Michael Dell, Dell Technologies | VMworld 2018
From. Las Vegas. It's the queue. Covering. VMworld, 2018. Brought. To you by VMware, and its ecosystem, partners. Hello. Everyone welcome back to the cubes live coverage, here for day two we're kicking it off for, Walter welcomes three days of cube interviews, here in the VMware, village VM. World village I'm John Faraday, Volante our next guest is special guest cube alumni Michael tell CEO Dell, technologies, founder, of Dell Michael, Dell named, after the company great to see you again thanks 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 two. Teams. Going here at the same time right isn't it tremendous. Coverage thank you great community, what's interesting is it's 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 know you look back just four years ago the the cloud and who's doing cloud who wasn't doing cloud anyone'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 clouds gonna be be, there and, but, the role of infrastructure. Hasn't, changed so at the end of the day you. Made a big bet don't take 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 in, a cloud world so it's not like anything's really change it's just a rearranging, of the resources, your thoughts on on this trend and your bet on infrastructure. It's a it's a data economy all. 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, and data, overlay. On top of that all the new computer, science, that. Requires, all kinds, of new infrastructure. 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. You know from customers, and partners around the world and, look. You. Know the the you. Know every business is, increasingly. Recognizing. The importance, of. You. Know technology and, data and, you. Know that requires, you. Know Watson Watson tools and technology, and that's, why we created Dell technologies, right to be the essential infrastructure. Company and. You. Know it's it's working well it's actually working better than we thought it would work right so it's. All good guys well, you know my old boss who might think you know Pat McGovern used to say that 90% of mergers and acquisitions, fail to meet their objectives 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 had you were relevant in other areas where you were number one to.
Like Number one and all the magic quadrants. And in record. Time is one of the most amazing transformations. I've, ever seen so your thoughts thank you you're, welcome but I really, like to understand, you. Know what were the conditions that, allowed you to do it obviously you, know they say it's better to be lucky than good you're both good in there's some 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 all right right. And. And, and, along, with it. You. Know VMware. And pivotal. Right and, we. Theorized. And. Actually as you guys know this this story goes back a long way right it actually goes back to 2001, when Dell DMC, started, working together, when. You, know VMware. It was just a little - it was you. Know when. Santi showed the slide about the server virtualization. Actually. Before be, aware we're servers Laysan it was works lease today for sure, and we were at investor, VMware we and we thought that was cool anyway. So, fast-forward to mm. You, know 13. We go private. 2014. Joe, touchy and I, restart. The discussion, that we had earlier, back in 2009, about, combining, together. 2015. We announced, it and we, we thought that if. We. Could combine. Everything. Together that. Customers. Would you. Know really, liked. It and. You. Know thankfully as, as. We found. That's. Been true it's been more true than we thought and and, and. The, innovation, engines are cranking on high you know twelve point eight billion dollars, 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 was just getting stronger and stronger. We. Never believed, that you, know everything, was gonna go one place or the other okay. It's. Actually great that the edge is booming, now if he said did you know that five or ten years ago I didn't, really know but. But you, could kind of see some things, starting, to happen. But. Now look, you. Know 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 yeah we where we credible, people right, you know the the the 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 started on the queue we comment about the synergies that were probably unrealized, or unrecognized, by others you actually saw that but, then also this 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 it's the man in the arena you know and and not everybody wanted to take the risk and and you. Know I. I'm. Happy to take some risk yeah but the rewards are looking good I mean you're home about you I mean if, you keeping score which I'm sure you are the, numbers are looking pretty good so, there's. A bit good this is the financial side of it and then, also risk reward payouts, are also part, of the entrepreneurial, they, if you look at our in our last quarter, you know gap. Revenues, up plus, 19 percent non gap revenues, up 17, percent data, center is G business, up 25. Percent right. I mean we're clearly guinea chair number, one in storage, in all-flash, in as. You. Know in backup and data protection and, every category of, storage, unstructured. You, know you. Know we're bigger than number two and number three, at number four all combined, together number. One in servers right. Number. One in, virtualization. And in all flavors you saw what, patent showed you know with the progress with NSX, with workspace, one obviously. Server virtualization. You. Know number, one in client. As well I 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 at 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 I think the industry, is, stronger. Than people understand. That's. The first point I think there's this data economy and, the. Tsunami, of data, that's being created and that's driving demand for, infrastructure. Products, and solutions which, we have the best the world and then, on top of that we're, gaining share these, market forces together, is it's, it's a good news story and the market force you mentioned that really were something that I think a lot of people in the industry at the time than you were do can time cleaning the deal and we talked privately about this I want to kind of bring this up here in the cube 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 talk privately, many. Times but one time we were talking about the maturity and size of the on-premises. IT market. It wasn't there all I teased that is dying topping it's like huge, I mean it's massively, mature so and we talked privately about that that's something a lot of people missed they didn't miss that the size of the market was so big yeah might have been you know flat, but it's 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 now and. So you know I've 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 what when we announced, you know 2015. Everybody. Was like what. What are you doing alright so why are you doing that you know and now. It's kind of like that. Seems like a really, good right. So. Look, I, I'll. Tell you what I think is maybe not so obvious, right now, although. I think people are starting to figure it out this boom on the edge I think the edge will be bigger than, the cloud.
The. Private cloud the public cloud that says it the edge will be bigger what are some the tell signs on that okay. Very very simple go. To arm, all. Right and say, how many micro, processors, and sensors and controllers have you sold a hundred. And twenty, billion. Okay. Seven. Billion people the world 120 billion that's already, sold. Okay, this isn't the next five years or ten years the numbers are early gonna 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 reef actors, the economy, and the explosion, and data as a result, oh my. God, so. Edible. 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 you know look, at like a tensor flow you. Know we you know let's. Just go back to our last, quarter, right server. A networking, business grew plus, 41%. Well. Server, networking business has grown 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 it's all working quite well you mentioned and we're we're uniquely, positioned you, know as Dell technologies, to. Be the, best. Choice for customers, either store for all this I got I want to drill, down on the IOT edge bloom gun the Telus on you mentioned it's really interesting I like that but also I want to tease out what Pat Gelsomina said on stage yesterday he said you, know IOT, cuz you know we're kind of critically IOT not super critical but it's assuring. But this there's no real products yet available in the true sense but Pat said it's. Being connected now so, you mention 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, yeah that's right a IAP some IT side AI in, apps, and path 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. Gonna be connect, they have phones and there's gonna be 1.2. Trillion right it's, just gonna keep growing, you. Know in five, years ten years is good 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 this is reinforcing, itself you know this at the center of this there's a relatively, simple thing that's, happening right it starts. With data yes all, 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 the, cycle is going much faster starts, with data with. Your data you, make better. Products, and services, all. 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, you 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 in that wheels just spinning faster, and faster and faster and it's not gonna slow down talk, about networks, and, and I there's, a metaphor I like the metaphor of networks of data and. You're talking 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.
And Retail. And. And you. Know, anybody. 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 I'm perfectly, willing to step into that opportunist. So. I'll see you doing well on the on the upside of the Risty you're taking but I think the operating models interesting you mentioned I mean cloud and DevOps flipped everything upside down, you know we're apps are now programming, networks what, you're talking about data is a sideways, force coming in that's disrupting, eyeties footprint. As well, as the operating model I think this is what I think is compelling with this new flywheel between, cloud mobile, ml AI and, edge is that that. Integrated. Flywheel. Is, this. Is virtuous circle more compute, faster access to data effects there's the data better, in a better AI so bettered more data more accurate data better AI that, circles around that's a flywheel this is coming sideways it's not an upside down this is just a and, 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 a autonomous. Fashion and they, can decide exactly where, to put workloads, based on security. Performance. You. Know cost. You. Know. Etc. Right and. It'll be a work load dependent, type discussion, and you, know again with pivotal, at VMware, deli, MC, we, are really, well positioned to, help, our customers with that so I can ask you so if 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 right. And we're seeing the evolution of the 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 say yeah exactly, and, you know secure, work who me right and so, you know if you've got a business that's you know close to 90 billion dollars and it's growing at you, know 17. 19 percent you. Know you, don't really sit around and say hey let's change a bunch of stuff right. 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, how, all that's working you said on the cube here that VMware. Is the crown jewel of Dell. Technology, obviously you can see the results elaborate. On that now give, us them 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 from, the 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 as 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 as going to a whole nother level. Update. The update is on the crown jewel status, of, um we're so. You know within the within the world of, infrastructure. In. In in in the in the software domain and 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 and it's it's the highest it's, ever been until. Next year right and just, to go back and look at Pat's keynote. And the. Things. That have been rolled out and, and you know we're we're, completely, tightly. Aligned, you know as adult, technologies, family, so, the. You know VMware. Is at the center of everything, we're doing in all the areas that we've 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. In and engaged and that's been an important part of VMware as success, from the beginning and will be forever, but we used to laugh out loud belly, laugh when people said you were gonna sell VMware, I mean it was like that made no sense but it's given you incredible, financial flexibility. Its throws, off cash it's a counsellor nearly I think roughly half of the profits, and now your ticket of the 11 billion dollar 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 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 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 it's. Got a great premium and, and, exactly. And that that, that. You. Know retiring the stock it will 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. You, know independence, and. You. Know when I would tell you if you got any further questions, we, have SEC, filings, you could refer to those we've. Got all kinds of answers it in those that we have an investor, Day coming up you know in September. Where you know what we'll go into more detail is that at HQ the investor day is that in New. York sin well, products try value value provides. Customers really to pay you for those value services that's called the business model you've got a good one going on congratulations. Graduates on the great bet and it's great to see the results and it's fun to keep in touch thanks for coming on the cube really attract you guys very much thank you thank you feeling the time of the great covered all right, great to see you Michael, Dell here on the cube at be emerald 2018, I'm John Farrar here with DES Volante more live coverage as the show break stay with us we got full day two and day three coming, two cubes here in Las Vegas stay, with us we right back.