 From Las Vegas, it's theCUBE. Covering VMworld 2018. Brought to you by VMware and its ecosystem partners. Hello everyone, welcome back to theCUBE's live coverage here for day two, we're kicking it off for wall-to-wall coverage. Three days of CUBE interviews here in the VMware Village. VMworld Village, I'm John Furrier with Dave Vellante. Our next guest is special guest, CUBE alumni, Michael Dell, CEO of Dell Technologies, founder of Dell, Michael Dell, named after the company. Great to see you again, thanks for coming on. Great to be with you guys and thank you as always for the incredible coverage you provide for our events and so many great events across the whole industry. You got two teams going here at the same time. It's great, isn't it? Tremendous coverage, thank you. Great community, what's interesting is this is our ninth year doing VMworld and we've gotten to know the community really well and it's just been so much fun and it's been great to see everyone. And more exciting now is this year's keynote, which I thought was pretty interesting. You look back just four years ago, the cloud and who was doing cloud, who wasn't doing cloud and everyone's throwing around. Well, they don't have a cloud strategy, what does that mean, right? So it's very clear what's happening with cloud, right? Everyone knows the cloud's going to be there and but the role of infrastructure hasn't changed. So at the end of the day, you made a big bet going and taking Dell private and the things that you've been doing certainly with VMware and others, infrastructure is never going away. So that was a good bet. I mean, storage doesn't go away. All these things are still happening and Amazon announcing RDS on VMware, on-premises is absolute validation from the customers that on-premises activity is still going to be super relevant in a cloud world. So it's not like anything's really changed, it's just a rearranging of the resources, your thoughts on this trend and your bet on infrastructure. It's a data economy, right? It's a multi-cloud world. That's a two-way street and if you think about the billions of connected devices, the explosion in data, overlay on top of that, all the new computer science, that requires all kinds of new infrastructure. There's a boom on the edge and so absolutely, this is why you see our business growing so quickly and doing as well as it's doing and we're investing in innovation strongly. You saw it yesterday and today in the keynotes and it's resonating extremely well with customers and so I think we're very well positioned, we've been gratified by the response from customers and partners around the world and look, every business is increasingly recognizing the importance of technology and data and that requires lots of new tools and technology and it's why we created Dell Technologies, right? To be the essential infrastructure company and it's working well, it's actually working better than we thought it would work. So it's all good, guys. Well, you know, my old boss, whom I think you knew, Pat McGovern used to say that 90% of mergers and acquisitions fail to meet their objectives. So then with many, many examples of that, in roughly 36 months from when you announced the merger acquisition, you've completely transformed Dell. You went from a company that was like sort of a half superpower, obviously, in client and you were relevant in other areas but you were in number one. So number one in all the magic quadrants and in record time and it's one of the most amazing transformations I've ever seen. So your thoughts, you're welcome but I really like to understand what were the conditions that allowed you to do it? Obviously, they say it's better to be lucky than good. You're both good in, there's probably some luck involved but what were the conditions that allowed you to make that transformation in such record time? Well, certainly a big one was the acquisition of EMC. Well, right. Right? Yeah. And along with it, you know, VMware and Pivotal, right? And we theorized and actually as you guys know, this story goes back a long way, right? It actually goes back to 2001 when Dell, EMC started working together when VMware was just a little, it was, you know, when Sanjay showed the slide about the server virtualization, actually before VMware was server virtualization, it was workstation. Workstation, that's right. And we were an investor at VMware and we thought that was cool. Anyway, so fast forward to 2013, we go private. 2014, Joe Tucci and I restart the discussion we'd had earlier back in 2009 about combining together. 2015, we announced it and we thought that if we could combine everything together that customers would, you know, really like it. And, you know, thankfully as we found that's been true, it's just been more true than we thought. And the innovation engines are cranking on high, you know, $12.8 billion in R&D invested in the last three years. And you see here at VMworld and at Dell Technologies World the strength of the roadmaps. And so every turn of the crank, we're just getting stronger and stronger. We never believed that, you know, everything was going to go one place or the other, okay? It's actually great that the edge is booming. Now, if you said, did you know that five or 10 years ago? No, I didn't really know. But you could kind of see some things starting to happen. But, you know, look, distributed computing will be even more distributed in the future, right? So you had good products, you had a great combination. That makes it a lot of sense. And, you know, we were- And incredible people too. A team, right. The quality of the talent that we are blessed with is amazing and it's a flywheel because you can attract the people, you know, and the very best people and develop them and train them and they want to come be part of the winning company. And we saw a lot of, and we saw that on theCUBE, we commented about the synergies that were probably unrealized or unrecognized by others. You obviously saw that. But then also there's other side of the equation of the financial opportunity. You took financial risk, you put your own money into the deal. There's a lot of engineering going on. We took the risk, it's the man in the arena, you know? And not everybody wanted to take the risk and, you know, I'm happy to take some risk. Yeah, but the rewards are looking good. I mean, if you keep in score, which I'm sure you are, the numbers are looking pretty good. So, there's the financial side of it and then also risk reward payouts are also part of the entrepreneurial thing. I mean, if you look at our last quarter, you know, gap revenues up plus 19%, non-gap revenues up 17%, data center, ISG business up 25%. I mean, we're clearly gaining share. Number one in storage, in all flash, in NAS, in backup and data protection and every category of storage unstructured, we're bigger than number two and number three and number four all combined together. Number one in servers, right? Number one in virtualization, in all flavors. You saw what Pat showed, you know, with the progress with NSX, with Workspace One, obviously server virtualization, you know, number one in client as well, right? In, you know, client revenues. So, the business is quite strong and healthy and what's really interesting is if you look at it across customer types, you know, the very largest, the small, the medium, the government, the state, local, top 50 countries, pretty much everything is growing double digits all across the world, every customer, every route to market, every channel. So, you know, I think the industry is stronger than people understand. That's the first point. I think there is this data economy and this tsunami of data that's being created and that's driving demand for infrastructure products and solutions, we have the best in the world. And then, on top of that, we're gaining share. So, all of this together is a good news story. And the market forces you mentioned that really were something that, I think a lot of people in the industry at the time that you were contemplating the deal and we talked privately about this, so I want to kind of bring this up here in theCUBE, way back when, the industry pundits were looking at the industry almost like a siloed map of TAM, total market addressable market. And these other forces, if you factor those in as a market force, it changes the analysis of what you were talking about. And we talked privately many times, but one time we were talking about the maturity and size of the on-premises IT market. It wasn't, they were like, oh, IT's dying, dying. It's like huge. I mean, it's massively mature. So, and we talked privately about that. That's something that a lot of people missed. They didn't miss that the size of the market was so big. Might have been, you know, flat, but it's a mature market. But then these outside forces transform and now the deal with Amazon highlights that. Two-way street, now it's going the other way. And look, if it's obvious, there's probably no opportunity, right? And so, you know, I kind of made my life of doing stuff that maybe wasn't quite obvious to everyone. Okay, fine. It's just how it goes. So maybe it wasn't obvious to everyone. And I remember when we announced, you know, 2015, everybody was like, whoa, what are you doing? Right? Why are you doing that? And now it's kind of like, oh, seems like a really good idea, right? So look, I'll tell you what I think is maybe not so obvious right now. Although I think people are starting to figure it out. There's boom on the edge. I think the edge will be bigger than the cloud. The private cloud, the public cloud, the sasset. The edge will be bigger. What are some of the tell signs on that? How could you tell? Very, very simple. Go to ARM, all right, and say how many microprocessors and sensors and controllers have you sold? 120 billion. Okay? Seven billion people in the world, 120 billion. That's already sold, okay? This isn't the next five years or 10 years. The numbers are only going to go up. That's just ARM. So you think about everything becoming intelligent, the cost of making something intelligent going to zero, the cost of prediction in the form of AI and learning and inference going to zero, and how that refactors the economy and the explosion in data as a result, oh my God. Incredible opportunity for infrastructure. So that's a factor that makes that AWS VMware deal more sensible because the conventional wisdom was just that. It was a one-way trip to the cloud. It's turned out to be a boon for the data center. So edge is maybe one reason why, but perhaps there are others, your thoughts. Well, it's, look at TensorFlow. Let's just go back to our last quarter, right? Server networking business grew plus 41%. Well, server networking business is growing plus 41%. Everything can't be going to the big three public clouds. It's not. So there is a boom on the edge. It's the AI, it's the ML, it's the software to find data center. Cloud is an operating model, not just a place, right? And again, big growth in our appliances, taking all the innovations of VMware and expressing those in consumption models and making it easy for customers to deploy. It's all working quite well. And we're uniquely positioned as Dell Technologies to be the best choice for customers. You're the store for all this. I want to drill down on the IoT edge boom. The tell sign you mentioned is really interesting. I like that. But also I want to tease out what Pat Gelsinger said on stage yesterday. He said, you know, IoT, because you know, we're going to kind of critical the IoT, not super critical, but it's maturing, but there's no real products yet available in a true sense. But Pat said, it's being connected now. So you mentioned ARM. Penetration used to be, and you know that from the PC game, everyone should have a PC. Now everyone's got PCs and laptops. So the penetration game is not the issue. They're already there. So as things be fully connected with mobile, it's not so much the penetration numbers per se. It's the network ability and the intelligence. So AI ops on the IT side, AI in apps. And Pat said the apps are the networks. So this is a new networking dynamic, networking things together, making them more intelligent is the new metric. Do you agree? Absolutely. And look, most of the 120 billion aren't connected, but you know, they're going to be connected. They have phones. And there's going to be 1.2 trillion, right? It's just going to keep growing, you know, in five years, 10 years is going to be way, way more. And then you've got 5G coming and it'll be node to node connection. And so yeah, and then you overlay the AI, it's all this is reinforcing itself. You know, at the center of this, there's a relatively simple thing that's happening, right? It starts with data, right? And you know, this is no different than it was in the 60s or 70s, right? With the beginnings of IT, it's just now the cycle is going much faster. It starts with data. With your data, you make better products and services, right? And when you make better products and services, you attract more customers and you get more data. It's just now, right? The number of devices, number of nodes, and then the network connectivity, and then you insert AI and machine learning and neural networks, you know, et cetera, on top of the data, and then it goes even faster. And that wheel's just spinning faster and faster and faster and it's not going to slow down. It's probably going to renaissance. You talk about networks, and there's a metaphor, I like the metaphor of networks of data. And you talk about, you know, you lived for decades on the cadence of Moore's law. Well, that's not the innovation anymore. John calls it the innovation sandwich. Data plus AI and cloud for scale. And you'll take your intelligence and your compute and your infrastructure to your data, right? That's why there will be a boom on the edge. We're already seeing it in manufacturing, in retail. And anybody who thinks that everything's going to the center of the universe somewhere, it's just not right. But hey, look, when there's some disagreement, there's opportunity. And I'm perfectly willing to step into that opportunity. Opportunity, yes, yeah, you're good. So obviously you're doing well on the upside of the risk that you're taking. But I think the operating model is interesting. You mentioned, I mean, cloud and DevOps flipped everything upside down, you know, where apps are now programming networks. What you're talking about here with data is a sideways force coming in. That's disrupting IT's footprint as well as the operating model. I think this is what, I think it's compelling for this new flywheel between cloud, mobile, ML, AI, and edge is that that integrated flywheel is a vicious circle. More compute, faster access to data. Faster access to data, better AI. So more data, more accurate data, better AI, that circles around, that's a flywheel. This is coming sideways. This is not an upside down. This is just a- And what our customers are realizing is that because of all this, they need to have more developers, right? And they need to express their competitive advantage in the form of their data and with software. And so what they want is a developer friendly, developer ready, secure infrastructure that is cloud agnostic, cloud neutral, and can operate in an autonomous fashion. And they can decide exactly where to put workloads based on security, performance, you know, cost, you know, et cetera, right? And it'll be a workload dependent type discussion. And, you know, again, with Pivotal, VMware, Dell EMC, we are really well positioned to help our customers with that. So I can ask you, so what you described to me is a new era. It's not a cloud of remote services anymore. It's this ubiquitous, intelligent, you know, platform. And it feels like it requires a new brand. And we're seeing the evolution of the Dell brand, the Dell EMC brand, now Dell Technologies brand. Talk about the brand and what we can expect going forward. I would say light touch, right? And so, you know, we revealed the Dell Technologies brand when we did the combination, but we also kept the, you know, important brands that have been part of the company's history, you know, in the form of VMware and Dell EMC and Pivotal. And so, you know, exactly, you know, secure works, boomy, right? And so, you know, if you've got a business that's close to $90 billion and it's growing at, you know, 17, 19%, you know, you don't really sit around and say, hey, let's change a bunch of stuff, right? So I think people are understanding what we're doing. They understand what Dell Technologies is more and more and the brand is resonating well. So we feel very good about how all that's working. You said on theCUBE here that VMware is a crown jewel of Dell Technologies, obviously you can see the results. Elaborate on that now, give us an updated answer today because obviously you look at some of the things that are going on, you know, NSX has turned out to be a very good investment payout from VMware as kind of an interconnection point between multiple clouds. The Amazon relationship is deeper and it's very clear for the field sales teams, it's a great go-to market from what we're hearing. That's, and then the senior managers are involved at both levels of those companies. So VMware actually is interesting position going to a whole other level. Update us on the crown jewel status of VMware. So, you know, within the world of infrastructure, in the software domain and software defined data center, VMware is the successful company by far, right? And the level of innovation that is coming from VMware is really profound. I mean, it's the highest it's ever been and until next year, right? Just go back and look at Pat's keynote and the things that have been rolled out and, you know, we're completely and tightly aligned as a Dell Technologies family. So VMware is at the center of everything we're doing in all the areas that we've talked about. At the same time, right? We've kept the ecosystem open. You see here on the show floor, the whole industry well represented and participating and engaged. And that's been an important part of VMware's success from the beginning and will be forever. Well, we used to laugh out loud. Belly laugh when people said you were going to sell VMware. I mean, it was just like, that made no sense. But it's given you incredible financial flexibility. It throws off cash, it counts for a nearly, I think roughly half of the profits. And now you're taking the $11 billion dividend, which gives you the ability to clean up the capital structure, create more clarity and then become a public company again. So can you talk about that a little bit? I don't know how much you can say, but you know, we used to joke about the 90 day shot clock. Seems like that's where you're going. You're obviously comfortable there. You're a very well run company. Your thoughts? So, you know, I've been doing this for almost 35 years and 25 years of it. You know, we were a full public company. We're actually a public company now, right? We make all the public filings. It's all out there and available. But the equity of Dell technology, so that we have a proposed transaction, which you've seen proposed transaction will have the effect of retiring the tracking stock, which we created in the combination, you know, started. Great premium. And exactly, and that retiring the stock, it'll be replaced with a combination of cash and equity in Dell technologies. What I see is no change in how we're operating and our strategy, our relationship with our customers and partners and in VMware's independence and you know, what I would tell you, if you got any further questions, we have SEC filings, you can refer to those. We've got all kinds of answers in those and we have an investor day coming up, you know, in September where, you know, we'll go into more detail. Is that an HQ? The investor day? Is that in New York? That's in New York City. Well, product strive value, value provides customers really to pay you for those value services. That's called a business model. You've got a good one going on. Congratulations. Congratulations on the great bet and it's great to see the results and it's fun to keep in touch. Thanks for coming on theCUBE. Really appreciate it. Thank you guys very much. Thank you. Thanks for spending the time. Thanks for the great coverage. All right, CUBE. All right, great to see you. Michael Dell here on theCUBE at VMworld 2018. I'm John Furrier with Dave Vellante, more live coverage after the short break. Stay with us. We've got full day two and day three coming. Two CUBEs here in Las Vegas. Stay with us. We'll be right back.