>> Live from Las Vegas
it's theCUBE!
Covering VMworld 2018.
Brought to by VMware and its ecosystem partners.
>> Hello everyone, welcome back theCUBE's live coverage
here for day two, were kickin' it off,
for wall-to-wall coverage,
three days of CUBE interviews here
in the VMware village, the VMworld village.
I'm John Furrier with Dave Vellante,
our next guest is a 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 comin' 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
two teams goin' 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 years keynote
which I thought was pretty interesting.
You know you look back just four years ago
the cloud, and what was doing cloud,
who wasn't doing cloud, and everyone's throwin' 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,
but the role of infrastructure hasn't changed, so,
at the end of the day
you made a big bet,
going 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,
and so it's not like anything's really changed
it's just the 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 you know yesterday, 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
you know from customers and partners around the world and
look
you know the
you know every business is increasingly
recognizing the importance of
you know technology and data, and,
you know that requires lots of new tools and technology,
and it's why we created Dell Technologies, right,
to be the essential infrastructure company
and you know 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
failed to meet their objectives,
so then we have 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 super power obviously in client,
and you were relevant in other areas,
but you weren't number one.
To like number one in all the magic quadrants and
in record time,
it was one of the most amazing transformations
I've ever seen.
>> Thank you, thank you.
>> You're welcome, but,
I'd really like to understand, you know,
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 and there's probably some luck involved.
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. (all laugh)
>> 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 and EMC started working together,
when VMware it was just a little,
you know, when Sanjay showed the slide about
the server virtualization;
actually before VMware was server virtualization
it was workstation virtualization.
>> Workstation, that's right. (laughs)
>> And we were an investor in VMware,
and we thought that was cool.
Anyway, so you fast forward to 2013, we go private,
2014, Joe Tucci and I
restart the discussion that 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 really like it.
And, you know, thankfully as we've found
that's been true, it's been more true than we thought, and,
and the innovation engines are crankin' 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, 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 (laughs)
but you could kind of see some things starting to happen.
Look, you know distributed computing
will be even more distributed in the future. (laughs)
>> And so you had good products,
you had a great combination, that makes a lot of sense,
and you know we were. >> And incredible people too,
>> The team.
>> The quality of the talent that we are blessed with
is amazing, and it's a flywheel,
because you can attract the people,
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 they 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 the other side of the equation
of the financial opportunity,
you took a 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,
I'm happy to take some risk.
>> Yeah, but the rewards are lookin' good, I mean,
I mean if you're keepin' score,
which I'm sure you are,
the numbers are lookin' pretty good, so.
>> This has been good.
>> There's the financial side of it,
and then also risk/reward payouts
are also part of the entrepreneurial thing. (laughs)
>> Yeah, 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%, right?
I mean we're clearly gaining share,
number one in storage, in all flash, in NAS,
you know in backup and data protection;
and every category of storage unstructured,
you know, we're bigger than number two,
and number three, and number four,
all combined together! (John laughs)
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 revenue, 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's this data economy,
and this tsunami of data that's being created,
and that's driving demand for
infrastructure products and solutions,
which we have the best in the world,
and then on top of that, we're gaining share.
>> These market forces are interesting.
>> So all of this together is,
it's a good news story.
>> And the market forces you mentioned
that really were somethin' 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 on theCUBE,
way back when.
The industry pundits were looking at the industry
almost like a siloed map of TAM,
total addressable market.
And these other forces,
if you factor those in as a market force,
it changes the analysis of what you talk about,
and we talked privately many times,
but one time we were talkin' about
the maturity and size of the on-premises IT market,
it wasn't "Oh, IT's dying!" It's like huge! (laughs)
I mean it's massively mature, so,
and we talked privately about that;
that's somethin' that a lot of people missed,
they didn't miss that the size of the market was so big,
might've been you know flat, but it's a ature market,
but then these outside forces transform,
and now the deal with Amazon highlights
that bet. >> It's a two way street,
now it's goin' the other way.
And look, if it's obvious,
there's probably no opportunity, right? (laughs)
And so, you know I've kind of made my life of
doin' stuff that maybe wasn't quite obvious to everyone,
okay fine, that's just how it goes.
So, maybe it wasn't obvious to everyone,
and I remember when we announced,
you know in 2015,
everyone was like "Whoa, whoa, what are you doing?"
right, so why are you doing it?
And now it's kind of like oh,
that seems like a really good idea, right? (John laughs)
Look,
I'll tell ya what I think is maybe not so obvious right now,
although I think people are startin' to figure it out,
is boom on the edge,
I think the edge will be bigger than the cloud.
The private cloud, the public cloud, the SaaS,
the edge will be bigger.
>> And what are some of the tell signs on that?
How can you tell?
>> Okay. Very very simple,
go to ARM, and say how many microprocessors,
and sensors and controllers should be 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;
and 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. (laughs)
>> So that's a-
>> 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 boom for the data center.
So, edge is maybe one reason why, but,
perhaps there are others, your thoughts?
>> Well it's, you know,
look at TensorFlow, you know we,
let's just go back to our last quarter, right?
Server and networking business grew plus 41%.
Well if server and 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-defined data center,
cloud is an operating model not just a place, right?
And, you know, again,
you know big growth in our appliances,
you know taking all the innovations of VMware
and expressing those in
you know consumption models and
you know making it easy for customers to deploy,
it's all workin' quite well.
>> You mentioned the-
>> And we're uniquely positioned
you know as Dell Technologies
to be the best choice for customers.
>> Yeah, you're the store for all of us.
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,
'cause you know we're being kind of critical of 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,
you know that from the PC game,
everyone should have a PC,
now everyone's got PC's and laptop's;
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.
>> Yes, that's right.
>> AIOps 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. (laughs)
>> And there's going to be 1.2 trillion, right,
it's just going to keep growing.
You know in five years, in 10 years,
it's going to be way way more,
and then you got 5G coming,
and it'll be node-to-node connection.
And so, yeah, and then you overlay the AI,
it's, all of this is reinforcing itself.
You know at the center of this
there's a relatively simple thing that's happening, right?
And 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.
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 the network connectivity,
and then you insert AI and machine learning
and neural networks, you know etc, 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 causing a renaissance. >> You talk about networks,
and I, 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,
that's why there'll be a boom on the edge;
we're already seeing it in manufacturing, in retail,
and you know,
anybody that thinks that
everything's goin' to the center of the universe somewhere,
it's jut not right.
But hey look,
when there's some disagreement there's opportunity,
and I'm perfectly willing to step into that opportunity.
>> Opportunist! (all laugh)
>> So obviously you're doing well on the upside,
and the rest of your take,
and what I think the operating model's interesting,
you mention that cloud and DevOps
flipped everything upside down,
where apps are now programming networks.
What you're talking about with data
is a sideways force coming in,
that's disrupting IT's footprint
as well as the operating model,
and I think this is what,
I think it's compelling what this new flywheel between
cloud, mobile, ML, AI, and edge,
is that that integrated flywheel
is this vitreous circle.
More compute, faster access to data,
faster access to data, better AI.
So better, 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, cost,
you know, etc, right?
And it'll be a workload dependent type discussion.
And you know again,
with Pivotal, with VMware, with Dell EMC,
we are really well positioned
to help our customers with that.
>> So I got to ask you, so if,
what you just described, to me, is a new era,
it's not a cloud of remote services anymore,
it's this ubiquitous, intelligent platform;
and it feels like it requires a new brand. (laughs)
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? (laughs)
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've been part of
the companies history, in the form of VMware,
and Dell EMC, and Pivotal, and so.
>> RSA.
>> Exactly. SecureWorks,
and Boomi. >> Boomi, yeah.
>> And so, if you've got a business that's
you know close to $90 billion,
and it's growing at 17, 19%,
you know you don't really sit around and say
"Hey, let's change a bunch of stuff!" Right? (all laugh)
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's the crown jewel of Dell Technologies,
obviously you can see the results.
Elaborate on that now,
give us the updated answer today, 'cause obviously,
you look at some of the things that are goin' 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 great go-to-market from what we're hearing.
And then the senior managements are involved
in both levels of those companies.
So VMware actually is interesting position
in going to a whole nother level.
Update us on the crown jewel status of VMware.
>> So, you know within the world of infrastructure,
in the software domain, a software-defined data center,
you know 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,
'til next year, right? (laughs)
Just go back and look at Pat's keynote
and the things that've been rolled out,
and you know we're completely and tightly aligned
you know as a Dell Technologies family, so.
You know VMware is at the center of everything we're doing,
in all of 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, (John laughs)
but it's given you incredible financial flexibility,
it throws off cash,
it accounts for 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 goin',
you're obviously comfortable there,
you're a well run company.
Your thoughts?
>> So, you know,
I've been doin' this for almost 35 years (laughs)
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 Technologies so that the,
we have a proposed transaction, which you've seen.
The proposed transaction will have the effect of
retiring the tracking stock,
which we created in the combination.
>> At a great premium.
>> Exactly.
And that,
you know, 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.
You know, what I would tell ya,
if you've got any further questions
we have SEC filings, you can refer to those,
we've got all kinds of answer 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 at HQ, the investor day,
is that in New York?
>> That's in New York City.
>> Well, products drive value,
value provides customers the ability
to pay you for those valued services,
that's called a business model,
you've got a good one goin' 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 comin' on theCUBE, really appreciate it.
>> Yeah, congrats!
>> Thank you guys very much, thank you.
>> Thanks for spendin' the time.
>> Thanks for the great coverage. Alright.
>> Great to see ya.
>> Michael Dell here on theCUBE at VMworld 2018,
I'm John Furrier with Dave Vellante,
more live coverage after this short break, stay with us,
we've got full day two and day three coming
two CUBE's here in Las Vegas, stay with us,
we'll be right back.
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