>> from the Silicon Angle Media Office in Boston, Massachusetts. It's the cue now Here's your host Day Volonte. >> Hello, everyone, this is David lot. They fresh fresh off the red eye from VM World 2019. And what I wanted to do was share with you some analysis that I've done with our friends at E. T. R. Enterprise Technology Research. We've begun introducing you to some of their data. They have this awesome database 4500 panel, a panel of 4500 end users end customers, and they periodically go out and do spending surveys. They've given me access to that spending data and what I wanted to do because because you had a number of companies announced this this quarter, I wanted to do a storage drill down so pure. Announced in late July, Del just announced yesterday late August. Netapp was mid August. HP was last week again late August, and IBM was mid July. So you have all these companies, some of which are pure plays like pure netapp. Others of you know, big systems companies on DSO. But nonetheless, I wanted to squint through the data and share with you the storage spending snapshot for the second half of 2019. So let's start with the macro. >> What you heard on the conference calls was some concern about the economy. There's no question that the tariffs are on people's minds, particularly those with large exposure exposure in China. I mean, Del obviously sells a lot of PCs in China, so they're very much concerned about that. IBM does a lot of business there, pure, really. 70% appears business roughly is North America, so they're not as exposed so But the macro is probably looks like about 2% GDP growth for the quarter i. D. C. Has the overall tech market growing at two ex GDP. Interestingly, a Gartner analyst told me in May on the Cube that there is no correlation between GDP and I t spend, which surprised me. Some people disagree with that, but But that surprised me. But nonetheless, we we still look at GDP and look at that ratio. Sometimes the other macro is component costs for years. For the storage business the last several years, NAND pricing has been a headwind. Supply has been down, it's kept prices up. It has kept all flash arrays more expensive relative to some of the spinning disc spread the brethren something that we thought would attenuate sooner. It finally has. Nan pricing is now a tailwind, so prices air coming down. What that does is it opens up new workloads that we're really kind of the domain of spinning disk before big data kind of workloads is an example. Not exclusively big data, but it just opens up more workloads for storage companies, particularly Flash Cos The other big macro we're seeing is people shifting to subscription models. They want to bring that cloud like model to the data wherever two lives on Prem in ah, hybrid environment in a public cloud and company storage companies trying to be that that data management plane across clouds, whether on prime it. And that's a That's a big deal for a lot of these companies. I'll talk a little bit more about that, so you're seeing this vision of a massively parallel, scalable distributed system play out >> where >> data stays where it lives. Edge on Prem Public Cloud and storage is really a key part of that. Obviously, that's where the data lives, but you're not seeing data move across clouds so much. What you are seeing is metadata, move and compute. Move to the data so that type of architecture is being set up. It's supported by architecture's, not the least of which are all flash, and so I want to get into it. >> Now I want to share with you some data on this slide. If you wouldn't mind bringing it up. Alex on spending momentum. So the title size spending moment of pure leads, the storage packs and what this shows is the vendor on the left hand side. And it essentially looks at the breakdown of the spending survey where e t r ask the buyers of the different companies products. What percent of the spending is going to go toward replacing? They're gonna replace the vendor. Are they gonna decrease? Spend. That's the bright red is replace. The sort of pinkish is decreased, the spending. The gray is flat. The sort of evergreen forest green is increase in the lime. Green is ad, so if you take the lime green in the forest, green ad and the grow on you subtract the rest. You get the net score, so the higher the net score, the better. you can see here that pure storage has the highest net score by far 48%. I'll show you some data later. That correlates to that when we pull out some of the data from the income statements. >> So this is Ah, the >> July 2019 spending intention surveys specifically asking relative to the second half what the spending intentions are. So this looks good for pure on again. I'll show you Cem, Cem Cem Income State income statement data that really affirms this Hewlett Packard Enterprise actually was pretty strong in the spending survey. Particularly nimble is growing HP Overall, the storage business was was down a little bit, I think, three points, but nimble was up 28%. So you're seeing some spending activity there. Netapp did not have a great quarter. They were down substantially. I'll show you that in a minute. On dhe, it looks like they've got some work to do. Deli M. C. I had a flat quarter. Dell has a such a huge install base. They're everywhere on DSO. Everybody wants a piece of their pie. Del. After the merger of the acquisition of the emcee, their storage share declined. They then bounce back. They had a much, much stronger year last year, and now it's sort of a dogfight with the rest. IBM IBM is in a major cycle shift. IBM storage businesses is heavily tied to its mainframe businesses. Mainframe business was way, way down, its overall systems. Business was down, even though power was up a little bit. But the mainframe is what drives the systems business, and it drags along a lot of storage. IBM has got a new mainframe announcement that it's got to get out. It's got a new high end storage announcement that it's got to get out, and it's really relying on that. So you can see here from the E T. R data, you know, pure way out ahead of the pack continues to gain share about over 1000 respondents to this. So a lot of shared accounts by shared accounts mean the number of accounts that that actually have some combination of multiple storage vendors. And so they were able to answer this 1068 respondents pure the clear winner here. Now let's put this into context. So the next slide I want to show you some of the key performance indicators from the June quarter off the income statements. >> So again you see, I get the vendor. The revenue for the quarter of the year to year growth for that quarter relative to last year. The gross margin in the free cash flow, just some of the key performance indicators that I'd like to look at. So look at pure Let's go, Let's go to the third column Look at growth pure 28% growth. Del flat 0% for this is just for storage. There's a storage growth. NETAPP down 16% end up in a bad quarter, HP down 3%. IBM down 21% Do due to the cycle that I discussed, You see the revenue, um, pure, growing very, very fast. But you know, from a small base or at 396 million versus compared that to Dell's 4.2 billion net APs 1,000,000,000 plus H p e. Almost a billion in IBM not nearly as large. And then look at the gross margin line. Pure is the industry's leading gross margin. It's just slightly above 69%. Dell is a blended that Asterix is a blended gross margin, so it includes PCs, servers, service's of V M wear, everything and, of course, storage. So now, when dehl was a public company before it went private, it's gross. Margins were in the high teens. So Del is in gross margin heaven with with both E, M C and V M wear now as part of its portfolio NetApp high gross margins of 67%. But that gross margin is largely driven by its gross margins from software and maintenance. And so that's a screen considerable contributor. Their product gross margins air in the mid fifties, kind of where I think E. M. C. Probably is these days. And when the emcee was a public company, it's gross. Margins were in the mid sixties, but then, as it was before, went private. I think it was dipping into the high fifties as I recall you CHP again, that's a blended gross margin, just roughly around 34%. I don't have as much visibility on their their storage gross margins. I would I would say they are below, in my view, what DMC and net out well below what Netapp would be on then IBM. That's again blended gross margin includes hardware. Software service is 47.4% probably half or more of IBM businesses. Professional service is on. IBM has, of course, a large software business as well. So and then the free cash flow you can see pure crushing it from the standpoint of of gaining share, I mean way, way ahead of the other market players, but only 14 million in free cash flow. So coming from a much, much smaller base, however pure, is purely focused on storage. So there are Andy. All their R and D is going into that storage space. DEL. Free cash flow very large. 3.4 billion that again is across the entire company. Net App. You can see 278 million h p e 648 million great quarter for HP from a free cash flow standpoint, I think year to date they're probably 838 140 million. So big Big quarter. For them. An IBM A 2.4 billion again. Dell, HP, IBM. That's across the company, as is the gross margin. So the the spending data from E. T. R. Really shows us that pure, strong Aziz showed you that very high net score and the intentions look strong, so I would suspect pure is going to continue to lead in the market share game. I don't see that changing. Certainly there's no evidence in the data. I think I think everybody else is in a sort of a dogfight del holding firm, you know, 0%. You'd like to see a little bit of growth out of that, but I think Del is actually, you know, Dell's key metric is, Are we growing faster than the market? That's that's they're sort of a primary criterion in metric for Dell is to grow faster than the overall market because that means you're growing some share. I think Del is comfortable with that. Della's gross margins actually were helped this this quarter by the fact that Dell server business was down 12%. There was a higher storage mix, so it propped up the margin a little bit. But again, generally speaking, it looks like pure is the market share winner here, but much, much smaller than the other guys. HB limbo very strong, and it shows up in the survey data from E T. R. And an IBM just needs to get a new product cycle out. So we'll come back. >> We'll take a look at this in in in in January and see how you know what it looked like and will continue to fall. Obviously, the income statement and the public reporting pure accelerate is coming up next month. Justin in mid September. I have no doubt, you know, pure has been first in a lot of different areas, right? They were first really all flash Ray. The only all flash. You're a company that ever reached escape velocity. They were they in Nutanix for the first kind of new $1,000,000,000 companies that people said would never have a billion dollar company. Pure is a pure play storage company, you know? Well, over a billion. Now, you know, they were first with that evergreen model. They made a lot of play there. You know, the first with envy, Emmy and first with the Nvidia relationships with Superior likes to be first. I have no doubt and accelerate next month down in Austin, curious that they picked Austin in Dell's backyard. I have no doubt that they're gonna have some other firsts at that show. Cuba be there watching just off of the emerald, the other big player here. Of course, that I'm not showing his v. San visa is very, very strong. You know, the D. E. T. Our data shows that, and certainly the data from the income statement shows of'em were NSX, the networking products, their cell phone to find network in their self defined storage of the the the V San. Very, very strong Pat Girl singer on the Cube. We asked him last week, Thio, take us through. So if someone has big memories and one of them was sort of East san, Excuse me. One of them was V San, and the board meeting at with Joe Tucci was on the Vienna where board really put a lot of pressure on Pat's and you can't do this to me. It's funny. Emcee had the shackles on the M, where for a number of years, but the shackles are off and visa is very, very strong. So these are some of the things we're keeping an eye on. Thanks for watching everybody busy day Volante, Cuban sites. We'll see you next time