepare their organizations to do that. And then finally, from a strategic standpoint, what does it really mean to be a digital business and looking at the way that digital technology is going to affect the variety of different functions like sales and marketing and fulfillment, et cetera, services in this new era. So we're going to be focusing very much on the way that technology is going to be applied in service to these transformations and more so than we're going to focus on, way down into the various configurations, switches that you can throw about the technology itself. So Stu, you and David focus a lot, David floral out on infrastructure. So really what I'm hearing from Peter is you'll be looking at sort of the infrastructure to support this digital world and what organizations can do to transform that infrastructure, EMC uses the term modernize here. And then Brian, obviously we talked about the cloud as the operating model and not a place to store stuff. That's something that you really have been focused on as well. So maybe you guys could add a little color to that. Yeah, so sure. Brian talked a little bit about the true private cloud is one of the underpinnings, flash, hyper converge, some of these kind of technology tools that are in there. But it's really that operational model where we're going to see the greatest changes for how many decades we've been talking about, oh, I understand CAPEX, but oh, I could save those soft OPEX dollars. What we really understand here is there's $300 billion a year in kind of those operating expenses and we're going to shift them into platforms where I've got automation and I've got tooling so that I can get out of doing it. Dave, the line you always used was customers need to get rid of that undifferentiated heavy lifting. The thing I've been a little more blunt lately in saying is there's certain things that customers suck at and they need to stop doing it. So David Flair said, stop building data centers most of you because there's a handful of companies that do that really well and you probably shouldn't be doing it. So where is core to your team in understanding it? Now that's not saying it all goes off to the public cloud but understanding what's important for me, what's going to drive my business, how can I be responsive as an IT organization to those business needs? And actually I've been really excited this week to talk to some really good customers. Brian and I did some interviews in the medical space, talked to one in the energy field that are helping to drive that digital transformation and the reality in the field of where things are going. And so Brian, you was talking about that many hundreds of billions of dollars shifting away from IT labor. That talks to a new operating model, doesn't it? Yeah, no, absolutely. Part of the thing that Peter and I have been working on from this digital business platform is one of the core tenets is this idea that operations now becomes a cog. Don't think of it as a cost center that you're trying to reduce. Think of it as a cog in this delivering digital platforms digital business or digital applications. You've got to think about optimizing that. You've got to think about automation is core to it. You've got to think about getting those data feedback loops while this is going on. Yeah, it is a very different operating model. And one of the little nuggets that kind of, it was in the keynote yesterday but it feels like it kind of got hidden is a little bit bigger push around public cloud. What's going on with Virtus.treem? We're going to have Rodney Rogers on I think tomorrow. We want to dig into that. I mean they spent, EMC spent a billion dollars, more than a billion dollars on Virtus.treem. They've apparently picked up about 2,000 people out of various EMC services group to help do managed services that I'm hearing about. But on the other hand they're going to compete against AWS in one of AWS's strongholds which is S3 storage. That's going to be a really interesting thing. Amazon, Google, Microsoft, they're pouring a billion dollars a quarter into building that stuff out. I don't know that EMC is that committed to making that kind of commitment. As much as companies say that we're not competing against those guys, they are. There's those guys everywhere. All right, we got a wrap here. So this is day two. We got some great guests coming up. Nina Hargis is going to come on. She's the new CMO of EMC. Guy Churchwood runs the core technologies group. We got a bunch of guests coming out today. There's a crowd chat going on with Jeremy Burton at the top of the hour. So just about five minutes. Go to crowdchat.net slash EMC world, John Furrier doing an ask me anything with Jeremy Burton. So keep it right there. We'll be here wall to wall coverage. This is theCUBE, right back. Looking back at the history of Dell, personal computers, you may.