>>The cube presents, Dell technologies world brought to you by Dell. >>Welcome back to Dell tech world 2022. This is the cube alive. My name is Dave Volante. We're here with our wall to wall coverage. This is day two. We actually started last night. Uh, the, the cube after dark John furry is here. Lisa Martin, Dave Nicholson. We're gonna talk about apex. The business value of apex flex on demand. Darren fedora is here. He's the senior vice president of Dell financial services, and we're joined by a customer and a partner Jud Barron is R and D infrastructure architect at Silicon labs. And Steve end is the regional VP of copy center comp computer center. I say that like I'm from Boston guys. Welcome to the queue. >>Thank you, >>Darren, take us through what's going on with, with apex, you got custom solutions, you know, people are gonna ask, is this just a financial gimick? What is this? >>No gimmicks, no gimmicks, Dave. So I think when we think about technology, historically customers purchased, they bought and they owned and they may have financed it and paid over time, but it was really an ownership model, especially in infrastructure and apex is about subscription. So think about Dell apex, as you can either buy, or you can subscribe to your technology and under apex subscription, we have options for custom based solutions or an outcome base. And I know today we're gonna talk about flex on demand and, and custom based solutions. So it's a high level pay for what you use when you use it with a high level of choice and flexibility. All >>Right, Steve, I'm gonna ask you to play little >>Co-host all right. I like >>This. Okay. So add some color color commentary, Jud, tell us a little bit about, uh, Silicon labs. I'm really interested in what your requirements were, your challenges and kinda why you landed on, on apex. Sure. >>Uh, Silicon labs is a semiconductor company were headquartered in Austin, 10 Xs, uh, just under a billion dollars a year right now. And, uh, at any ed shop or, uh, that, that people who are doing electronic design automation, that's not just in the semiconductor industry, but we have these HPC farms who are running, you know, millions of jobs a day. And the, a balance that you have to strike when you're doing capacity planning in one of these environments is we have these things called tape outs, and that's where we're finishing a project and there's a much higher volume of jobs that we have to run and you have to decide, do we buy for peak or do we, you know, come under that some amount and say, oh, we're gonna buy 80% of what we think >>As an over, over, over under, right. Do we over buy for peak normally, right, correct. Right >>Hard. One is geo Overy the under buy. It's always a hard decision. >>There's a tradeoff. Right? And, and so the, the challenge there is that you'll end up kind of linking the time and potentially miss a tape out window. And there's costs associated with that because you work with the Foundry and you kind of schedule based off that tape out when you're gonna deliver the photo mask to them. So anyway, the point is we in the past using a traditional like camp X, we're gonna buy a bunch of servers. We, we tend to undershoot whatever our peaks are. Cause we may have a peak every couple of months during, you know, these tape outs. Uh, but you know, sometimes tape outs, slip. And so one slips two months, another one comes in a little bit early and now you have multiple tape outs in the same months. And what was gonna be a, a small, uh, difference in from peak to what you actually purchased ends up being a big peak. And, uh, the thing that was interesting to us about flex on demand is the ability to have a commit rate that, you know, the customer can work with Dell financial services to figure out is that 80% is at 60% whatever. And they give us additional servers that we pay just when we're using them. Now I'm somewhat oversimplifying the process. Um, but we're, we gotta talk about that, >>But, but the point is, if I understand it correctly, that infrastructure was dominoing the, the time to tape out in a negative way, and you you've been able to address that more cost effectively. >>It, it can, it, it has on occasion. And so this, this basically gives us a way to lever to pull, to say, well, we can spend some additional OPEX this month and open up this additional capacity. So it's not like bursting to the cloud. Exactly. Uh, because I mean, you have to have the equipment in your data center already for you to be able to use it. But, um, it's under a traditional acquisition model. It's, it's just not a, a, a thing that was available to us before and looking at leasing or other types of, uh, you know, financing was wasn't really attractive previously, but the flex on demand model, when we first heard about it, we're like, that's very interesting. Tell me more. And we ended up using it in, in Austin, and then we built a whole data center in Asia and did the whole thing on flex on demand and >>Got it. Okay, Steve, uh, talk a little bit about your role what's going on at, at computer center and you know, why apex give us the background? Yeah. >>Um, computer center is a, one of the largest global VAs on the planet, right? Um, we, we have a lot of global and international reach, but at the end of the day, it's about one on one customer of relationships. Um, talking to them, understanding what their challenges are. And we've had a multiyear relationship with Jud. I've known you for a long time. And, and, um, typically that relationship, or initially that relationship was about collaborating, working hand in hand, kind of figure out what the solutions were that best fit their environment to solve their issues they need. And it was typically a procurement, a, a purchase based relationship and, and it worked well for a long time, but it, when Jud posed the challenge to us about kind of more pay as you go, uh, uh, subscription based modeling for, for how he want to do acquire in the future. >>Um, we just, we huddle with the Dell team collectively, um, and, and talked about what we could offer and how we could solve the problem. Uh, apex is a really nice brand today, but this was two and a half years ago, Uhhuh. Okay. So it was a little, we were a little early on on putting it together. I feel good that we were able to, to put that type of solution together for Jud and it's, and it's working today, working wonderful today. And it was good for it's good for the whenever it's good for the customer, the manufacturer and the partner altogether. It's a wonderful solution. >>So you took a little risk, but it worked out and you helped. >>Yeah, that was probably the infancy as we were growing our, as a service, think of this, you know, there's a, a lot of big words out there, Dave, right? As a service utility cloud, it doesn't matter what it is super cloud it's super cloud. It doesn't really matter. Super. This is really Jud was talking about a really important element, which is around flexibility choice. There's uncertainty oftentimes in a, in an environment, but they want to control. They still want have a level of control and leveraging partnerships, being able to deliver flexibility and choice. Don't worry about the words. Don't worry about cloud utility as a service we end up solving the customer need, right? And when we talk about flex on demand, I'll give you a little bit deeper into flex on demand. So when we think about flex on demand, it really is about understanding the customer needs and our capability and Jed reference this, determining what a baseline is. So if you think about your own utility bill, right, you, you go home and even if you're on vacation for a month, I'm sure you went on vacation for a month right. Month at a time. If I ever. >>Yeah, >>I know, but if you leave you your utility bill, even if you don't turn on a light, you still get a utility bill, it's your baseline. So we, we determine a baseline with our customers, with computer center, to understand in your environment, you're gonna use this minimum amount and that becomes your baseline. And that baseline can go as low as 25%. And up to 80% in a environment, it usually is typically in this 70, 80%. And then we determine what is gonna be optimal based on that 25 or above we charge based on the usage on a day to day basis, average by a month. And if you go up one month during your peak, you get charged at that peak. If you then a couple months are lower, then you're gonna pay only for the usage. And so for a customer that's growing has variability or seasonality. >>Um, this is a great model cuz they can still control their environment either within their own domain or um, in a colo. They also have the capability to pick anything within the Dell ISG catalog, any product, configure it to meet their environment, be able to work with a trusted partner like computer center. That it's a solution based on a partner relationship and delivers choice and flexibility on the catalog of anything Dell sells within your control of how you can configure it. So it gives this ability to say, instead of buying and instead of paying a predictable payment, a I E a financing I'm gonna pay for use. Yeah. If I turn on my light switch more or if it's during the summer in Texas where I am the ACS a lot higher. So your utilities go up and if you are a much lower because you're on vacation in Hawaii, maybe you've been in vacation in Hawaii for a month, you're gonna have a much lower and you're gonna hit your baseline. Right. So it gives flexibility choice and it gives the control back to the customer. >>Okay. So the whole ISD portfolio. So you're like the tip of the spear for future apex, right? >>We, we, we absolutely are the tip and that's why, you know, Steve referenced a couple years ago as we were still in our infancy, growing, listening to our customers, listening to our partners, we've evolved to become a more robust program, um, 35 countries today. So we can cover 35 countries over the globe, all ISG you products that are sold with a high level of flexibility and it, and it's Jud and feedback over time that we've continued to evolve this program. Mm-hmm >>So Jud you, if I understood correctly, the business impact to you was gonna better predict predictability. You didn't have to over buy or undery and take all that risk. Is that right? You maybe could quantify. Did you ever quantify that? What can you tell us about the, the business impact? Yeah, >>Sure. So, I mean, traditionally we will, uh, base our capacity demands on, uh, complex calculation that effectively just boils down to number of engineers, like head count, uh, and you know, kind of personas within that. And we figure out, okay, well how many compute do we need? And then we say, okay, well how many tape outs are we doing? And when are those tape outs gonna land? And try to figure out which months are gonna be the hot months and the design teams have to kind of vary their tape out schedules so that they don't pile up all into like July or something. And then there's not enough compute capacity. So with, with something like flex on and where I can turn additional capacity on in our HBC farm, it, you know, we just go in and make some changes to the LSF configuration and say, Hey, you know, now you've got these extra nodes available. >>We don't really have to worry about that as much. Uh, in fact, last year we, we ended up with one month where for us, it was unusual. We had five tape outs, uh, at all land within two weeks of one and a other. And they all finished, which in previous years before we had deployed that that would not have been the outcome things we would've had multiple, uh, tape outs delayed. And you know, that that's a seven figure impact for each one of those commits that we miss with the foundries. So it it's a big deal. >>Yeah. That's real dollars. And >>It is. And you know what else, this, as, as Joe's going through this, we all know their supply chain chain constraints, right? And this solves a lot of supply constraints because Joe, if you would be purchasing today, you'd be buying, you're looking at had, and you're actually having to purchase today where if you go into an apex flex on demand, you don't have that full commitment of having to purchase, but you can get ahead of the supply chain. So you can be looking six months in advance, you can be doing capacity planning and I'm Jed. I'm sure you're doing that leveraging. Like what's my future and not be worried about, I have this huge burden upfront. >>Yeah. And I mean, we have two levers right now. One is we have this extra capacity there. I can, you know, pick up the phone and, and call our Dell rep and say, Hey, I'm gonna modify my commit rate. And so now that's, you know, the new baseline I can use all day every day. Uh, and, and, you know, we still have some burstability and then separately, we can say, we want to expand the contract or, or, or, you know, basically acquire more hardware for additional burst or additional commit. Both of those things are, are options. We only had the, we had to go buy it and we need to know when we have to have it available. So you kind of back into this ordering schedule for, uh, you know, like a traditional CapEx purchase. >>So Steve, obviously Silicon labs is, is leaning again. Are you seeing any other patterns in your customer base, uh, where this is being applied? What can you share >>With us there? Yeah, it's it, I believe this is a fairly horizontal solution. Any customer can really utilize it. I mean, traditionally people would buy for two and three years worth of capacity and slowly consume it over time, but you paid up front. Right. That's how it, that's kind of how it worked. Cause I didn't want to go back to the well year after year after year. Right. So, um, you know, and I, and I think, I think if anything, the, the, the cloud, the hyperscalers has, uh, taught the world, some things taught the industry. Some things, you know, in a, in a perfect world customers like to consume and pay for what they use, you know, and in the increments that they use it as much as possible as closely aligned to that as they could get. And what I see, what I see in this, you know, cuz I, I kind of put solu in my role, I'm putting solutions and customers and bringing those together other right. And, and complimenting that with services of our own. Right. But, but what I see over time that, that almost all the manufacturers and Dells does a wonderful job, but almost all the manufacturers will be delivering technology on a subscription basis. So the more I learn, the more I know, the more I understand about how to deliver those and provide those to customers is better off we are >>Because it aligns with business value. And that's what you're seeing Jud correct. >>Steve made an interesting comment in there. Uh, you know, he was talking about the cloud and for us, there's always pressure to say, Hey, you know, can we burst in the cloud? And for Edda workloads, every time we look at this, it's a data problem. It, it, it's not a computing problem for us. EA workloads tend to generate a lot of data and you know, there's a, there are a lot of tools, uh, you know, there's just a bunch of stuff that you have to have available to run those jobs. And so you have to look at that very carefully. The company that I work for Silicon labs has been around for a long time and we have a lot of development effort. That's been put into automating and simplifying things for our design engineering and trying to, you know, manipulate that and make it to where we can burst just certain jobs out to the cloud efficiently and cost effectively. Hasn't really resonated for us. But the flex on demand thing gave a us the ability to kind of achieve some of that burst ability. I mean, not to the same level of scale of course, but you know, we, we can do that at, you know, our own speed in our own data centers with our own data. And we don't have to worry about trying to, you know, peel an onion and put something new together, make it cloud friendly. It's >>Substantially similar. We gotta go. But to Aaron bring us home. >>Yeah. Hey, I think when we think about Dell, it's about listening to our customers and our partners. Mm-hmm <affirmative>, which we continue to do. We continue to evolve our products and, and apex is around choice and flexibility in delivering to customers an option to pay for what they use. It's a great solution. Appreciate the time guys. >>Great conversation. Thanks so much for coming on the cube. All right. Thank you. Good luck. All right. And thank you for watching. This is Dave VoLTE for the cube. We've been back with more wall to wall coverage. John furry, you'll be back Lisa Martin and Dave Nicholson. You're watching the queue >>And.

(upbeat music) >> Welcome back to Dell Technologies World 2021, the virtual version. My name is Dave Vellante and this is theCUBE I'm pleased to welcome Bill Wavro, the president and GM, Dell Financial Services at Dell Technologies. Bill. Great to see you. Thanks for coming on. >> Yeah, thanks Dave. It's really great to be here with you. >> So we heard in Alison Doos keynote, Dell Technologies all in on as a service APEX. She's the executive lead. So really passionate about that. Talk about DFS in that context, you've always had a way to help people shift CapEx to OPEX but what's your specific role regarding APEX? >> Yeah, well, thanks Dave. Look, we're really excited about APEX in DFS we think APEX solutions gives customers access to the broadest range of infrastructured solutions in the industry if you combine that with the Dell Technologies portfolio of ISG technology and solutions, that's a great combination for customers but you asked about DFS and in DFS we've been delivering consumption solutions for over 15 years. So taking a look at the APEX portfolio you can broadly divided into two categories, turnkey, APEX turnkey solutions, like data storage services and then APEX custom solutions like data center utility and Flex on Demand and those custom solutions are with DFS plays. And as I said we've been offering those for over 15 years. We have a lot of experience with customers, what customers are looking for? We have tens of thousands of assets out there today with hundreds of customers that are being metered on a regular basis that we're billing monthly. So we're getting a lot of feedback from customers. And I think the APEX solutions announcements that you heard here at Dell Technologies World are a further expansion of that. They're built on the backbone of what DFS has been delivering for a long time. So we've taken I think the best of those solutions and we've listened to customers, what are they looking for? What do they want? And we've got even new and improved offerings in the current announcement that we made. So, I think when you talk to customers they want a couple of things. They want simplicity. They want to be able to understand how they're going to acquire it and how those payment solutions work and they want choice. And I think the APEX solutions gives customers both of those things. And the good news is they're available on all sorts of ISD hardware be it servers storage, hyper-converged, converged infrastructures. Customers can choose what technology they're looking for and they can create their own demand environment. And the last thing I'll do is a little plug for DFS. We've been in the payment solution business for over 25 years. So we not only offer consumption solutions but we offer traditional leases and financing. And so when you add all that together and you go talk to a customer about technology and how they want to pay for it we think we've got the broadest range in the industry. And we're really proud of that. >> Okay, cool. So you have the two areas that you simplified it. That which is great. You've got that standard off the shelf and then you've got the custom solutions. The standard stuff is like console data storage and then cloud services that breaks down even further. And then the custom, I got my notes, APEX Flex on Demand and APEX data center utility, how do APEX custom solutions differ from those turnkey offerings. >> Yeah. Well, the beautiful thing about APEX is it gives customers choice. So as you mentioned, you have turnkey. So if you think data storage services that's one of our new turnkey type offerings and those turnkey offerings are outcome-based. So think about it as an outcome. What is a customer looking for? Do they want file versus block storage? What sort of capacity do they need? What performance level are they looking for? But it's thinking of those outcomes. And Dell Technology is going to take care of the rest, right? A customer can go to the APEX console and they can review those choices. They can make their selections and then they can turn it over to Dell and we'll deploy that technology, we'll manage it, we'll upgrade it and we'll service it over the life of the term. So the customer can focus on outcomes versus on acquiring and managing technology. So that's the turnkey solution and that's probably the biggest and newest part of our announcement of APEX solutions. And then we have the custom, the custom, as you mentioned data center utility Flex on-demand. That's what DFS has been delivering for many years now. And that's for our customer who wants to select the product. So think of it as a product-based solution where a customer wants to select the technology. They may want to manage it themselves. They may want to have a partner manage it. They may want to include different services. So they're able to put that together in a custom way and satisfy whatever problem they're trying to solve. So we found that many customers are going to want to select that custom solution because they're in a part of their data transformation journey where they still want to control some of that technology and others will want to go the turnkey route. So again, it kind of goes back to the customer choice in allowing them to acquire it the way that they want to acquire it. >> Okay. So like an example might be, I'm just making this up. I'm a financial institution, I'm a big VMAX customer. I got some kind of special process that I use, that I wrote that gives me competitive differentiation because I can get a millisecond faster than my competitor speed or whatever. And I want that I'm not going to take it. That's not part of your turnkey solution but that's part of my value add, I want that but I want your help in sort of customizing that and making it as a service. Is that like reasonable example? >> That's a great example. And so let me talk about that a little bit. So let me give you a couple of examples of use cases and what the products provide. So think about, let's talk about data center utility first because when you think of the data center utility think data center, right? These are the large deployments. They're big customers. They they're most likely a global customer and they want to get out of the data center business, right? They want to get out of the day-to-day management of that and be able to focus on, hey, how do we as I as a CIO deliver value to my business? I want to make a difference in that business strategy. CIO is more and more being asked to help the business and enable that business strategy. And so many of them want to get out of the data center management business and this is where a data center utility product can come in. It allows us to go in as Dell and help that customer manage that data center. So it has the most flexibility in terms of, custom building, custom reporting, very low if any minimum commitments. And one of the best features is we have a delivery manager who's assigned to every account who can help that customer procure assets, manage assets, deal with capacity management. So we really can take over the management of that data center and allow the customers IT group to focus on delivering value to the business. So we think that's a really important aspect of it. And it allows us to manage even existing assets that are sitting out at the customer as well as new purchases. And then back to the kind of example that you gave, where a customer really wants that high performance they have specific hardware in mind. They can also use a Flex On Demand type product so that the customer is able to pick the hardware whether it be servers, storage, converged infrastructure, hyper-converged and they can select the technology that they want to use. They can sign up for a very flexible period of time. So they can go from one year to five years. They may only need this hardware for a limited period of time. Maybe they're working on a project where they're going to need additional storage capacity for the next couple of years, so they can sign up for a two year contract if they want, they can sign up for the commitment level that they want to use. So, one of the great things that customers are looking for is they want that cloudlike operating model. They want to pay for that technology as they utilize it. And they don't want to be locked in to having to purchase a large amount of data if potentially they're not going to use it. So Flex On Demand gives them that flexibility. They could sign up for 50% of a storage arrays capacity and only pay for usage above and beyond that 50%. So it offers customers a lot of choice and a lot of ability to get the technology they want and be a very flexible utilization method as they go forward. >> So, I don't think a lot of people realize that you said very low or no minimum commitments. And so maybe you could explain that a little bit and who owns the asset? >> When we talk about Flex on Demand it is still owned by Dell. So Dell owns that asset and the customer can commit. And we think we have the broadest range of commitment levels in the industry. So if you think about a Flex on Demand type offering and let's say you want to purchase a storage array you can sign up for a 50% minimum commitment. So again, you've got flexibility on the term. So you can go one to five years you can sign up for 50% commitment. So you're going to get a bill for 50% of that storage usage every month but you're not going to get a bill for anything more unless you utilize it. Now, let's say one month you go to 60%, right? So you're going to pay that extra 10% only when you use it. If you go back down to 50% the following month, you don't pay. And let me point something out on this because I think this is where we differ from a lot of our competition. The rate you pay is the same. So it's the same for the minimum commitment level of 50% as it is for the incremental 10% or 20% that you use above that. Some of our competitors have surge pricing. So basically once you go above your commitment you're paying a premium. We don't do that. We've heard from customers. They don't like that. They want it simple. They want to pay one rate per gigabyte throughout the life of that contract. And so we do that. Another unique feature which we kind of just implemented recently is that the max that you can pay is 85% on that storage usage. So if you sign up for a 50% minimum commitment and let's say you use 90% of it so you've got a pretty significant increase off your minimum. We will only charge you up to 85%. And that's a new feature that we added to all our Flex on Demand products recently for future customers as well as previous customer. So you've actually gone back to all our current customers and said, this applies to you even though that wasn't part of the original offering we're going to cap you at that 85% level. And the reason we did that is because a lot of customers love, pay for things as they use them. They're a little uncomfortable on uncertainty of maybe paying too much, right? So we put this in to help protect customers that they wouldn't have to worry about paying more than they expected to. So we think that's a pretty cool feature of what we offer. >> Yeah. So to summarize the features, I got the portfolio, I got the whole portfolio I have access to, I get the flexibility that you just described in great detail and then pricing transparency or certainty. And then the other piece of that is the value the 85% cap. So that's pretty cool. >> Yeah. >> Okay. So you've been doing this for a while. You have data and experience with real customers, with different types of customs solutions. Maybe you could share some of the business impacts and benefits that customers have seen. >> Yeah. Well, let me give you example. So data center utility like we had a large multinational manufacturer who again as I mentioned earlier they wanted to get out of the data center environment. They don't want to manage that anymore. They had a complex data center. It was managed with about 50% of their own internal IT department and 50% with a third-party service provider. They had multiple hardware vendors, multiple third parties providing services. It was very very complex. So they came to Dell Technologies. We took that data center put it into a data center and utility contract. And we took over management of the data center. So it freed up that 50% of their own IT staff to work on other things. It provided value to the business. And then we were able to take that consolidate vendors make it a lot simpler and improve the efficiency of the data center. And that's an important thing. So it's not just about how you pay for it, that you pay for it in a variable manner. It's how efficient can you make that data center? And no one knows Dell Technologies assets and hardware better than us, right? So we were able to create tremendous value by utilizing those assets more efficiently. So they were getting more productivity out of the underlying IT assets. We simplified it for them. And we were able to take their team out of that day-to-day management which is what they were looking for. So there's a great example of a win-win on both sides. And what we've found with these customers is once they go to this kind of model, they stay with it. They like it. And we actually ended up expanding our relationship with these customers. So it's good for us in a lot of ways. And one of the things we didn't talk about earlier is another benefit that maybe isn't so obvious, particularly when you look at a Flex on Demand type product. So let's think about Flex on Demand. One of the things customers are struggling with is how to predict how much data storage they're going to need in the future. There's this huge data explosion going on in the world. We've talked about that many times. And CIO's often have trouble trying to predict how much capacity they're going to need in the future, right? They don't know exactly where it's going to go. And so one of the struggles that they have is when they have a need for that data it takes time to get it available. So if you think about a CIO that all of a sudden has additional capacity they need to add to their infrastructure, it could take 90 days to get that out on the floor. They've got to go through their internal requisition process. They've got to select a vendor, they've got to acquire the hardware to get it all set up. This all takes time. 90 days later is too late. One of the things that Flex on Demand offers is that you're able to get that capacity on the floor and at the push of the button you can have it up and running. So you're not paying for it until you use it but once you do need it you can have it available really quickly. And that's one of the benefits that maybe people don't expect when they use this Flex on Demand product but provides tremendous value for customers. So we've seen that kind of time and time again with Flex on Demand we had a large pharmaceutical customer who went to one of these, had a mandate that they wanted to go to a cloud operating model for all their IT purchases. So they wanted to free up cash flow that was kind of a directive from the top, free up cashflow, let's get out of the CapEx business and Flex on Demand was a perfect answer to that because it freed up the cashflow. They paid for the technology over time and they were able to have this capacity available whenever they needed it. So we've seen that as a tremendous benefit of the custom Flex on Demand model. >> I've done a lot of TCO studies Bill and I'll tell you that the upfront planning, the capacity planning, the asset management, the procurement, these are a big chunk of the labor cost associated with total costs. Okay. So we've got the turnkey with the three components. We've got the custom with the two components. There was a fifth bucket in my notes here which is the partners in the channel. And I'm really interested in how the channel is transforming, no longer can you just be a box seller in the channel. Those days are gone. Made a lot of money doing that, good deal. But, now you got to add value. The cloud has really changed everything there. And of course it's all about the margin and profitability. So talk about the channel. You've always had relationships and how APEX fits with channel partners. >> Yeah, well look Dave, we've had great experience working with our partners. I mean, partners are hearing the same thing from customers that were here, they want a cloud-based type operating model. They want to pay for their technology as they use it. So partners are looking to provide the same value to customers. And we found that working with partners expands our reach tremendously and they have a lot of expertise. So the APEX custom solutions are designed to work with partners. Partners can either sell those for themselves so they can sort of resell our solution to them or they can just refer the business to us. And they're going to get a 20% uplift on the committed contract value for those contracts. So this is really financially attractive to our channel partners. And it allows us to work with those partners to get to more customers, right? And as I mentioned earlier these custom solutions can include services from the partners so we can provide the hardware piece to them. They can add on their services on top of that and they can be the primary relationship with a customer or again they can refer it over to us. So we found that to be a really good value proposition for partners. And we think they're pretty happy about it. I mean, we have an example, RelateCare as a company that supports healthcare organizations around the world. So helping with patient communication appointment scheduling tele-health which is a really big area right now as you know with the pandemic still going across the world this is an area for medics growth. So RelateCare was working with one of our partners, Arc Fire and they needed more flexibility in the data center. And so these APEX Flex on Demand was a perfect solution for that. It allowed them to deliver a secure flexible data center and work with their partner to really improve the service level that was occurring in that relationship. And if you think about it, one of the things we didn't mention is particularly for a lot of healthcare companies and companies and customers who have a high sensitivity around data security and where that data resides. One of the advantages of on-prem solutions like APEX Flex on Demand or data center utility is know where your data is. The public cloud can move the data around often without you knowing about it. And so that security of that assurance that you know exactly where your data is, is really important to a lot of our customers. So its kind of another feature that has been official for customers. And again, we're seeing partners adopt this more and more. And I think over time that is going to continue to grow. >> Yeah. So 20 points on the uplift plus additional services that I can bring in because they have a tighter relationship, in this model, right? The renewal starts when you sign the contract. So it's a much, much deeper relationship. Can the partners, can they white label the service? Is it co-branded? Is it all Dell branded? >> Yeah. Well, they have the choice. I mean, the partner can financially take on the billing and relationship primarily if that's what they would like to do. And again, so that's one of the offerings or they can refer it to us. Many partners they don't have the back end or the infrastructure to do all that billing and collecting themselves. So they prefer just to refer it to us. Another part is at large they do have those capabilities and they want to take on the primary relationships. So we can work with them both ways and we have worked with them both ways. >> Nice. We're out of time, Bill, but give us the bottom line. You've touched on some of this but why APEX over the competition? >> Yeah. Well, look, I think it goes back. The first thing is Dell Technologies, right? Dell Technologies has the broadest selection of products and services means. So you combine that with APEX solutions you've got a win-win, it's unbeatable in my opinion. We also I think have the best range of flexibility in those payments solutions. So you can go from a minimum commitment of 40% all the way up to 85%, you can go one to five years, no surcharges, right? The rate is the rate. The rate goes from the minimum all the way to the maximum. We have the storage cap that I talked about, HCI cap at 85%. So you're going to be capped. So you don't have unexpected costs that you didn't forecast and you can flex up and down, right? So you flex up, you could flex down, some of our competition once flex up you can't flex back down. And that's a real negative in my opinion. And we've got 15 years of experience of doing this. So that's really important. We work with a lot of customers. We've learned a lot during those journeys and we think we're the best equipped to provide you with consumption solutions and as a service solutions that really work with customers. >> Financial flexibility, asset management, the really key part of IT that we don't spend enough time talking about. Bill, thanks so much for coming on theCUBE and sharing your insights. >> Thanks, Dave. Really glad to be here. Thank you. >> All right. And thank you for watching everybody. This is Dave Vellante for theCUBE's continuous coverage of Dell Tech World 2021 the virtual edition. We'll be right back right after this short break. (upbeat music)

from the cube studios in Palo Alto in Boston connecting with thought leaders all around the world this is a cube conversation on June 23rd the Wall Street Journal reported that Dell is exploring strategic options for its approximately 81% share in VMware both Dell and VMware stocks popped on the news we believe that Dell is floating this trial balloon to really gauge investor customer and partner sentiment and perhaps send a signal to the short sellers that you know what Michael Dell has other arrows in his quiver to unlock in case you want to squeeze me I'm gonna squeeze you back who knows hello everyone and welcome to this week's wiki Bond cube insights powered by ETR in this breaking analysis we'll unpack some of the complicated angles in the ongoing VMware saga and assess five scenarios that we think are possible as it pertains to this story as always we're going to bring in some ETR customer data to analyze what's happening with the spending picture let's take a look at what happened and just do a quick recap The Wall Street Journal story said that Dell was considering spinning off VMware or buying the remaining 19 percent of VMware stock that it doesn't own the Journal article cited unnamed sources and said that a spinoff would not likely happen until 7 September 2021 for tax reasons that would mark of course the 5 year anniversary of Dell acquiring EMC and would allow for a tax free transaction always a good thing what's going on here and what options does Dell really have what does it mean for Dell VMware customers and partners we're gonna try to answer those questions today so first of all why would Dell make such a move well I think there's tweet from your own name Marc he's a portfolio manager at one main capital it kind of sums it up he laid out this chart which shows Dells market cap prior to the stock pop you know it's closer to 38 billion today and the value of its VMware owner which is over 50 billion since the stock pop but let me cut to the chase investors value the core assets of Dell which accounts for around 80 billion dollars in revenue when you exclude vmware somewhere south of negative 10 billion dollars why it's because Dell is carrying more than 30 billion dollars of core debt when you exclude Dell Financial Services and it looks like a conglomerate owning the vast majority of VMware shares Michael Dell has something like a 97 percent voting control Cordell is a low margin low growth business and as some have complained that Michael uses VMware as his piggy bank and many investors just won't touch the stock so the stock generally Dell stock has underperformed I've often said even going back to the EMC days that owning the stock of VMware's owner is actually a cheap way to buy vmware but that's assuming that the value somehow gets unlocked at some point so Dell is perhaps signaling that it has some options and other levers to pull as I said you may be trying to give pause to the shorts now let's have a look at some of the ETR spending data and value and evaluate the respective positions of Dell and VMware in the market place this chart here uses the core ETR methodology that we like to talk about all the time for those not familiar we use the concept of net score net score is a simple metric it's like Net Promoter Score sort of the chart shows element the elements of Dells net score so each quarter ETR goes out and ask customers do you plan to adopt the vendor new that's the lime green at 4% spend more relative to last year more meaning more than 6% that's the forest green and you can see that's at 32% flat spend is the grey meaning plus or minus 5% and then decrease spending by 6 percent or greater that's the pink and that's just 11% for Dell or are you replacing the platform to see that that's the bright red there at 7% so net score is a measure of momentum and it's derived by adding the greens and subtracting the Reds and he can see Dell in the last ETR survey which was taken at the height of the pandemic has a net score of 18% now we we colored that soft red it's not terrible but it's not great either now of course this is across Dells entire portfolio and it excludes vmware so what about vmware so this next graphic that we're showing you it applies the exact same methodology to vmware and as you can see vmware has a much higher net score at 35% which of course shouldn't surprise anybody it's a higher growth company but 46% of vmware customers plan to spend more this year relative to last year and only 11% planned to spend less that's pretty strong now what if we combined dell and vmware and looked at them as a single entity hmm wouldn't that be interesting okay here you go so there were nine hundred and seventy five respondents in the last ETR survey when we matched the two companies together and you can see the combined net score is 27% with 42 percent of respondents planning to spend more this year than they did last year so you may be asking well is this any good how does this compare to dell and vmware competitors well I'm glad you asked so here we show that in this chart the net score comparisons so we take the combined dell and vmware at 27% Cisco as we often reported consistently shows pretty strong relative to the enterprise data center players and you can see HPE is a kind of a tepid 17 percent so it's got some work to do to live up to the promises of the HP HPE split we also we also show IBM red hat at 14% so there's some room for improvement there also and you can see IBM in the danger zone as we break that down and red hat much stronger but you know what it softened somewhat in the EGR survey since last year so we'd like to see better momentum from IBM and RedHat it's kind of unfortunate that kovat hit when it did his IBM was just kind of ramping up its RedHat go to market now just for comparison purposes for kicks we include Nutanix nifty annex is a much smaller company but it's one that's fairly mature and you can see at 52% its net scores much higher than the big whales now we've been reporting for months on high fliers like automation anywhere CrowdStrike octa rubric snowflake uipath these emerging companies have net scores you know north of 60% and even in the 70% range but of course they're growing from a much smaller base so you would expect that now let's put this into context with a two-dimensional view that we'd like to show now as you know in addition to net score that metric we like to use so-called market share market share is a measure of pervasiveness in the data set or essentially market share in the survey and it's a proxy for a real market share so what this chart here does it plots several companies with their net scores on the y-axis and market share on the x-axis and you can see that we combine Dell and VMware together and we plotted them in that red highlighted box just for comparison purposes so what does this tell you about the competitive landscape well first everyone would love to be AWS Microsoft - we didn't plot Microsoft because they're so bloody dominant they skew the chart somewhat but they would be way way out to the right on the x-axis because they have such a huge number of products and mentions in the data set so we left them out now you can see vmware and cisco are kind of right on top of each other which is sort of ironic as they're you know kind of increasingly overlapping with their offerings in the marketplace particularly nsx and you can see the other companies and for context we've added a few more competitors like theme and CommVault and you know they're in a pretty strong position as well as the combination of Dell and VMware so let's start there Steve Phil analyst Brad Reebok was quoted in the market watch publication is saying the following we have long believed Dell would ultimately buy in the approximately 19% our 12 and a half billion of VMware that it does not own in order to gain full control over VMware's substantial free cash flow which is about four billion dollars annually and we still expect this to be the ultimate outcome huh you know I don't know I'm not sure about this on the one hand you can see from the previous chart this would be a better outcome for Dell from a competitive standpoint what it did is it pulls Dell up and to the right yeah but perhaps not so much for VMware as it went down and to the left adèle would have to raise a bunch more cash to do this transaction and what take on even more debt you know maybe it could get Silverlake to finance the deal you know then essentially Dell would become the Oracle of infrastructure you know it certainly would make Dell even more strategic to CIOs would that be good for customers well on the one hand I guess it would bring better integration between Dell and VMware yeah but I wonder if that's the critical issue for customers yeah and nearly and I think it would stifle VMware's innovation engine and a little bit further and I wonder how Pat Yeltsin here would react I mean my guess is he would call it a day and what about Sanjay Putin who was the obvious next in line for the CEO job at VMware what he becomes the president of Dells software division and what about the rest of the team at VMware yes they're a Silicon Valley stalwart and that would slowly morph into austin-based Dell with the debt burden growing you know it's gonna mean more of VMware's cash would go to paying down the debt meaning less for R&D or even stock buybacks what you know I'm not a huge fan of and I'm not a huge fan of this scenario for sure the the technology park partner ecosystem would be ice cold on such a deal although you know you could argue there are already less than lukewarm but here I want to explore some other options so the next on the list is Dell could sell VMware to a private equity firm mmm or a strategic it could basically wipe out its debt and have some cash left over to sail into the sunset that would be a big pill for someone to swallow even though Michael Dell has 97 percent voting power I think there's fine print that says he has a responsibility to protect the interest of the minority shareholders so to get approval it would have to sell at a premium you know that could be as high as you know almost seventy billion dollars Microsoft has the cash but they don't need VMware and Amazon I guess could pull it off but that certainly is not likely even if Google who has the cash we're interested in buying VMware Google be the most likely candidate you know it would give Google Cloud instant access to the coveted enterprise but it's really hard to conceive I mean same for a PE company 65 to 70 billion you know they get their money out in 15 to 20 years so I I just I just don't see that as viable all right what's next how about this scenario of spinning off VMware that the Journal reported so in this transaction Dell shareholders would get a bunch of vmware stock now there may be some financial wizardry that tom sweet dell CFCF owned his band of financial geniuses could swing I can't even begin to speculate what that would be but but I've heard there's some magic that they could pull off to maybe pull some cash out of such a transaction and this would unlock the value of both Dell and VMware by removing the conglomerate and liquidity hangover for Dell and it were to definitely attract more sideline investors into VMware stock and Michael Dell would still own a boatload of VMware stock personally so there's an incentive there so this is interesting and certainly possible you know I think in a way it would be good for VMware customers VMware we get full autonomy and control over its destiny without Delvaux guarding its cash so it could freely innovate Dell would become probably less strategic for customers so I don't think that for Dell EMC buyers you know the technology ecosystem partners like HPE IBM Napa cetera would would would they would like it more but they were already kind of down the path of looking to optimize VMware alternatives so you know think about Cisco but you know I think for VMware customers okay I think for for daily MC customers not so much now what about the do-nothing scenario you know I think this is as possible as any outcome Dell keep chipping away at its debt using VMware as a strategic linchpin with customers sure they continue to pay the liquidity overhang tax and they'll frustrate some shareholders who we're going to remain on the sidelines but you know that's been the pattern anyway now what about delivering some of the VMware ownership so the more I think about it the more I like this scenario what if del sold 20% of its VMware stake and let's say raised ten twelve billion dollars in cash that it could use to really eat into its debt burden a move like this combined with its historical debt pay down could cut its death debt in half by say 2021 and get the company back to investment grade rating something that Tom sweet has aspired towards this one dropped hundreds of millions if not a billion dollars to the bottom line and it would allow Dell to continue to control VMware what I don't know I don't know if there are nuances to this scenario in other words does this dropping ownership from roughly eighty percent to about sixty percent trigger some loss of control or some reporting issue I'm sure it's buried somewhere in the public filings or acquisition Docs but this option to me makes some sense it doesn't really radically alter their relationships with customers or partners so it's kind of stable with VMware maintains its existing autonomy and even somewhat lessens Dale's perceived control over VMware in an attacks Dells debt burden yeah it's still a bit of a halfway house but I think it's a more attractive and as I said stable option in my view okay let's talk about what to look for next you know it looks like the stock market is coming to the reality that we are actually in a recession although it appears that Nasdaq is trying to ignore this or maybe the the markets a little bit off because they're afraid Joe Biden is gonna win the election he's not gonna be good for the for the economy we'll see we'll see what the economic shutdown means for tech companies in this earnings season etrs next survey is in the field and they're gonna have fresh data on the impact of kovat going into the dog days of summer here's what I think let me give you my preview and you'll see in a few weeks you know how accurate is I believe that tech spending is going to be soft broadly I think it's gonna especially be the case for legacy on-prem providers and expect their traditional businesses to to deteriorate somewhat I think there's gonna be bright spots in text protect for sure the ones we've reported on cloud yes absolutely automation you know I'm really looking closely at the battle between the two top our PA vendors automation anywhere in uipath I think there's a really interesting story brewing there and the names that we've been pounding like snowflake the security guys like CrowdStrike and octa and Z scalar I think they're gonna continue to do very well with this work from home pivot we also expect Microsoft to continue to show staying power but because of their size you know they're exposed to soft demand pockets but I think that continue to be very very strong and threatening to a lot of segments in the market now for Dell I think the data center businesses continue to be a tough one despite some of the new product cycles especially in storage but I think dal is gonna continue to benefit from the work from home pivot as I believe there's still some unmet demand and laptops we're gonna see that I believe show up in Dells income statement in the form of their their client revenue I'd love to know what you think you could tweet me at Devante or you can always email me at david dot Volante at Silicon angle com please comment on my LinkedIn post always appreciate I post weekly on silicon angle calm and on wiki bond calm so check out those properties and of course go to e TR dot plus for all the survey action as I say e TR is in the field with the current survey they got fresh Cova data so we're excited the report on that in the coming weeks remember these episodes are all available as podcast wherever you listen this is Dave Volante for the cube insights powered by ETR thanks for watching everyone we'll see you next time [Music]

(digital music) >> Live from Las Vegas, it's The Cube. Covering Dell Technologies World 2019. Brought to you by Dell Technologies and its ecosystem partners. >> Kay, welcome back everyone. Live Cube coverage here in Las Vegas for Dell Technology World 2019. I'm John Furrier with my co-host, Dave Vellante. Three days of wall-to-wall coverage. Cheryl Cook, senior vice president of Global Partner Marketing in Dell Technologies joining us. We just reminiscing about the old days of how computing was going on, cloud computing, Sun Microsystems to now, Dell Technologies is doing extremely well. Congratulations. Welcome to The Cube. >> Thank you. It's a fantastic time. Thanks for being here and having me. >> And what a time to be in tech. Michael is on stage. This is just a pre-game show of what's coming. Kind of teasing out like best is yet to come. A lot of things are going on in tech. Certainly the business performance for Dell is strong but you guys have a huge partner ecosystem, huge global channel. That's changing and transforming. That's your wheelhouse. Tell us what's going on in the channel because you have partners that are making money with you. How's that going? What's happening? >> Thank you. Actually, we are thrilled with the momentum we've seen in the partner community and thanks to a lot of their engagement and support and solutions that they're developing around Dell Technologies. I mean our channel business has just hit fifty billion dollars in orders this year, growing faster than the market, growing faster than our competition and I honestly think it's an expression and a reflection of just the opportunity they see in the family of companies and just the assets of the technology that we have. >> One of the things that's happening with cloud and data is that these trends are kind of rising tides. There's no zero sum game anymore, this verses that, it's like a whole new shift. What are some of the trends going on that's impacting the channel specifically, that allows the partners to take advantage of the trends and either serve customers, have happy customers, and ultimately make more profit. Cash. >> Absolutely. You know, I kind of call it the art of the and. I think there Is a lot of traditional consumption that's still happening right now, while at the same time they're increasingly being asked by customers for as a service business model. So I think our partners are realizing that opportunity and meeting that demand right now. That's why you see the growth figures we have, frankly, in the channel in our traditional server and storage business, but also in our Dell Financial Services and really meeting these dynamic consumption model request as a cloud, as a service, manage services opportunities. We actually think some of the announcements we've made here this week, it's going to allow our partners to really enable and build services capabilities for their businesses that are highly lucrative, high margin service capabilities around these cloud offerings, these integrated solutions, really leaning in and leveraging their expertise across Dell, EMC, VMware and the rest of the family of businesses. >> Take a minute to explain some of the notable announcements here at Dell Technology World and what'll be the impact to the partners? >> Well, I think one of the most exciting things is we've been on an evolution as a company and we unveiled the new name of our partner program. We're now the Dell Technologies Partner Program. In many ways just simplifying the ability for the partners to lean in and realize the advantage of the offers, solutions, and capabilities of the family of companies. So all of the requirements for their tier attainment and tier status go unchanged. The strategically aligned businesses, such as VMware, will continue to have their own independent programs but the opportunity for the partners is it really empowers them to now be able to get access to these integrated offers, more access to the strategically aligned businesses, and go build out services that, as I said, that allow them to really bring those customer solutions at the level of expertise, either in a verticle or an industry, that their customers are struggling with their own transformations. >> How are they transforming, specifically? What are partners doing? I mean I always, you know we love selling boxes but if you're a box seller you just can't keep doing that. So you've got to change your business model. What are some of the things that they're doing? >> What I've seen, actually in the community, is I've seen certainly M & A. There's been some mergers and acquisitions where you'll see traditional integrators or solution providers investing and augmenting their capabilities with application development expertise. So they understand that not only do we have to modernize infrastructure, but it's about the work load. And we have to modernize the application. So, we've seen those kind of mergers happen. We've seen alliances form, where you have different partners that may not possess security capabilities, for example, they team and they partner. So I think the community in the ecosystem is evolving and they're leaning on their strengths and really trying to best position themselves to realize the opportunity. >> So you think about trends like converged infrastructure, hyperconverged, some of the stuff you guys announced. Ten years ago I remember when the modern CI first came on the scene. A lot of the channel partners didn't like that. They were like, no we want to screw the bolts in, we make money doing that. That has completely changed, hasn't it? >> Yeah, absolutely. I think it's less about, how do I integrate the bag of parts and the piece parts of the infrastructure, and it's much more about the work load and the outcome. So, I think where partners are really savvy and where they're uniquely advantaged and positioned well to help customers is in those complex work loads, in those inventory and assessment services of which work load is best served in a public cloud, which is best served in a private cloud, and helping their customers navigate that journey. It's richer services but they have to monetize their Value-Ad in those type services than traditional system integration-type services. >> How to secure it, how to manage it... >> Absolutely. How to migrate it, how to modernize it. Absolutely. >> So those services used to be reserved for a unique qualification of partner. Highly technical solution architect. Now someone says, I need to multicloud architecture, if you go back a couple years in DevOps you'd be like, okay got to get a alpha geek and we got to lay out architecture, you know, usually a higher priced person, but kind of what we're seeing now is almost a democratization or an increase aperture of opportunity capture for partners because the tools and technologies are, I won't say totally turn-key, but they're composable so as you don't need to have an advanced computer scientist degree to be a solution architect. You can be more of a composer of solutions, not the tech lead. So this is a trend we're seeing. Do you agree with that and if so how's that increasing your capabilities? >> Well I do and I think, frankly, we at Dell Technologies are uniquely positioned and one of our aims is to simplify the access to that type technology. So when you look at the announcements around our Dell Technologies cloud platform and the integration with VMware, it really is to provide that seamless, simple, common management layer, operational and orchestration layer, to be able to migrate and move your work loads to public, on-premise so the skills in our partners are really leverageable, so their VMware expertise, it really is about the work load, less about the infrastructure and how to go standup a virtualized environment. >> Cheryl, talk about the impact it's had on your job because I can only imagine the complexity involved in soft dollar programs, incentive programs, compensation programs, how to get more training, skill gaps closed down, and now that's hard in and of itself so I'm sure there's a lot going on there that you're spending and working on but when you start overlaying, oh VMware's got a program, I got this program, it's like, are you wiring up a bunch of programs or is it just first... Take us through the stages of your evolution because you now have to be agile with how you market globally. >> Absolutely. And we're trying to be as thoughtful as possible with an outside in perspective to be fair. So across the family of companies we're actively engaged with my peers at VMware and Pivotal and we're really looking at, how do we take the investment that our partners are making into their capabilities and make that leverageable and protect that investment across the offers. So we, for example, are offering reciprocal recognition within the credentials, for like credentials so the VMware capabilities they earn with VMware we'll recognize in our Dell Tech cloud competency. We want to try and offer an easier path for them to engage across the companies and to be honest, incentives, capabilities, they're on their own evolution and we're trying to help just to ensure that we can externalize a lot of the training that we create internally for our people. How can we leverage the strategically aligned companies, jointly, for what we're doing in the program, so that it at least holistically can be common and make sense for the partners to engage. >> So training's important to you? >> Sure, absolutely. >> Partners now account for over half the revenue of the company. You've said that you're growing faster than the competition. That's something that we've heard a lot this week. (Cheryl laughs) A two-part question. One is, how is it that you guys, it's almost like you're being set up by a great coach to win and everybody seems to be growing faster than the competition. That's what we're hearing as a theme. So, how does that happen? Why is that? And then the second is, do you set targets for how much of your business you want to be through the channel, or is it just, let the business go as it may? >> Well, first of all, I would say we are really clear inside the company on what the strategy and vision is of the company and as we take that to market, both on the direct side and through the partner community, we try and listen to the partners and gain feedback from them on what they need to be most successful, but then again, we are really ruthless in aligning our strategies, our goals, our metrics, our measures, our rewards, to ensure that we can go deliver those results and the outcome and I think frankly, the success we've been seeing and enjoying is, I think it's resonating. Our partners are responding with the strategy and the enablement that we're bringing to market and it's combination of good strategy, good vision, relentless execution, and commitment. And we listen. Right? There's always more to do. We know we're not perfect. We have a lot of advisory capacities with our partner community, our distributors, our system integrators, for them to tell us how they can monetize and realize the maximum value out of what we're bringing to market and we adapt, we adapt, we adapt. >> Cheryl, final question for you. Over the past three years it's been an interesting journey. EMC comes in, you guys went public, got the VMware relationship clicking, you've got the things going on. So you got the end-to-end operational consistency as a big land grab. We see that as a big strategic opportunity for Dell, as well as specialism up to the top of the stack around vertical industries with data. Clean strategy, we've been saying that in The Cube for years. That's the killer form, you guys are doing it. But without learnings along the way, take us through personal observations that you've had inside Dell around just getting the ship tightened up to keep executing going. What's it been like? Share some stories. >> I'll have to say, a merger as large as we did and certainly as large as we are now, growing at the pace we are, is never easy, and I think we have an amazing culture in the company and I think it starts with Michael from the top down, and I think as we came together as teams and we started really decomposing and working on what we needed to strategize we quickly found ourselves very like-minded. Really like-minded. Very complimentary. So it allowed us to move faster. So I would say my learnings are you've got to be really authentic, you've got to have a lot of trust, you got to lean on the culture which is a bit of an intangible, and then there's all the obvious strategy and execution. But I would say one of the enjoyable learnings out of this has been, you have to just trust and we've been very like-minded. We've been very fortunate. Really good talent. Amazing talent. >> Now the plantation of brands has got some fruit coming off the tree, business performance is coming out, you're seeing some results. >> Yeah. Well, I think we're realizing the vision of the mutual R & D and I think we're so uniquely positioned for the level of R & D in innovation going forward, the expression of bringing those technologies together is now coming to market. You're really seeing the work of the joint innovation bear fruit. >> Cheryl Cook, senior vice president of the Global Partner Marketing in Dell Technologies, here in The Cube sharing her insight and observations and learnings over the past couple years and what's happening. They're doing great. This is The Cube bringing you all the content from Dell Technology World, three days of coverage, day two. We'll be right back with more after this short break. Stay with us. (digital music)

(upbeat techno music) >> Live from Las Vegas, it's theCUBE! Covering VMworld 2018. Brought to you by the VMware and its ecosystem partners. >> Welcome back to theCUBE, here in VMworld 2018. Joining me is my guest host John Troyer, and I am Stu Miniman. And coming to the program, it's hard to believe, for our first time, Jay Krone, who's a senior consultant, Storage Portfolio with Dell EMC. And I say that just to give our audience some context. Jay works for Dell EMC, but we both worked for a company called EMC back in the day. And Jay's has had a number of roles where he's brought lots of people on the program, has known theCUBE since its inception. >> Inception, yeah. >> Yeah,ninth year doing it, and now you've made it. >> Right, I'm finally here. >> All right, so Jay, give our audience a little bit of your background, what you're working on these days. >> So, I'm a longterm storage veteran, as Stu said. I worked for the old EMC back when the only product we had was a scuzzy connected symmetrix and have been though the fiber channel wars. I've been through the SAS wars, the SATA wars, the SSD wars. I'm now working on a couple of cross-portfolio programs. The one we're here to talk about today is the Future-Proof Loyalty Program. >> Yeah, and for the audience that doesn't know what a scuzzy connector is. (Jay laughing) It was this really fat plug that plugged in, It had actual pins-- >> And lots of wires. >> That were designed for-- >> Lots of wires. >> On and off, so those kind of protocols have kind of changed and everything. But when I interviewed at EMC in 2000, it was like, oh, that connection, that I would take two computers and connect them. That was a scuzzy cable. >> Right. >> And it was relatively short-length, so wow. We can go down our memory lane later. But Jay, you're talking about something specific. We talk about the future, and it's tough to predict it. But Dell's going to make sure that everything's future proof, right? >> Of course. >> All right, what's that mean? >> What that means, what's interesting, back in the day we were competing and innovating primarily just in a technology dimension. And a lot of us technologists. We've had fun time doing that. But as people have gotten more sophisticated about the way they buy technology, they're looking for other assurances that vendors are going to be there for them when something goes wrong. So, there are nine different, what we call offers or pillars in the Future-Proof Program that are really intended to give customers peace of mind, probably most importantly, protect their investment, the money that they spend on IT, and to your point, give them a path forward. So, what we've done is looked across the inventory of things that Dell EMC already offered. Many of these were business practices that we already had in place. And what we've done is turned up the volume and made them more, basically, more visible to customers and to our selling forces, and the response has been really good. And the financial ones, of course, are the ones that people, shall we say, gravitate to at the beginning because when they're making a purchase, whether its effectively an extended warranty or a trade-in credit on their old stuff. Think of it, when you go buy a car, you get a trade-in, so you're protecting the investment you made in the car. These are all things that customers are interested in getting and we get from Dell EMC. >> OK, and just in case, people didn't catch that. I think the umbrella for the program is the Dell EMC Future-Proof Loyalty Program? >> Correct! Is that it? OK. >> OK, and one of the things that's important for folks that have been watching, it was started originally as the Future-Proof Storage Loyalty Program because it was generated out of our storage business. And what happened is the customers and sales people were so excited about it, they said, "Can you add more?" And we said, "Yes, we can." And so in July, for example, we added data protection, the IDPA DP4400 product, along with a guarantee specifically tailored for that product. We're here, one of the reasons that I'm here, and we are here at VMware is we added VXRail on Monday. That one's extremely exciting because even before it was officially in the program, we helped a customer with a six-figure purchase through one of the Future-Proof benefits. And then, we have another, we have an eight-figure deal in the wind right now, on VXRail based on some of the pillars of the Future-Proof Program. >> And so, Jay, when you talk about some of the, you're talking about some of the pillars, some of the motivators for the customer then. I mean, some of it's just the transparent financial, some of it's kind of dedupe and storage guarantees. >> Correct. >> All those, you're including all these. >> Correct, correct. And then, yeah, 'cause part of it is to make... Bring Dell and EMC together was complex. >> Gotcha. >> Or created some complexity and some confusion, shall we say. Part of the reason we created this program was to make it simpler to consume and to make some of the things easier to find. >> Yeah, right, right, I mean, much, I mean, like buying a car, right? Enterprise hardware has always been a little bit mysterious. Like, what does cost? Well, how much money do you have? And then I tell you how much it cost. >> Exactly. >> And shady. I mean, not shady, but discounts, and it's not very, it's very opaque. But a lot of these things are real clear, out in the open. Actually, I just went through the website. >> Exactly. >> We guarantee you're going to get this, you can do this. >> Right, right. >> And in three years or five years, we guarantee this, and it's pretty upfront. >> Exactly, and I mean, what you mentioned is the Clear Price Maintenance Program. I mean, again, as we all know, there were some pricing practices with customers that were neither clear nor predictable on maintenance renewals. And so that's been something that's been extremely exciting. That is, in fact, one of the things VXRail folks are excited about, where what ends up happening from a customer perspective is when they get the quote, the quoting system automatically generates your prepaid maintenance price and your renewal price, either three year or five years from now, depending upon the contract you pick, and it's right there on the paper. And I can't get clearer and I can't get more predictable. Here's what you going to pay now, and here is what you going to pay later. >> As a cultural shift, was there any kind of discussion internally about, well, wait a minute, sometimes I hold these, I hold a couple points for a partner. I hold a couple points to make sure I get a deal. Was there a discussion about the changing culture of being so open? >> Well, yes, is the short answer. I'll say it was a culture change. But what's happened is the industry is shift. We don't use scuzzy cables any more, and that maintenance pricing practice has pretty much been voted down by the customer. So, its innovate or die. And so, and part of what I want to say is the innovation is not only in the products. We're doing some innovation on the business side as well. >> Yeah, Jay, I'm curious. We've said on theCUBE many times, the bar the customers will measure everything against is how they do things in the cloud. So, how I consume it, how I think about it. >> Right. >> But one of the challenges with the cloud is sometimes there's uncertainty as to what that bill's going to be next month. >> Right. >> So, maybe you can give us a compare-contrast as of what you've learned. And is there a comparison between this program and what you're talking about? >> Well, so this program is targeted at the infrastructure products. So, it's not so much to compare against the cloud pricing itself; however, what we've done here, also announced this week as part of the larger Dell EMC Cloud Marketplace is what we call the Cloud Consumption Models. And this is a couple of the cloud financing programs. Again, they were already in place from Dell Financial Services. They give customers the ability, if they really want to buy infrastructure that they put in their data centers in an Opex model, you can do that. And it's called Flex on Demand. There's a couple of really exciting high-velocity, they call it Flex on Demand Velocity for Unity and X2 where again, there's a rate card. So you are not coming in and having the sales person sharpen the pencil and say, here's what the price is. So they'll come in with the rate card on how to consume that. And when we take a look at that, that pricing model versus both some of our system vendor competitors, as well as some of your, shall we say, more prominent cloud competitors, as Michael said, the cloud is an operating model, not a place. If you want to have that operating model for the way you pay for the infrastructure, buying an XtremIO capacity from us with the cloud model is cheaper than buying SSD capacity from one of the cloud providers. >> All right, Jay, want to give you the final word. Believe there's a website if people want to find out more. What is the final takeaway you'd want people to have about this program? >> Well, basically, investment protection is number one. Peace of mind is really important. There are a number of guarantees about product performance. And as we've said, the future is bright. We're giving you a way to go there. >> All right, Jay Krone. Pleasure to catch up with you on camera. >> Likewise, thank you. >> As it is always off camera. For John Troyer I am Stu Miniman. Back with more coverage here, theCUBE, VMworld 2018, thanks for watching. (electronic musical flourish)

(techy music) >> Announcer: Live from Las Vegas, it's theCUBE, covering Dell Technologies World 2018. Brought to you by Dell EMC and its ecosystem partners. >> We're back in not-so-sunny Las Vegas. You're watching theCUBE, the leader in live tech coverage. We're here at day three, wall-to-wall coverage of Dell Technologies World, the Inaugural Dell Tech World. I'm here with Tom Sweet, who's the CFO of the 80 billion dollar Dell Technologies empire. Thanks for coming to theCUBE. >> Happy to be here. >> So, really thrilled to have you on. I think it's the first time you've been on theCUBE. >> You guys usually don't let me on, so you know, they're letting me out a little bit, I guess. >> Well, I say, we're happy to have you. So, a lot going on, obviously, in your business. I mean, let's start with, you know, we're a couple of years into the integration, you guys, obviously, you dug in. You've got a pretty good handle on this, like I said, 80 billion. When it started, you guys were in the low 70's, I believe, so you've seen some growth. Not a lot of growth in this business, but you guys are growing. So, give us the rundown of your business. How should we think about the Dell empire, as I called it? >> Look, I think that we're very happy with the progress that we've made since the integration, which was back in September of 16, so over the last 20 months, we've been focused on building velocity within the business, and particularly, as you think about our major tranches of product, if you will. So, you know, our client business is growing quite nicely, as we evidenced by last year, 21 consecutive quarters of share gain. Pleased with our server velocity. Last year, we were number one in servers. Storage has been a bit of a work in process, as you know, but I think we're beginning to see a little bit better velocity in that business. Clearly, we have VMware, and we have Pivotal. So, what's been really interesting is how the companies have come together, and the offerings have come together in a much more integrative fashion, which has been fun to watch and fun to sort of help put this thing together. The customer buy-in and the customer acceptance of the vision and the story has been pretty remarkable, from my perspective. >> And, the client's side of the business surprised me anyway. It's like the gift that keeps on giving. >> Well, you know, what was it, 10 years ago, they said the PC was dead, you know, and today it's roughly half of our revenue and growing nicely. I think the secret, as always, as you know, is work gets done on a keyboard. The tablet and the phone become an and device, a notebook and a tablet, a notebook and a phone. We keep innovating form factors or innovating the interfaces with the device, so we're pretty excited about it. It's just a really good, really great business for us. >> I think what Michael said in his keynote, when IBM announced the end of the PC era, since then there's been four, I think he said four billion PCs shipped. >> Yes, exactly. >> It's astounding. >> Clearly, the overall market for PCs is flat to slightly down, it's going to be in that range, but in that type of market, our point of view, as you well know, is you have to take share, you have to grow. The team's done a nice job. Jeff Clark and his product team have done a really nice job around form factor innovation, 87 CES awards this year for PCs, so really good business. >> And, from a CFO's perspective, it's throwing off cash, you're comfortable with, what is it, a 5% to 6% operating margin, basically? >> We typically think of that as about a 5% op inc business, but it provides huge amount of scale for us, if you think about our supply chain, our ability. It's a nice, predictable, really strong cash flow business for us, so it's a good business. >> And, the higher end, the server business and the storage business is what now, around 7% op inc, and there's a lot of upside there, potentially? >> Yeah, it's a little bit higher than that, but there is upside there as we continue to drive the business and drive efficiency in that business and, as you know, we're doing a lot of work right now in our storage area in terms of how, over time, do we evolve that road map around the solution set, and working more in an integrative fashion with VMware around the convergence of hardware and software, into more thoughtful and more smarter designs or in the storage platforms. So, you know, that business is, that's going to be a really interesting business for us over the next year or so. >> Well, really, VMware, people look at Dell as a hardware company, but VMware is not a hardware company. It's software, marginal economics. It throws off 50% roughly of your operating cash, I mean, it's a gem. >> We're actually huge fans of VMware. It's a great company, growing very nicely, and extraordinarily well-positioned, as you think about the world of Multi-Cloud. And, what we're doing and how they're thinking about any device to any device, any Cloud to any Cloud, that whole story is resonating, and from a CFO perspective, you got to like software margins. It's a good business. >> So, let's talk about the debt a little bit, because I think there are a lot of misconceptions out there. You paid down $10 billion in debt, I think it's roughly around 40 billion now. Is that about right? >> A little bit higher than that, because we've added some debt related to our GFS business, but I think the way you ought to think about our debt load is that very manageable, we're right on the schedule we thought we were going to be on, in terms of debt paydown, and we'll continue to pay down debt, from a capital allocation focus. You know, 60-70% of our capital is focused on debt paydown, doesn't mean we're not investing in the business properly, 'cause I think we are, and we're continuing to fuel those investments, and then we're going to add some debt, because our DFS, or financing business, we use debt to fund that business, but that's a little bit different sort of perspective. We think about that debt separately and different than the core debt of the business, and our analyst community and the credit rating agencies think about that debt differently. And the GFS business is growing very nicely in terms of originations, and it's a great tool for our sales force to help in terms of the financing capacity and credit capacity for our customers. So, it's a good business. >> And, let's talk taxes for a second. I know it's kind of off the normal CUBE interviews, but a lot of people talk about that. All the legislation tax, legislation, that's bad for Dell, you can't write off that debt, but essentially, from what I've read, it's a net neutral to you guys. >> It's generally neutral to maybe slightly negative, as we understand the debt regulatory environment today, with the US tax reform. They did put some limits on how much interest, and there's transition rules around how much you can deduct, but you know, you got to lower corporate tax rate in the US, you also have the immediate expensing of CapX, and then you've got the repatriation toll charge, but when you throw it all together, slightly negative, but it's not a big cash dynamic for us, it's not a driver of, geez, we've got to go do something with our capital structure as a result of that. So, that's just a misconception that's out there right now. >> And then, you've told me earlier that the Pivotal move was not about delevering, it was a move that you guys have been planning for a while. I mean, that was in the works before the merger. Talk about that. >> Look, I mean, Pivotal's done, their growth at Pivotal and the acceptance of Pivotal's been remarkable. So, that conversation around should we IPO, when should we IPO, has been in the works for over a year, and Pivotal needed to continue to grow and mature a little bit in some of its processes and making sure that when you decide to go public that you're ready to go public. For that last year, that's what they've been working on. But in terms of the actual, to go public and the proceeds from that, that's all about giving Pivotal their own capital to fund their business growth and dynamic. We could have done it at the Dell level, Dell technology level, but I thought it was more appropriate, the size of company they are, that they have their own capital. They're doing business with over half of the Fortune 500, so they need some substance, and it's a great retention to 'em, in terms of having currency for their employee base, for both their attracting talent and retaining talent. >> A Silicon Valley company with its own, I've visited those offices. It's not the normal corporate office down on Howard Street, right? >> No, you know, they're doing the huddles in the morning, but that's what's interesting about Dell technology, the family of businesses, the different cultures, the different capabilities, it's a pretty remarkable set of companies with it. >> The market's booming right now, hope it continues, knock wood here, but what are the assumptions you're making in your business, maybe the economy, you could touch on that. >> We look across the top 45 economies right now, where we do business. They're all growing, GDP's growing, so we feel pretty good about the overall economic environment. Interest rates are slightly rising, but not a big issue for us, even with our debt load. We're about, roughly 70% fixed, 30% floating, so the fact that LiveBoard's up a little bit isn't a big deal. Currency's relatively stable, so we're positive, and companies and institutions are spending on IT, the round of innovation that's being driven, the round of investments and the changes in business models. Typically, one of the first things they go do is they invest in IT to help with that digital transformation, that IT transformation. We're bullish on the economics, so it's a good platform for us. >> One of the things I've said for quite some time now is that the merger between Dell and EMC was inevitable. You had these pressures of Cloud, you needed a company who was comfortable, with a lower margin business and had a profitability model that could thrive, and it made a lot of sense. But, you don't have a public cloud, and you're comfortable with that, but you've done a lot of work with, I'll call, utility pricing. Can you talk about that a little bit? >> Well, one of the feedback things we got from our customers is, hey, look, I like the economics of the Cloud. I like this pay-as-you-consume, pay-as-you-grow, that flexibility to scale up, scale down, so through our Dell Financial Services and using our own balance sheet, we have put together flexible consumption models, so I can offer you a pay-as-you-grow, pay-as-you-consume, or we can do a straight out utility where the assets are on my balance sheet and you're paying a monthly fee, if you will. So, all we're trying to do there is to normalize the economics for our customers, say, hey, I want you to take economics out of your decision about whether you want to go to the Cloud or not, because we can offer that capacity and capability. And, let's really talk why, and what's the purpose, and what's the work load, what's the problem that you're trying to solve? >> And, you obviously recognize that as radical revenue. >> Yeah, absolutely. >> I'm guessing it's not meaningful, like a software company shifting from a perpetual model, or is it? >> Well, I think over time you're going to see the rise in these types of models. Customers are interested, as a service models. So, there is interest in that, and I think you'll see that piece of the business grow over time, but I don't think it's going to be a step function change. But, again, it's just another example, I think, of Dell Technologies offering customers what they want and in different and innovative ways to do business with us. >> One of the things that EMC did, was they did a lot of M&A. That's kind of how EMC innovated, no offense to my friends from EMC, but they fill gaps. And, a lot of times, those gaps created huge overlaps. You guys are addressing that carefully, I understand that. How has the merger, the debt, affected your ability to do M&A? How critical is that to you guys, because you are very acquisitive, obviously, as well? >> We are still very active, as we look at the technology trends and what type of capabilities and new technologies are on the horizon, so we haven't done a lot of M&A since the acquisition of EMC. We've principally focused on the integration, but if you look at VMware, they've done acquisition, we've done a couple of really small tuck-ins within the family, but we'll continue to look at that. And, one of the other tools in our tool chest, as you know, is Dell Technologies Capital. I think we've got roughly over 81 investments in technology startups, principally on the West Coast, but some overseas, and very focused on security, AI, machine learning, next-generation storage capabilities, and so we get exposed to that type of technology, and we put our R&D teams together with them, so I feel like we're in a reasonable position, and as the business tells me they need something, we'll go evaluate it. >> I want to ask you a question about your peers, the CFOs. I'm getting to know you a little bit. I think you're a rock star CFO. One of our analysts said to us the other day, Tom Sweet is a stud, I said, yeah, it's the make-up on theCUBE. >> I don't know about that. >> So, what's going on in the, well, you've got a big job, and you've got a really good handle on what's going on here. What's going on in the world of CFOs these days? I mean, obviously, you've got stuff like GDPR that gets in there, but digital transformation is obviously a huge theme among the C-Suite. Security is a board level issue. What kind of discussions are you having with your peers these days? >> Look, I mean, most of the conversations tend to be around two or three different areas. One is how do you think about how does the finance function and our capabilities change over the coming three, five years, right? How do you think about the use of AI, machine learning, and in the processes of the company? And, what is everybody doing to innovate around that? That's a pretty common conversation we're having. You know, security cyber is a huge conversation point in terms of how is your board looking at it, how are you thinking about it. Since we're CFOs, we're always talking about how much money, what's that investment profile you need to have there, in terms of what's the right amount? As you well know, you can spend a lot of money there. Are you guaranteed of a perfect defense? Absolutely not, so that tends to be a common area, but more importantly, there's this whole comment, this whole big data conversation that's also happening around how do you help the business make better decisions? How do you add and drive value back to the business? How are you using advanced analytics to drive insight back into the business, the various businesses? So, pretty much the same sort of conversations we're having with our customers, we're having internally, or amongst the CFO community. >> A lot of risk management, obviously, >> Yeah, absolutely, absolutely. >> goes into that equation. >> I mean, inside of tech or outside of tech, are there companies or CFOs that you sort of follow, admire, kind of models that you look at? >> Look, there's some great CFOs that I've had the opportunity to have interactions with. You know, Mark Hawkins at Salesforce is a great CFO, also a good friend, Amy up at Microsoft, really doing a really nice job up there, and then Bob Swan at Intel. So, we tend to sort of be industry-organized, just because that's how we interact, but they're all doing nice jobs and really interesting innovative things within the context of their companies' business models. >> Have you changed the sources of where you guys get information? Obviously, your peers is probably number one, but as the digital world comes forward, have you sort of changed the sources, or still sort of the Wall Street Journal every day? >> Well, it's guys like you, right? We're all watching the blogs and, look, the amount of data and information that's flowing these days can be overwhelming, so I tend to be, I'm looking at industry publications, I'm looking at some of the online blogs in terms of trying to understand where are our competitors headed, where is the industry headed, what are the themes out there? You know, Michael's got a perspective with his leadership team that, hey, he wants us out in front of customers, so I spend roughly 30% of my time with customers and partners. You have to be aware of, obviously, what's going around in the industry, not only to be thoughtful and intelligent, but to also help think about where do you position the company, three and five years down the road? And, helping Michael in that thought process, and helping the leadership team in that thought process. >> Well, Tom, it's been a real pleasure getting to know you a little bit, and watching you guys in action. Wish you best of luck. >> I appreciate it. >> Thank you so much for being on theCUBE. >> It was a lot of fun. >> All right. Keep it right there, buddy. We'll be right back with our next guest, right after this short break. You're watching Dell Technologies World, live on theCUBE. (techy music)

>> Announcer: Live from Las Vegas. It's the Cube, covering Dell Technologies World 2018. Brought to you by Dell EMC and its ecosystem partners. >> Welcome back to Las Vegas, everybody. You're watching the Cube and our continuous coverage of Dell Technologies World. My name is Dave Vellante and I'm with my co-host, Stu Miniman. Marius Hass is here, he's the President and Chief Commercial Officer of Dell EMC. Great to see you again. >> Dave, great to see you and Stu, wonderful. >> You're lookin' good. Business is good. The commercial business is cranking. Particularly impressive in servers and networking but the whole business is just really booming. What's going on? >> We're very pleased with the progress that we're making and I think from, you look at it last year and the share gain that we'll be able to have in all the key lines of business. The transformation stories are real and enabling our customers to progress in the journeys that they're on into a digital transformation movement and to an IT transformation movement. A workforce transformation security transformation. Every one of our portfolio elements plays a role in that. And it's resonating well. We're doing, we're aligning our team members to best serve our customers. Our partner community has really stepped up and performed really well around the globe as well. So we see every region doing quite nicely. >> And just to clarify for our audience, the commercial businesses, not the top of the pyramid, it's sort of everything else. Maybe you could just quantify it. >> If you think about it, take the top 3,000 accounts around the globe, it's the top of the pyramid it's at. So everything below that, so you take all public sector, you take some federal, and then here in the US also, department of defense, we've got a big customer, NATO in Europe is an example. All commercial accounts, and then in addition to that, I also have the pleasure of hosting our channel program. So we wanted to make sure we had two amazing channel teams when we brought the company together. We wanted to have one channel team, one program, driving simplicity, driving a predictable engagement model, and obviously making it extremely profitable for our partners. So that was the objective and it's all starting to come together very nicely. >> So a channel obviously a critical component of your business. Maybe talk a little bit more about that. You brought in sort of EMC's channel piece, your channel piece. Those things evolve, I mean, every five years the whole channel business changes. The Cloud changed everything. So how have you dealt with that? How would you describe this state of your channel business? >> I think, let me start by, the first thing you want to make sure that you do is that you align every single one of your core assets, which is inclusive of our team members as well as our partner team members, towards how do we best cover the total TAM. It's a 3 1/2 billion, almost 3 1/2 trillion dollar addressable market, large account-based, well over 500,000 that we've got as named accounts around the globe. And then you can imagine all the other small, medium businesses as well. So first thing we did is ensure that we understood how do we best cover those accounts with our team members? And then how do you best augment with a complementary coverage model with our partners? And then, now that you have the ability to get more at-bats with more customers, then how do you make sure that you present the best possible plays or solutions that solve their key business problems? And being able to do all of that refining, all of that, takes a lot of time and effort. But once you've got those levers and pulling them right, you just start to see the progression and then the nice momentum that we for example see today. >> Marius, what are some of the key concerns that you're hearing from the consumer clients that you have? Is it the digital transformation that we heard in they keynote? How much is that pervasive across every company these days? >> Oh, there's no doubt, I think every customer in every industry is going through some transformation today. They're choosing Dell Technologies as a partner of choice for them. The first question is, help me assess where I am in that journey, and then how do I translate, or how do I intersect that journey with the right technology so that I can now move forward? And many a time, it starts with the conversation around, how do I become a digital company? How do I transform my applications into a native Cloud application-based model that can reside on any OS, on any Cloud, anywhere? You talked to Pat earlier today from VMware. Clearly a big push for what they're doing. That conversation is typically the first one we have. But then very quickly it translates also into well what other core infrastructure components that I need in order to be able modernize it, automate it, and then start to orchestrate service levels so that I've got the best optimized infrastructure to be able to deliver those applications and those services to my constituencies. >> So your relationship with clients since the integration has evolved. I mean when you think about Dell, the Dell brand, EMC's long-term relationships. VMware, and then the other business, RSA, Pivotal, Dell Financial Services. You bring a lot to the table. Maybe talk about how you use that as a competitive weapon. >> I think it's the ability that we have now to transform the business problem conversation into here's how you solve it with technology and here are all the components and solutions that we have. And we bring that together in a business problem solving manner. That's where, it's what we call the art of the possible. It's truly transformed the way we have a conversation with our customers. And truly puts us in a position of being a strategic partner of choice. >> And how about the cross selling, the cohort selling. How has that transpired? How much of a lift is that to your business? Maybe you could give us some color there. >> I'll give you a little bit of a sense. One of the things obviously we did during the integration planning when we still had to operate as two separate companies was, how can we dissect all the accounts that we have? How much of our, in every one of these accounts, how many of our lines of business have we sold into those accounts? So from a planning perspective, we were able to get ready for the cross sell enablement as soon as we became one company. That truly put us in a position where once the clock started ticking the teams went off and running. They knew exactly which accounts to go pursue. They knew exactly what solutions to be offering to the customers. And our team members came together very nicely. We compensated them to go bring together a single architecture strategy. So all of those pieces were all part of the planning cycle that once we were able to execute, people were running at it at a fast, fast pace. >> So that requires some leadership. We were sort of talking off camera about some of the complexities of bringing two large organizations together. EMC for years, belly-to-belly, those guys love account control. You've had your organization, and you were hit in a groove swing before the merger, so how did you address that cultural mix? >> Well I think what, the cultures were a lot more similar than people expected. I think, we've talked about this before where we put all of our cultural traits and asked every single one of our team members, I think it went out to 75,000 of our team members and said, rank these 27 cultural traits in order. And the top five were exactly the same and in exact same order. From both cultures, which was impressive. And the first thing was always about embrace the customer. So then when we then go through and said to our team members, okay, we're going to align by our customers. And then make sure that we've got an account exec, we've got a pre-sales team, we've got a specialty organization, that is all aligned towards how do we best serve this customer? And then make it a very scalable model. All of a sudden you see that engine started clicking. You start the team members starting to realize that we're going to win together, as long as we win the hearts and minds of our customers. And that was a truly a differentiator in the process. >> Marius, one of the themes in the keynote this morning Michael talked about the pace of change. I want you to address how the channel is dealing with this pace of change. Because I think about when conversion infrastructure first rolled out, as Cloud over the last 10 years has come out. It's been challenging for some of the channel to work their way through. Where they add value, where they make dollars. What are you seeing out there, and how are you helping the channel through their own transformation? >> So we're kicking off our global channel summit today, this afternoon. Joyce Mullen is our channel chief. She's going to have Michael on stage. Willie Scannell and myself will be there with her as well. You see over 60% of what we call our metal partners, so these are titanium and so forth, grew well into the double-digits with us. So these are the majority of our partners that have understood how to embrace a solution orientation with our full portfolio. They're selling more lines of business, we added and re-activated 54,000 customers just this past year alone. That's a big number. And so, what they're finding is, again, embracing the transformations, embracing the portfolio, and becoming a lot more relevant to the customer journey. And we've seen nothing but success so far. So we've been very, very happy. >> So you have to position yourself with a channel obviously as relevant, and then of course at the end of the day, they care about margin, they care about things like deal registration. How complicated was it to bring those two different systems together? And it seems like you've done it pretty quickly but. >> We've done a good job, and we had plenty of time to get ready for it too. >> Dave: Yeah. >> Now as systems go, you know that it's never perfect. Right, so there was still opportunities for us to improve the deal registration process. We got well over 70% of the inquiries coming in are getting approved right away. And then you've still got to work long tail of the 30%. And how do you try to do that in a frictionless manner as quickly as possible? We've got SLAs that we've deployed for every one of our partners, so they know exactly how long it'll take to get a deal reg done, and some instances it's automatic where they've got lined-up business encompassing for example. So trying to put as many rules into the process to make sure that we have a very efficient, effective engine. Now we're still in the process of consolidating all our quoting and config engines site. I think you're familiarized with the EMC engine was an SAP-based model, the Dell core engine is an Oracle-based model. Well, bringing those configurations engines together isn't something that you do overnight. So what can we do to mask some of that complexity to our partners? By giving them an SLA that truly enables them to compete effectively across the globe. And we get better, and better, and better at it. To the point that our partners are feeling, obviously able to grow, obviously be in a position to be extremely competitive with us. >> So I'm guessing you masked that with people in process, right? >> Some of that, yes, and we continue to invest significantly in our IT infrastructure to continue to improve that. >> Right, right, okay so, what's going on this show? You talked about the partner summit. What else should we know about? >> Well, obviously you heard Michael's keynote. He was signaling some of the new technology announcements that will be made tomorrow. Jeff Clarke is going to have an amazing keynote and he's going to launch a number of new products, new solutions, new updates. Basically across the whole portfolio. Pay close attention. >> Well, I'm glad you brought up Jeff Clarke because he's not been shy about talking about simplifying, I mean you've done very well despite the fact that storage business is not held up to expectations. So you got some upside there. Jeff has come in and said we're going to simplify this. And so that could potentially add fuel to the fire in the next 12 months. >> And he'll certainly help for sure. And it's all about how do we simplify? How do we streamline? How do we accelerate the pace of innovation? How do we create a more consistent management orchestration layer across all of our storage assets is an example. And he is marching down that path at a feverous pace. So we're extremely excited about all of the things that are going to really enable us in sales and make us to present an even better portfolio to our customers. But, look, in the fourth quarter we grew storage. We've seen that same momentum continuing in the first quarter. So we're feeling pretty bullish about where we're heading. And we're pretty bold in our communications to our channel partners. Say hey, this ought to be a refuse to lose it approach. We're number one in storage today. Our customers have voted to have us as part of their solution. So, let's make sure that we embrace 'em. Let's make sure we bring 'em the best technology possible. >> Marius, one of the things people on the outside often don't notice some of the big changes that happen inside a company. We remember back when you joined Dell, gone through the whole privatization, we've had this huge merger. How is Dell different today than it was when you joined just a few years back? >> Can you believe it? It's been six years ago. I think that's when we probably first met, right? And it's again the, the magnitude shift, and what this portfolio can now do for our customers. It's mind-boggling. It's just unimaginable six years ago. Yes, we had great technology on the client side. We were making great strides on the compute side. We were starting to make hay in the networking side. Starting to progress on the storage side. And we've just now completely changed the industry landscape. Where I don't have a conversation today with a customer where there isn't an opportunity that they want to engage with. Not a single customer says I'm not interested in working with Dell Technologies. It just doesn't exist. So I think the stat is 99% of our Fortune 500 customers are Dell customers. Dell Technologies' customers. >> Well, it's hard not to bump into Dell when you walk into an account. I mean it's virtually impossible in some way, shape, or form. >> Marius: That's a good thing right? >> That's true. >> Yes. >> When your customers, particularly in the commercial area, go home, and they write up their trip report, what are their takeaways? What do you want them to take away from this event? >> I'd say it's a place your bets on Dell Technologies. That's the right partner for you. It's going to move you and your company into being future-ready all the time. Michael's got the right vision of where this is going. He's got the right technology to do it. And we've got great team members to help you get there. >> Marius, you look great, you got a winning spring in your steps. >> Love it. >> So congratulations. I know there's a lot more to go. You're not done yet, and we'll be watching. So thanks so much coming-- >> There's always more to do. Dave, Stu, awesome. >> Great to see you again. 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