(upbeat techno music) >> Live from Las Vegas, it's theCUBE covering VMworld2018 brought to by VMware and it's ecosystem partners. >> Welcome back to theCUBE, I am Lisa Martin with Dave Vellante, John Furrier, Stu Miniman at the end of day two of our continuing coverage, guys, of VMworld 2018, huge event, 25+ thousand people here, 100,000+ expected to be engaging with the on demand and the live experiences. Our biggest show, right? 94 interviews over the next three days, two of them down. Let's go, John, to you, some of the takeaways from today from the guests we've had on both sets, what are some of the things that stick out in your mind? Really interesting? >> Well we had Michael Dell on so that's always a great interview, he comes on every year and he's very candid and this year he added a little bit more color commentary. That was great, it was one of my highlights. I thought the keynote that Sanjay Poonen did, he had an amazing guest, Nobel Peace Prize winner, the youngest ever and her story was so inspirational and I think that sets a tone for VMware putting a cultural stake in the ground around tech for good. We've done a lot of AI for good with Intel and there's always been these initiatives but I think there's now a cultural validation that people generally want to work for and buy from companies that are mission driven and mission driven is now part of it and people can be judged on that front so it's good to see VMware get some leadership there and put the stake in the ground. I thought that was the big news today, at least from my standpoint. The rest were like point product announcements. Sanjay Poonen went into great detail on that. Pat Gelsinger also came on, another great highlight and again we didn't have a lot of time, he was running a bit late, he had a tight schedule but it shows how smart he is, he's really super technical and he actually understands at a root level what's going on so he's actually a great CEO right now, the financial performance is there and he's also very technical, and I think it encapsulates all of it that Dell Technologies, under Michael Dell, he's making so much more money, he's going to be richer and richer. (laughing) He took an entrepreneurial bet, it wasn't hurting at the time but Dell was kind of boring, Dave. I wouldn't call it like an innovative company at the time when they were public using the 90 day shot clock. They had some things going on but they were a hardware company, a supplier to IT footprints-- >> Whoa, whoa, they were 60 billion dollars in revenue and a 20 billion dollar market gap, so something was broken. >> Well I mean it was working numbers wise but he seemed-- >> No that's opposite, a 20 billion dollar value on a 60 billion of revenue, is you're sort of a failure, so anyway, at the time. >> Market conditions aside, right, at the time, he seemed like he wanted to do something entrepreneurial and the takeaway from my interview with him, our interview with him, was he took an entrepreneurial bet put his own cash on the table and it's paying off, that horse is coming in. He's going to make more money on this transaction and takes EMC out of the game, folds it into the operations, it really is going to be, I think, a financial success story if market conditions continue to be the way they are. Michael Dell will go down as a great financial maneuver and he'll be in the top epsilon of deals. >> The story people might forget is that Carl Icahn tried to take the company away from him. Michael Dell beat the great Carl Icahn, which doesn't happen often. Why did Carl Icahn want to take Dell private? Because he knew he could make a boatload of money off of it and Michael Dell said, "No way you're taking my company. "I'm going to do my thing and change the industry." >> He's going to have 90% voting control with Silver Lake Partners when the deal is all said and done and taking a company private and the executing the financial engineering plus execution is really hard to do, look at Elon Musk in the news today. He's trying to take Tesla private, he got his butt handed to him. Now he's saying, "No, we're going to stay public." (laughing) >> Wait, guys, are you saying Michael, after he gets all this money from VMware that it will help them go public, he's not going to sell off VMware or get rid of that, right? >> Well that's a joke that he would sell VMware, I mean-- >> Unless the cash is going to be good? >> No, he won't do it. >> I don't think it'll happen. I mean, maybe some day he sells some of the portion of it but you're not going to give up control of it, why would he? It's throwing off so much cash. He's got Silver Lake as a private equity company, they understand this inside and out. I mean this transaction goes down in history as one of the greatest trades ever. >> Yeah. >> Let me ask you guys a question, because I think is one we brought up in the interview because at that time, the pundits, we were actually right on this deal. We were very bullish on it, and we actually analyzed it. You guys did a good job at Wikibon and we on theCUBE pretty much laid out what happened. He executed it, we put the risks out there, but at the time people were saying, "This is a bad deal, EMC." The current state of IT at that time looked like it was dismal but the market forces that changed were cloud, and so what were those sideways impact points that no one understood, that really helped him lift this up? What's your thoughts, Dave, on that? >> First of all the desktop business did way better than anybody thought it would, which is amazing and actually EMC did pretty poorly for a while and so that was kind of a head fake. And then as we knew, VMware crushed it and crushed it even more than anybody expected so that threw off so much cash they were able to deliver, they did Pivotal, they did a Pivotal IPO, sold some software assets. I mean basically Michael Dell and his team did everything they said they said they were going to do and it's worked out, as he said today, even better than they possibly thought. >> Well and the commentary I'd give here is when the acquisition of EMC by Dell happened, the big turn we had is the impact of cloud and we said, "Well, okay they've got VMware over there "and they've got Pivotal but Dell's "just going to be a boring infrastructure company "with server, network and storage." The message that we heard at Dell World and maturing even more here is that this portfolio of families. Yes, VMware's a big piece of it, NSX and the networking, but Pivotal with PKS, all of those tie in to what's Dell's selling. Every time they're selling VxRail, you know that has a big VMware piece. They do the networking piece that extends across multi clouds, so Dell has a much better multi cloud story than I expected them to have when they bought EMC. >> But now, VMware hides a lot of warts. >> Yeah. >> Right? >> Absolutely. >> Let's be honest about that. >> What are they? >> Okay. I still think the client business is exposed. I mean as great as it is, you got to gain share in that business if you want to keep winning, number one. Number two is, the big question I have is can the core of Dell EMC continue to innovate or will it just make incremental improvements, have to do acquisitions to do innovation, inorganic acquisitions, and end up with more stovepipes? That's always been, Stu used to work there, that was always EMC's biggest challenge. Jeff Clark came in and said, "Okay, we're going to rationalize the portfolio." That has backlash as customer's say, "Well wait a minute, does that mean "you're not going to support my products?" No, no, we're going to support your products. So they've got to continue to innovate. As I say, VMware, because of how much cash it throws off, it's 50% of the company's profits, hides a lot of those exposures. >> And if VMware takes a turn, if market conditions change, the debt looming is exposed so again, the game's not over for Dell. He can see the finish line, but. (laughing) >> Buy low, sell high, guess who's selling right now? >> So a lot of financial impact, continued innovation but at the end of the day, guys, this is all about impacting customer's businesses. Not just from we've got to enable them to be successful in this multi cloud era, that's the norm today. They need to facilitate successful digital transformations, business outcomes, but they also have VMware, Dell EMC, Dell Technologies, great power to help customer's transform their cultures. I'd love to get perspective from you guys because I love the voice to the customer, what are some of your favorite Dell EMC, VMware, partner, customer stories that you've heard the last couple days that really articulate the value of this financial successful company that they're achieving? >> Well the first thing I'll say before we get to the customer stories is on your point about what VMware's doing, is they're a technology, Robin Matlock, the CMO was on theCUBE talking about they're a technology company, they have the hands on labs, they're a very geeky audience, which we love. But they have to get leadership on the product side, they got to maintain the R and D, they got to have best in class technical products that actually are relevant. You look at companies like Tintri that went bankrupt, great technology, cul-de-sac market. There's no market there, the world's going cloud. So to me VMware has to start pumping out really strong products and technologies that the customer's are going to buy, right? (laughing) >> In conjunction with the customer to help co-develop what the customer's need. >> So I was talking to a customer and he said, "Look, I'm 10 years behind where the cloud guys are "with Amazon so all I want is VMware "to make my life easier, continue to cut my costs. "I like the way I'm operating, "I just get constant pressure to cut cost, "so if they keep doing that, I'm going to stay with them "for a long, long time." Pete Townsend said it best, companies like VMware, Dell EMC, they move at the speed of the CIO and as long as they can move at the speed of the CIO, I've said this a million times, the rich get richer and it's why competent management that led by founders like Larry Ellison, like Michael Dell, continue to do well in this industry. >> And Andy Jassy technically, I would say, a found of AWS because he started it. >> Absolutely. >> A key, the other thing I would also say from a customer, we hear a lot of customer, I won't name names because a lot of our data's in hallway conversations and at night when we go out and get the real stories. On theCUBE it's mostly, oh we've been very successful at VM, we use virtualization, blah, blah, blah and it's an IT story, but the customers in the hallways that are off the record are saying essentially this, I'm paraphrasing, look it, we have an operation to run. I love this cloud stuff and I'd love to just blink my fingers and be in the cloud and just get rid of all this and operate at a level of cloud native, I just can't. I can't get there. They see Amazon's relationship with VMware as a bridge to the future and takes away a lot of cognitive dissonance around the feelings around VMware's lack of cloud, if you will. In this case, now that's satisfied with the AWS deal and they're focused on operations on premises and how to get their app more closed, like modernize so a lot of the blocking and tackling of the customer is I got virtualization and that's great but I don't want to miss out on the next lever of innovation. Okay, I'm looking at it going slow but no one's instantly migrating to the cloud. >> No way, no way. >> They're either born in the cloud or you're on migration schedules now, really evaluating the financial impact, economic impact, headcount impact of cloud. That's the reality of the cloud. >> You got to throw a flag on some of that messaging of how easy it is to migrate. I mean it's just not that easy. I've talked to customers that said, "Well we started it and we just kind of gave up. "There was no point in it. "The new stuff we're going to do in the cloud, "but we're not going to migrate all of our apps to the cloud, "it just makes no sense, there's no business case for it." >> This is where NSX and containers and Kubernetes bet is big, I think, I think if NSX can connect the clouds with some sort of interoperable layer for whatever workloads are going to move on either Amazon or the clouds, that's good. If they want to get the developers off virtualization, into a new drug, if you will, it's going to be services, micro services, Kubernetes because you can throw containers around those old workloads, modernize with the new stuff without killing the old and Stu and I heard this clear at the CNCF and the Lennox Foundation, that this has changed the mindset because you don't have to kill the old to bring in the new. You can bring in the new, containerize the old and manage on your speed of the CIO. >> And that's Amazon's bet isn't it? I mean, look, even Sanjay even said, if you go back five, six years, the original reinvent that was sweep the floor, bring it all into the cloud? I think that's in Amazon's DNA. I mean ultimately that's their vision. That's what they want to have happen and the way they get there is how you just described it, John. >> That's where this partnership between Amazon and VMware is so important because, right, Amazon has a lot of the developers but needs to be able to get deeper into the enterprise and VMware, starting to make some progress with the developers, they've got a code initiative, they've got all of these cool projects that they announced with everything from server less and Kubernetes and many others, Edge going to be a key use case there but you know, VMware is not, this is not the developer show. Most of the conversations that I had with customers, we're talking IT things, I mean customers doing some cool things but it's about simplifying in my environment, it's about helping operations. Most of the conversations are not about this cool new micro services building these things out. >> Cisco really is the only legacy, traditional enterprise company that's crushing developers. You give IBM some chops, too, but I wouldn't say they're crushing it. We saw that at Cisco Live, Cisco is doing a phenomenal job with developers. >> Well the thing about the cloud, one thing I've been pointing out, observation that I have is if you look at the future of the cloud and you can look for metaphors and/or real examples, I think Amazon Web Services, obviously we know them well but Google Cloud to me is a picture of the future. Not in the sense of what they have for the customer's today it's the way they've run their business from day one. They have developers and they have SREs, Site Reliability Engineers. This VMworld community is going down two paths. Developers are going to be rapidly iterating on real apps and operators who are going to be running systems. That's network storage, all integrated. That's like an SRE at Google. Google's running massive scale and they perfected it, hence Kubernetes, hence some of the tools coming in to services like Istio and things that we're seeing in the Lennox Foundation. To me that's the future model, it's an operator and set of developers. Whoever can make that easy, completely seamless, is the winner of it all. >> And the linchpin, a linchpin, maybe not the linchpin, but a linchpin is still the database, right? We've seen that with Oracle. Why is Amazon going so hard after the database? I mean it's blatantly obvious what their strategy is. >> Database is the hill that everyone is trying to take down. Capture the hill, you get the high ground with the database. >> Come on Dave, when you used to do the financial models of how much money is spent by the enterprise, that database was a big chunk. We've seen the erosion of lots of licensing out there. When I talked to Microsoft, they're like, pushing a lot of open source, they're going to cloud. Microsoft licensing isn't as much. VMware licensing is something that customers would like to shrink over time but database is even bigger. >> It's a strategic fulcrum, obviously Oracle has it. Microsoft clearly has it with Sequel Server. IBM, a big part of IBM's success to this day, is DB2 running on mainframe. (laughing) So Amazon wants a piece of that action, they understand to be a major player in this business you have to have database infrastructure. >> I mean costs are going down, it's going to come down to economics. End of the day the operating models as I said, some things about DB2 on mainframe, the bottom line's going to come down to when the cost numbers to run at the value and cost expense involved in running the tech that's going to be the ultimate way that things are either going to be cleared out or replaced or expanded so the bottom line is it's going to be a cost equation at that level and then the upside's going to be revenue. >> And just a great thing for VMware, since they don't own the application, when they do things like RDS in their environment they are freeing up dollars that customers are then going to be more likely to want to spend with VMware. >> Great point. I want to make real quick, three things we've been watching this week. Is the Amazon VMware deal a one way trip to the cloud? I think it's clear not in the near term, anyway. And the second is what about the edge? The edge to me is all about data, it's like the wild, wild west. It's very unclear that there's a winner there but there's a new type of cloud emerging. And three is the Dell structure. We asked Pat, we asked VMware Ray O'Farrell, we asked Michael, if that 11 billion dollar special dividend was going to impact VMware's ability to fund it's future? Consistent answer there, no. You know, we'll see, we'll see. >> I mean what are they going to say? Yeah, that really limits my ability to buy companies, on theCUBE? No, that's the messaging so of course, 11 billion dollars gone means they can't do MNA with the cash, that means, yeah it's going to be R and D, what does that mean? Investment, so I think the answer is yes it does limit them a little bit. >> Has to. >> It's cash going out the door. >> But VMware just spent, it is rumored, around 500 million dollars for CloudHealth Technologies, Dave, Boston based company, with about 200 people You know, hey, have a billion-- >> They're going to put back a dividend anyway and do stock buybacks but I'm not sure 11 out of the 13 billion is what they would choose to do that for, so going forward, we'll see how it all plays out, obviously. I think, Floyer wrote about this, more has to go toward VMware, less toward-- >> I think it's the other way around. >> Well I think it's really good that we have one more day tomorrow. >> I think it's a one way trip to the cloud in a lot of instances, I think a lot of VMware customers are going to go off virtualization, not hypervisor and end up being in the cloud most of the business. It's going to be interesting, I think the size of customers that Amazon has now, versus VMware is what? Does VMware have more customers than Amazon right now? >> It's pretty close, right? VMware's 500,000? >> 500,000 for VMware. >> And Amazon's-- >> Over a million. >> Are they over a million, really? >> Yeah. >> A lot of smaller customers, but still. >> Yeah. >> Customer's a customer. >> But VMware might have bigger customers, see that's-- >> No question the ASP is higher, but-- >> It's not conflict, I'm just thinking like cloud is natural, right? Why wouldn't you want to use the cloud, right? I mean. >> So guys-- >> So the debate continues. >> Exactly. Good news is we have more time tomorrow to talk more about all this innovation as well as see more real world examples of how VMware is going to be enabling tech for good. Guys, thanks so much for your commentary and letting me be a part of the wrap. >> Thank you. >> Thanks, Lisa. >> Looking forward to day three tomorrow. For Dave, Stu and John, I'm Lisa Martin. You've been watching our coverage of day two VMworld 2018. We look forward to you joining us tomorrow, for day three. (upbeat techno music)