(upbeat music) >> As we said in our analysis of Dell's future, the transformation of Dell into Dell EMC and now Dell Technologies has been one of the most remarkable stories in the history of the technology industry. After years of successfully integrated EMC and becoming VMware's number one distribution channel, the metamorphosis of Dell culminated in the spin out of VMware from Dell and a massive wealth creation milestone pending of course the Broadcom acquisition of VMware. So where's that leave Dell and what does the future look like for this technology powerhouse? Hello, and welcome to theCUBE's exclusive coverage of Dell Technologies Summit 2022. My name is Dave Vellante and I'll be hosting the program. Today, in conjunction with the Dell Tech Summit, we'll hear from four of Dell senior executives. Tom Sweet is the CFO of Dell Technologies. He's going to share his views of the company's position and opportunities and answer the question why is Dell a good long term investment? Then we'll hear from Jeff Boudreau, who's the president of Dell's ISG business unit. He's going to talk about the product angle and specifically how Dell is thinking about solving the multi-cloud challenge. And then Sam Groccot is the senior vice President of marketing. He's going to come in the program and give us the update on Apex, which is Dell's as-a-service offering. And a new edge platform called Project Frontier. By the way, it's also Cybersecurity Awareness Month and we're going to see if Sam has any stories there. And finally, for a company that's nearly 40 years old, Dell has some pretty forward thinking philosophies when it comes to its culture and workforce. And we're going to speak with Jen Saavedra who's Dell's Chief Human Resource officer about hybrid work and how Dell is thinking about the future of work. We're going to geek out all day and talk multi-cloud and Edge and latency, but first, let's talk wallet. Tom Sweet, CFO, and one of Dell's key business architects. Welcome back to "theCUBE." >> Dave, it's good to see you and good to be back with you, so thanks for having me today. >> Yeah, you bet. Tom, it's been a pretty incredible past 18 months. Not only the pandemic and all that craziness, but the VMware spin. You had to give up your gross margin pinky, just kidding, and of course the macro environment. I'm so sick of talking about the macro. But putting that aside for a moment what's really remarkable is that for a company of your size, you've had some success at the top line which I think surprised a lot of people. What are your reflections on the last 18 to 24 months? >> Well Dave, it's been an incredible, not only last 18 months, but the whole transformation journey if you think all the way back maybe to the LBO and forward from there. But stepping into the last 18 months, it's, I think I remember talking with you and saying, "Hey, the scenario planning we did at the beginning of this pandemic journey was 30 different scenarios roughly, and none of which sort of panned out the way it actually did," which was a pretty incredible growth story. As we think about how we helped customers, drive workforce productivity, enable their business model during the all remote work environment that was the pandemic created. And couple that with the rise then and the infrastructure spin as we got towards the tail end of the pandemic coupled with the spin out of VMware, which culminated last November as we completed that, which unlocked a pathway back to investment grade, which then unlocked, quite frankly shareholder value, capital allocation frameworks. It's really been a remarkable 18, 24 months. It's, it's never dull at Dell Technologies. Let me put it that way. >> Well, I was impressed with you Tom before the leverage buyout and then what I've seen you guys navigate through is truly amazing. Well, let's talk about the challenging macro. I mean, I've been through a lot of downturns but I've never seen anything quite like this with Fed tightening, and you're combating inflation, you got this recession looming. There's a bear market. You got, but you got zero unemployment, you're rising wages, strong dollar, and it's very confusing. But IT spending is, it's somewhat softer, but it's still not bad. How are you seeing customers behave? How is Dell responding? >> Yeah look, if you think about the markets we play in Dave, we should start there as a grounding. The total market, the core market that we think about is roughly $750 billion or so, if you think about our core IT services capability. If you couple that with some of the growth initiatives that we're driving and the adjacent markets that that that brings in, you're roughly talking a 1.4 to $1.5 trillion market opportunity total addressable market. And so from that perspective we're extraordinarily bullish on where are we in the journey as we continue to grow and expand. We have, we're number one share in just about every category that we plan, but yet when you look at that, number one share in some of these, our highest share position may be low 30s and maybe in the high end of storage or at the upper end of 30s or 40%. But the opportunity there to continue to expand the core and continue to take share and outperform the market is truly extraordinary. So if you step back and think about that, then you say, okay, what have we seen over the last number of months and quarters? It's been really great performance through the pandemic as you highlighted. We actually had a really strong first half of the year of our fiscal year '23 with revenue up 12% operating income, up 12% for the first half. What we talked about if you might recall in our second quarter earnings was the fact that we were starting to see softness. We had seen it in the consumer PC space, which is not a big area of focus for us in the sense of our total revenue stream. But we started to see commercial PC soften and we were starting to see server demand soften a bit and storage demand was holding quite frankly. And so we gave a framework around guidance for the rest of the year as a result of what we were seeing. The macro environment as you highlighted continues to be challenging. If you look at inflation rates and the efforts by central banks across the globe through interest rate rise to press down and constrain growth and push down inflation, you couple that with supply chain challenges that continue particularly in the ISG space. And then you couple that with the Ukraine war and the energy crisis that that's created. And particularly in Europe, it's a pretty dynamic environment. But I'm confident, I'm confident in the long term. But I do think that there is, there's navigation that we're going to have to do over the coming number of quarters. Who knows quite how long. To make sure the business is properly positioned and we've got a great portfolio and you're going to talk to some of the team later on as you think your way through some of the solution capabilities we're driving, what we're seeing around technology trends. So the opportunity is there. There's some short term navigation that we're going to need to do just to make sure that we address some of the environmental things that we're seeing right now. >> Yeah, and as a global company of course you're converting local currencies back to appreciated dollars. That's another headwind. But as you say, I mean, that's math and you're navigating it. And again, I've seen a lot of downturns, but the best companies not only weather their storm, but they invest in ways they that allow them to come out the other side stronger. So I want to talk about that longer term opportunity the relationship between the core, the the business growth. You mentioned the TAM. I mean, even as a lower margin business, if you can penetrate that big of a TAM, you could still throw off a lot of cash and you've got other levers to turn in potentially acquisitions and software. But so ultimately what gives you confidence in Dell's future? How should we think about Dell's future? >> Yeah look, I think it comes down to we are extraordinarily excited about the opportunity over the long term. Digital transformation continues. I am on numerous customer and CIO conference calls every week. Customers are continuing to invest in digital transformation, in infrastructure, to enable their business model. Yes, maybe it's going to slow or pause, or maybe they're not going to invest quite at the same rate over the next number of quarters but over the long term the needs are there. You look at what we're doing around the growth opportunities that we see, not only in our core space where we continue to invest, but also in the, what we call the strategic adjacencies. Things like 5G and modern telecom infrastructure as our, the telecom providers across the globe open up their what previous been closed ecosystems to open architecture. You think about, what we're doing around the EDGE and the distribution now that we're seeing of compute and storage back to the edge given data, gravity, and latency matters. And so we're pretty bullish on the opportunity in front of us. Yes, we will, and we're continuing to invest. And you hear Jeff Boudreau talk about that I think later on in the program. So I'm excited about the opportunities and you look at our cash flow generation capability, we are in in normal times a cash flow generation machine and we'll continue to do so. We've got a negative CCC in terms of how do we think about efficiency of working capital? And we look at our capital allocation strategy which has now returned somewhere in near 60% of our free cash flow back to shareholders. And so, there's lots to, lots of reasons to think about why this, we are a great sort of, I think value creation opportunity in a over the long term. That the long term trends are with us and I expect them to continue to be so. >> Yeah, and you guys, you do what you say you're going to do. I mean, I said in my other piece that I did recently, I think you guys put $46 billion on the balance sheet in terms of debt. That's down to I think 16 billion in the core which that's quite remarking. That gives you some other opportunities. Give us your closing thoughts. I mean, you kind of just addressed why Dell is a good long term play, but I'll give you an opportunity to bring us home. >> Hey Dave, yeah look, I just think if you look at the grid, the market opportunity, the size and scale of Dell and how we think about the competitive advantages that we have, we can, if you look at say we're a hundred billion dollar revenue company which we were last year as we reported. Roughly 60, 65 billion of that in the client in PC space, roughly 35 to 40 billion in the ISG or infrastructure space. Those markets are going to continue. The opportunity to grow share, grow at a premium to the market, drive cash flow, drive share gain is clearly there. And couple that with what we think the opportunity is in these adjacent markets, whether it's telecom, the EDGE, what we're thinking around data services, data management, we, and you put that together with the long term trends around data creation and digital transformation. We are extraordinarily well positioned. We have the largest direct selling organization in the technology space. We have the largest supply chain. Our services footprint. Well positioned in my mind to take advantage of the opportunities as we move forward. >> Well Tom I really appreciate you taking the time to speak with us. Good to see you again. >> Nice seeing you. Thanks Dave. >> All right, you're watching theCUBE's exclusive behind the scenes coverage of Dell Technology Summit 2022. In a moment, I'll be back with Jeff Boudreau. He's the president of Dell's ISG Infrastructure Solutions Group. He's responsible for all the important enterprise business at Dell, and we're excited to get his thoughts. Keep it right there. (upbeat music)

>>from around the globe. It's the Cube with digital coverage of Dell Technologies. World Digital Experience Brought to You by Dell Technologies. Hello, everyone, and welcome Back to the cubes. Continuing coverage of Del Tech World 2020. This is David Dante With Me is Tom Sweet. He's the EVP and chief financial officer of Dell Technologies. Tom is great to see you. Thanks for coming on The Virtual Cube. >>Dave is always good to see you. And thanks for having me. It's always good to have a conversation with you. >>I actually don't think I've spent a lot of time talking to folks from jail, but I don't think you and I have talked since the pandemic hit. So you know, what's the macro picture? You know, you and I was usually start with the big picture. And, of course, the impact of the pandemic and kind of the big waves that you're seeing out. There may be some of the changes that you're navigating >>Well, you know, it's it's been uninterested near David's. You and I both know, right, and so we way clearly did a number of tactical actions as we worked our way through the pandemic in the early days to make sure our team members could work and we're safe and then pivoted to making sure we could, you know, help our customers and get them up in productive from a work from home perspective, you know? And so it's and then we've evolved into Then, you know, how do you think your way through? Um, you know, what's the what's the work? How do you work your way through? What do you look like on the other end? And so we've been spending a lot of time thinking about investments. Where do we put Capital Toe work to position the organization for success? Post Cobain, whenever that might be, by the way, and and so that's been the focus in, you know, really spending a lot of time on investment areas. The whole macro dynamic has been interesting is, you know, way went through this huge trough in Q two in terms of GDP and global GDP. You know, we're working our way out of that at a macro level. It's very interesting as you go across the globe and look at the various countries and regions and how they're recovering at very different paces. You know, the business has been uninterested in business in terms of what we do, and our PC business has been quite strong. And we've seen a big shift with the work from home and learn from home dynamics with strong demand from government and education. Three infrastructure business R I s G business has been a bit softer, just a zoo Companies have pivoted, but all in all, I think we're working our way through it. I e think the actions we took to preserve liquidity and protect the P and L early in the pandemic have paid off for us. And, uh, we're now focused on how do we position Post Post when we get through this whole cova dynamic? >>You know, way both seen a couple of pretty severe downturns. I think about the dot com downturn and then the financial crisis. I'm actually kind of surprised and impressed the way that that not just our industry, but all industries have worked through this. I guess in hindsight, that shouldn't be surprising given the pace of technology. But I remember those two that I just mentioned. People were flat footed. I remember Ed Zander joking when he was a son. Anybody wanna buy a server? And it was just there was business wasn't being transacted. And that's different this time around, Uh, industries have have responded and you know, technology, of course, is is at the heart of that. But were you surprised at all by the by the pace of I don't want to say recovery, but resiliency, I guess >>a little bit to be honest day. I mean I mean, it does highlight the fact that at the heart of what most companies are you know are doing these days is technology and how they evolve their business model, how how they interact with their customers. And so clearly, if you you think all the way back with our industry date back to the early two thousands and we had a with the bump with the dot com bust and people shut down, I t spending, you know. And now I don't think you can really do that if you think about where you need to be from a business model perspective. So I think there's been a maturation and a recognition that technology plays a key role. But But it has been surprising about how fast it's pivoted. To be honest with you in the sense of, you know, I think of the very distinct cycles is would come through the Coba dynamic. Big PC demand early innings. You know, we saw some recovering the I S G spend in Q two in our quarter second quarter a little bit better than Q one. You know, as companies readjusted spin eso, it's The organizations across in our customer base have have adjusted quite well. Clearly, there is vertical implications. If you're in the airline industry or some of the hospitality, you're you're being a bit more cautious, right? But all in all, it's been a It's been an interesting journey for all of us. >>Yeah, I mean, at the height of the pandemic, you saw, you know, some people taking actions. Obviously, they were freezing I t projects. They were starting to do layoffs or freezing new hires. That's moderated based on the data that we've seen. I just published the other day that we're starting to see some, you know, slow thawing of that tight grip on I t. What are you seeing? Both externally and maybe as the CFO. What are you doing internally? Well, >>if you talk to my CEO should probably give you a different answer day that I'm about to give you because you know, I'm a extraordinarily balanced guy in my point of view, right? But, you know, look, I think externally we're seeing targeted investments happening by customers that are moving projects forward. I think there's a bit of caution, and I do think this whole evolution off. How do customers want to consume? I t is evolving, you know. Is it a cat expand? Is it a Is it a financing structure? Is it a as a service and consumption model type? You know, So those three economic models around I t. Or changing and evolving. But I think overall, what we've seen is some level off, you know, cautious, you know, cautiousness. But yet, you know, targeted and investment with our customers and in an internally, Quite frankly, we're continuing to invest. We have capabilities that we need to evolve. You know, we're working. We're very focused on transformational projects that enable our customers to do business with us easier. On the other hand, we're being very tight around. What do I need to do from, You know, some of those old run the business types spend and how doe I streamline that while still supporting the business properly. So it's a bit of a balance right now. >>Yeah, and you obviously have the advantage of large portfolio parts of your portfolio exposed. Like you said, some of the on Prem stuff. But then you've got the certainly the laptop in the work from home shift. A couple of questions there. One is, first of all, you know, Della was largely a larger work from home culture than the average. The average Let's say the average is on a 15 to 20% of employees work from home. You're probably higher than that. And and But now we're seeing that people are expecting at least double that long term are gonna work from home. So you were, you know, somewhat, maybe more prepared than than most. But then again, you have that tailwind on one side of your business. Your supply chain did very well, unlike some of your competitors that we saw early in the pandemic, you know? So it seems like you've managed that pretty well. Maybe your thoughts. >>Yeah. Okay. We do have a culture that provided flexibility. We've been on this journey for roughly 10 years about having our people have some flexibility where they work. And so we had roughly 20 25,000 people working remotely, or some are in some hybrid fashion before the pandemic. You know, obviously, right now, 90% of our workforce is is remote. We think, you know, post pandemic, you know that it's gonna look like something like, you know, you know, 45 50% of the organization is probably gonna be in some sort of hybrid or remote setting. You know, that's the feedback our team members are giving us. And, uh and so you know, we have been fortunate to be able to have the culture that pivoted quite frank quite quickly, I should say, as we worked our way through this from a supply chain perspective Look our supply chain has done. Team has done a terrific job on sort of navigating the barriers and the challenges put up by a covert 19 crisis. But I'll go further back that if you and I talked about this before, think about what's happened with our supply chain and global supply chains over the last couple of years and whether it's the US China dynamic and how do you work your way through that? You know, and how do you ensure continuity of supply for our customers? And so that that teams done a great job? You know, we have long term relationships with many of our key suppliers, which has been helpful. And, you know, as you know, we have one of the largest, if not the largest, technology by in the industry. So it has helped us in terms of making sure we have capability and availability for custom. >>Let's talk a little bit about some of the strategy and the value levers that you guys talk about. You've always hit on industry consolidation, integration delivering. You've seen the 13 D with the movie you're gonna make with VM Ware. How have things changed? There has a pandemic changed your thinking at all, And how are you doing in terms of those turning those knobs? >>You know, first, it has not changed our thinking in the sense of some of those keep long term value creation activities we've been focused on and platforms we've been focused on around Hey, you know, we know that in the where we where we sell where we compete, that the industry is not a, you know, a rapidly growing industry. And so you grow organically by consolidation and share gain, and that's what we've been focused on. You couple that with the innovation engine we have with Dell Technologies. And, uh, including our, you know, way need to including that VM ware. You know, we've got a new, extraordinary patent portfolio and we've got these what we think are unique solutions and capability. So we're pushing hard on the innovation engine, and then you couple that with the capital work we've been doing around, how do you delivering the balance sheet? Getting the company reposition back towards investment grade. And we've made really good progress on that. You know will pay down $5.5 billion of debt this year, which will again position us closer to those investment grade like metrics. And so those those platforms are pillars, if you will, of our strategy, haven't changed. But in addition to that, you know, we are looking at where do you grow and how do you continue to grow at a pace, perhaps at GDP GDP plus, which is sort of where we think you know, is the long term framework we've got to be thinking about. So that's where you get into these adjacency is like, How do you How do you further driving a multi cloud hybrid cloud? How do you think about the opportunity with Telco, with five G roll out that's happening across the globe and the investment that's going to go into that the whole edge computing the edge cloud is of interest to us. And so there's a number of these emerging areas that we think are pretty interesting, and their adjacent and fit nicely into what we do is a, you know is, quite frankly, that essential infrastructure company. So that's the focus we've been driving about. How do we set up both continue on our core mission of consolidation, innovation and delivering as well as how do you set up some of these growth vectors as we move forward? >>Well, in one of the other levers you filed the 13 d, I don't know what you can share with us. Some of it gets confused. How much is fact sometimes and how much is speculation. But, I mean, I've said that it appears that one of the things that you're looking at is creating an equilibrium in terms of the balance sheets of both companies. Uh, keep getting them both that investment grade. What can you tell us about what you're thinking there? >>Yeah, I look, you know, obviously we did file a 13 D in mid July, which essentially said we were contemplating whether you know, a potential spin of our 81% ownership interest out to the Dell Technology shareholders. And so we're continuing to work with the VM Ware team on, you know, what does that look like with a couple of fundamental principles, which is Hey, you know, we have both benefited from this better together story. And so how do we keep that differentiation in some type of a long term operating agreement or operating framework? But at the same point in time, you know, you know, do the potentially look at it spend that unlocks value for both sets of shareholders of both companies, right? VM ware gets additional flexibility from a from a strategic perspective, they don't have the Dell balance sheet. Dell Technologies balance sheets sitting on top of them from the Dell Technologies perspective. You know, we presumably as part of this would be some type of a dividend stream. But by being were out to its share. What shareholders? We get the opportunity to accelerate our delivering story and get back closer to investment grade or right at investment grade, depending upon how this all works out. So we think there's a number of really interesting value levers here, right at the same point in time, wanting to protect what's been really good about the relationship in the way we've gone to market, the way we've innovated. And so that's the balance were walking right now. And you know there's work to do is we work with being where to see. If this makes sense, can we get it done? But But we're early innings and and we may end up not doing anything honestly, But I mean, that's that's sort of the thinking that we're working through right now. >>Well, it's an interesting thought exercise, if nothing else. And so e I look at it when when you combine del in the M. C when you did the acquisition. Now you became VM Ware's most important partner. Just even if it's in terms of revenue because you've got a massive distribution channel. So there's there's that inherent value in that relationship, independent of anything else. The flip side of that is VM Ware has been, you know, awesome acquire of companies. Uh, you know, inorganic r and D, if you will. And some pretty cool R and D A Z Well, so it's gonna be really interesting toe watch how that plays out. I think we wait and see. That's a comment, you know, >>we're working through it and we'll see where we end up. But, you know, you've highlighted a couple of great points. I mean, our, you know, our go to market reach, you know, it is extraordinary. And VM Ware has benefited from that. We've benefited from the VM Ware relationship with some of their technologies is we've integrated those into our combined solution. So it's been a it's been a win win, and that's the balance of how do you keep that, Aziz. Well, as you know, quite frankly, provide some value back to your shareholders. >>Well, we've seen that not just the the uplift of the market. But clearly the speculation has caused some unlocking of value and may bring some others from the sidelines. But I wanted to ask you about I've been talking about this automation mandate. I think there was one. Certainly. There was one before the pandemic, and now it's even accentuated. Um, can you talk a little bit about how you're applying automation, thio your business and maybe what you're seeing with customers? How that could affect, you know, the long term productivity of your business? Maybe new ways to work. What can you tell us there? >>Yeah, Look, I mean, we we have a pretty significant automation agenda within Dell Technologies, both from an internal perspective as well as the automation and a I am and machine learning capabilities were embedding into our solutions to help our customers Dr their automation agendas. Internally, what we've been focused on is how do I simplify? How do I take complexity out? You know, how doe I providing a richer mawr interactive experience with our customers? How doe I lean into service needs service capabilities, all those areas that are ripe for automation and my finance organization alone Right now, I think I have over 125 automation projects going right now is we? We look at how we simplify from a customer. Perspective is I go out and talk to customers. They're also doing much the same thing that we're doing, which is how did they take complexity out of their process? How do they streamline? How are they? How do they drive? Responsiveness and customer, uh, you know, customer experience at a much higher level. And so it's all you know. It's all war walking down this pathway of process simplification, automation, which includes technology, investment, obviously which is, you know, helpful from our perspective. And so there's a agenda out there is Aziz. We talked with customers in terms of in a commonality as we talked with customers. And then the other point I'd give you Dave, is that just as you think about, you know, as I talked to my peers out in the industry, I mean, many of us are driving automation agendas. Have a lot of that, you know, with focused on taking touch out, enrichment of job and capabilities, enrichment of, you know, we gotta build skill sets to drive that. So there is a big theme across the industry in this area, and I think it's gonna do nothing but accelerate. Quite frankly, Aziz, we work our way forward. >>Yeah, I've talked to a bunch of customers in this topic, and it seems to be sort of three paths. Actually, one path is there's. There's a lot of low hanging fruit and easy wins. And but the problem with that is a lot of times it's just paving the cow path with automation. You know, the other is you got to do the hard work of really digging into the process and the third that I've seen, which is kind of interesting to which is kind of what you're alluding to is your free up. You know, some of the mundane tasks, and you let the people who really understand the process rethink that process. And then you go into a deeper automation agenda, and that seems toe that will turn millions into billions. >>That's the value. Add their game. I mean, it's that third framework that you laid out, which is you have to do the work around process. But then again, how doe I then you know over time is I is. I have the experts help us on the automation capabilities. Once we've identified, what are the appropriate processes or functions to be automated? How do you then pivot resource tomb or higher value add activity across the organization and that Z when you when you do that, you unlock, I think, a terrific value creation opportunity, which we're very focused on. >>And I know there's always a big concern about jobs with automation. But the reality is, if you look at the data from the U. S. And Europe of the last couple of decades, the productivity trend is clear. It's it's gone down. And if you think about the big problems that we face in the world, whether it's climate change, your national debt or health care, you know you know hunger, you just can't throw people at that problem. You gotta have a combinations of people in machines. And so well, there may be, you know, a short term impact. I'm kind of an optimist. I know you are a swell >>No, it Zuno. Obviously, this is a tough time for a lot of businesses and customers. As we work our way through the pandemic and and including, you know, and and some have adjusted their workforce, you know, and part of its from the economic reality. But part of it is also a skill set. Dynamic is a reshaping workforce. And but I do think automation plays a key role. And how do you enable skill sets to evolve and get again re allocated Thio other value creation activity. So there is, you know, unfortunately, are probably gonna be some short term disruptions in certain areas. But on the other hand, if you think about the long term gain and the productivity gains that we all need to drive, you know you can't do it without automation and thinking your way through streamlining and taking complexity out of the organization. >>So my last question has come back the productivity We're talking about work from home. Do you feel like you've had a bump in productivity? As a result? Maybe there was some short term disruption. But you know, what's your what's your data or your gut say, in terms of the impact on your organization and then maybe on your customers as well in terms of the program. So >>I think it's been fairly similar between us and our customers. I waas concerned when we went to a work from home back in March that we were gonna lose productivity and, you know, and I thought it was gonna be a productivity drain, you know, a czar. Team members were juggling work and their family dynamics and situation is in. Obviously in the middle of that are in the early innings of this covert crisis. What we have seen, in fact, is actually, we've seen productivity improved pre Koba to where we are today. And I think a lot of that has to do with the fact that we're giving our team members one flexibility on how they do their job. But we're giving them time back there, and they're not commuting. There's less meetings that are consuming time, you know, and the responsiveness in the capabilities of the order such that we're moving through decisions and projects. I think, at a faster pace, quite frankly. And so it's been an interesting and, I think to me a bit of a surprising result from what we've seen as I talked to customers and I'm the executive sponsor on a number of extraordinary, very large multinational customers. It's pretty much the same response. You know, the similar experience, right, that they've seen similar results that we have. So now what you don't want this to be is that you're doing it on the backs of the team members working 15 or 16 hours a day. You've got to find the right balance. But the fact that we're giving them flexibility to jump out during the middle of Daito tend to some family members or help with, you know, their Children's learning. Then they're back in maybe a little bit later during the day. I mean, I do think that we've been able to a culture that's pretty interesting that is paying dividends for us right now. >>Yeah, it's ironic that this hit at the beginning of of 2020 it's clear that it's gonna be a different decade than it was last decade, which I guess every decade is Tom Tom Sweet. It was great to have you on the Cube. Thanks so much. Always a pleasure speaking with you. >>Always, always great to see you. Thanks for having me. >>You're welcome. And thank you for watching everybody says Dave Volonte, you're watching our coverage, the cubes coverage of del Tech World 2020. But right back after this short break

(bright music) >> Announcer: From around the globe, it's "theCUBE", with digital coverage of VMworld 2020, brought to you by VMware and its ecosystem partners. >> Welcome back, I'm Stu Miniman, and this is "theCUBE's" coverage of VMworld 2020. Of course, such a broad ecosystem in the VMware environment. Been talking a lot, of course, this year, about what's happened in the Cloud Native space. vSphere 7 has Kubernetes coming into the virtualized environment. And one of those key pieces of doing cloud is you need to make sure data protection still works. And, of course, VMware has a long history working with lots of companies. In this segment, we're going to be digging into the VMware, and Dell, also, solution for data protection. So, happy to welcome to the program. First, I have, from VMware, Tom Spoonemore. He is a product line manager for Modern Application Platform with VMware, and welcome back to the program, one of our CUBE alumnis, Efri Nattel-Shay, who is with Dell technologies, Director of Data Protection and Cloud Native apps. Efri, welcome back, Tom, welcome to the program. >> Thank you very much, it's good to be here. >> So, Tom, I kind of teed it up in my intro. VMware, for the longest time, for as long as I can remember, we've really talked about that ecosystem, those joint solutions. I remember, back when we started "theCUBE", in 2010, you'd go there and it would be, oh, there's $15, no, $20, for every dollar that you spend on VMware that the ecosystem kind of pulls along. When VMware started building the VMware Cloud Foundation and the VMware cloud solutions, data protection really went along with it. So, the integrations that they done with vSphere hold them in there as the environment. Tanzu Kubernetes, there's a lot of new pieces. But I think some of those principles have stayed the same. So, why don't you start us off. Tell us a little bit, philosophically, how is VMware treating this space, and how data protection fills into it, and then, Efri, we'll get your take on it, too. >> Yeah, sure, absolutely. So, from the perspective of VMware and the ecosystem, as you say, we want to be very inclusive. We want to bring the ecosystem and our partners along with what we're doing, regardless of what space it is, and in the Modern Applications Platform and Cloud Native tooling, we're very much thinking along the same lines. And as it relates to data protection in specific, Cloud Native is a place where, mainly it's been thought of as a place for stateless applications. but what we're seeing in people's deployments is more and more stateful applications are beginning to move to Kubernetes and into containers. And so the question then becomes, what do you do for data protection of those applications that are deployed into Kubernetes? And so, with Tanzu, and specifically Tanzu Mission Control, we have included a data protection capability, along with the other capabilities that come with Mission Control, that allows you to provide data protection for your fleet of Kubernetes clusters, regardless of which distribution, regardless of which cloud they're running on, and regardless of how many teams you might have running on a particular cluster or set of clusters. And so, for this reason, we have introduced a data protection capability that is focused around our open source project called Velero and Mission Control operates Velero in your clusters from a central UI API and CLI. That allows you to do data protection, initiating schedules of backups, doing restores, and even migration from cloud to cloud, from a single control point. And part of this vision is not only providing an API that we can handle directly with our own Velero-based implementation, but also opening that up to partners. And this is where we're working with Dell, specifically, to be able to provide that single API, but yet have Dell, for instance, with their PowerProtect solution, be able to plug in and be a data protection provider underneath Tanzu Mission Control. And so, that's the work that we're doing together to help satisfy this vision that we have for data protection in the Cloud Native space. >> Yeah, agree 100% with Tom. Like Tom has said, when we looked at customer environments three years ago, people talk mainly about stateless applications, but over time, when more storage solutions, persistent data solutions came along, there came the need to, not only provision the data, but also protect it, and be able to do backups, and restores, and cyber recovery solutions, and disaster recovery, and the whole set of use cases that allow a full life cycle of data along the Cloud Native set of applications, not just a traditional one. And what we've seen, we're talking, obviously, with a lot of customers, joint customers with VMware, customers that use our storage solutions, as well as others, on-prem and in the cloud. And what they have shown, to say, there, is that you have the IT infrastructure people on one hand, which have certain needs, and there is the new set of users, the DevOps people, who are writing applications in a new way, and they need to communicate and they need a solution that fits both of them. So, with VMware, with the community, with Velero, we are introducing a solution that is capable of doing both management for the DevOps people, as well as for the other team infrastructure. And, a year ago, we have talked about this coming up, and now it's really there, and it's doing great. >> Oh, Efri, I'm so glad you brought up some of those organizational issues, because it's not just, oh, we have some new applications, and, of course, we need to do data protection. Can you bring us inside a little bit? Your customers, are they aware of what they need to do? Is it central IT that's coming over and telling the DevOps team, hey, don't forget, security, data protection, still super important. How does that engagement go, and what change does that have for the Dell field and the channel? >> Yeah, I think that the more successful organizations really have that kind of dialogue. So, the developers are not operating in silos. They're not doing things themselves. They do, some of the use cases, they do need to copy data for their own use, but they understand that there are also organizational needs. Someone needs to sign the audit pass, the SLAs are in compliance, the regulations are met. So, all of these things, someone needs to do them. And there is a mutual recognition that there is a role for these people and for these people, for these use cases and for these use cases. >> Yeah, I would agree with that. One of the things that we're seeing, particularly as you think about Kubernetes as a multitenant kind of platform, what we're seeing is that central IT operations still wants to make sure that backups are happening with stateful applications, but more and more they're relying on and providing self-service capabilities to line of business and DevOps, to be able to back up their applications in the way that's best for those applications. It's a recognition of domain expertise for a particular application. So, what we've done with Mission Control is allowed central IT to define policy. And those policies then give the framework, or guidelines, if you will, that then allow the DevOps teams to make the best choices within their own field of expertise and for their own applications. >> Yeah, and what we've seen is some of the organizations really like full control over central IT, and some customers have told us, don't give anything to the developers, but most of them are asking for some self-service capabilities for the developers. But then, who is setting the policy? Who is saying, okay, I have a gold policy data protection? Does it mean I replicate to another side? Does it mean I do longterm retention for a month, or for a year? That is for someone in central IT to set up. So, saying what the policy means, or what it actually is, is the job of a central IT, whereas, this application needs application consistency, and it is of gold policy, that oftentimes is the best knowledge and domain expertise of the developer. >> So, Tom, you mentioned Tanzu Mission Control, which is the management solution. Tanzu is a portfolio. Can you help walk us through the relevant pieces here that are part of this joint solution? >> Yeah, sure. So, Tanzu is really a portfolio of applications, or a portfolio of solutions, as you've said. It's really along three main pillars. It's what we call, build, run and manage. Tanzu Mission Control fills in, along with our Tanzu Observability and Tanzu Service Mesh, in our manage pillar. The build pillar is more along the lines of supporting developing of modern applications, developing and deploying modern applications. So, many of the technologies that have come from our acquisitions of Pivotal, as well as Bitnami, make up that pillar, and these are technologies that are coming to fore, and you'll hear more and more about at this VM world and going forward. Our run pillar is really where you'll find Tanzu Kubernetes Grid. Now, this is our distribution, but it's more than just a distribution of Kubernetes. It's a distribution of Kubernetes, along with all the tools that you would need to be able to deploy modern applications. So, all of these three pillars come together, along with services provided by Pivotal labs, to really give you a full, multifaceted platform for deploying and operating modern applications. >> Great, and Efri, where are there integrations there? How does the storage fit in has been a discussion we've been having for a few years% when it comes to Kubernetes. >> Yeah, basically, PowerProtect integrates with all of these levels that Tom has mentioned, starting with the lowest levels of integration. With the storage, VMware has Cloud Native storage solutions, which allow things like incremental snapshots to be taken from the environment. And we're using this mechanism in order to copy data efficiently from TKG, Tanzu Kubernetes Grid, environment, out of the cluster, into a space-efficient data domain, as a target site. So, that's a storage integration. Then, there is qualification and support for the various run environments that Tom has mentioned, the Tanzu Kubernetes Grid, and Tanzu Kubernetes Grid Integrated, as well as things that we're working with VMware in order to enable protection for what has been called the Project Pacific, which really allows you very sophisticated capabilities of running multiple Kubernetes clusters using the Kubernetes cluster API capabilities. So, you can spin up a cluster very, very quickly by VMware. And then, we can take backups of this environment up to data domain target site. And, finally, working with Tom for tons of amount of time and effort to do the integration between Tanzu Mission Control and PowerProtect. So, allowing cloud, multicloud, multilocation environments to be provisioned and monitoring by Tanzu Mission Control, but also protected using PowerProtect. >> Yeah, so, Tom, we talked about supporting the ecosystem, and it's a much faster cadence now than it was in the past. It used to be, it felt like every other year at VMworld, we got together and talked about the major vSphere release. Of course, in the container, in Kubernetes world, we're having a much faster cadence. So, could you just help us understand, what of this is generally available today? We saw vSphere 7 back in the spring. The update, right ahead of VMworld, that really extended Kubernetes beyond just VCF, to be able to be an all vSphere 7 environment. So, we know some of this is here on the roadmap, so help map this out for us, what's here today from VMware and what the timeline is we expect for all of these pieces we've been discussing. >> Yeah, absolutely. So, Mission Control shipped in March. So we're still relatively new, but as you say, we run Cloud Native ourselves, and so we're releasing new features, new capabilities. literally every week. We have a weekly cadence for release. Our data protection capability was just introduced at the end of June, so it's fairly new, and we are still introducing capabilities, like bring your own storage, doing scheduling of backups, and this kind of thing. You'll see us adding more and more cloud providers. We have been working to open up the platform to make it available to partners. And this is, just generally, with Mission Control, across the board, but specifically, when it comes to Dell, and PowerProtect, the data protection capability, this is something that we are still actively working on, and it is past the architecture stage, but it's probably still a little ways out before we can deliver on it, but we are working on it diligently, and definitely expect to have that in the product, and available, and really providing a basis for integrations with other providers as well. >> Yeah, and in terms of PowerProtect, we have told the audience about a tech preview a year ago, and since then we have released a number of releases. We are having a quarterly cadence. So, it is available for the general consumption for quite some time. Talking about the integration layers that we have mentioned before, we are the first stack to protect VMs and Kubernetes and applications using the same platform, the same UI, the same policies, everything looks the same. And we have recently introduced capabilities such as application consistency for a number of applications. The support for TKG is available for now. And, as Tom has said, we are working on further integrations, such as the integration with Tanzu Mission Control with VMware. >> Wonderful, I want to get a final word from both of you. Efri, we'll start with you. We've got this regular cadence coming up. We know we're only a couple of weeks away from DTWE, the Dell Technology World Experience, where, of course, theCUBE will be there. What should we look for the rest of 2020, or any final comments that you have for customers that might be looking at this environment? >> Sure, I think that, two trends that I'm seeing, and they're just getting stronger over the years. The first thing is multicloud, and multicloud means many things to different people, but, basically, every customer that we are speaking to is talking about, I want to run things on-prem, but I also need to run these workloads in the hyperscaler. And I need to move from one hyperscaler region to another, or between hyperscalers, and they want to run this distribution here, and the other distribution there. And there are many combinations of stacks and Database-as-a-Service and other components of the infrastructure that different developers are using on-prem and in the cloud. So, I expect this to go even further, and solutions like PowerProtect and TKG can help customers to do that job, and, of course, Tanzu Mission Control, to monitor and manage this environment. Secondly, I think that protection is going to follow more the workloads. So, application is no longer the VM. Obviously, it's becoming many different components that are starting to span across locations and across environments. And again, the protection nature of these is going to change according to where and how these workloads are being provisioned. >> Yeah, and I would say the same thing about Mission Control, very much multicloud-focused, Today it's largely an AWS-focused solution. We're changing to add more flexible storage options, more clouds. Azure is something that we'll be doing in the short term, Google Cloud platform and Google Cloud Storage after that, as well as just the ability to use your own on-prem storage for your backup targets. Also, we're going to be focusing on driving more policy-driven backup. So, being able to define policies for groups of clusters, define RTO and RPO for groups of clusters, allowing Mission Control to help determine what the individual backup policy should be for that particular asset. And continuing to work with Dell and other partners to help extend our platform and open it up for other data protection providers. >> Tom and Efri, thanks so much for the updates. Tom, welcome to being a CUBE alumni, and Efri, I'm sure we'll be seeing you in the team, in the near future. >> Thank you. >> Thank you so much. >> Stay with us for more coverage from VMworld 2020. I'm Stu Miniman, and as always, thank you for watching theCUBE. (bright music)

live from Las Vegas it's the queue covering del technology's world 2019 brought to you by Dell technologies and it's ecosystem partners hey welcome back everyone cubes live coverage day three of three days of wall-to-wall coverage got two sets exploding the content out there the cube can and we've been calling it so much content coming in I'm John Fourier your host with mykos de Villante we're Tom sweet is the CFO of Dell Technologies he's the man who's making it all happen all the numbers are starting to come in we're starting to see some real big numbers and more welcome to the Q thanks for spending the time hey I'm happy to be here it's great to see you guys again and it's been a great three days here at Deltek world so I'm very excited about what we're seeing all of the enthusiasm by with our customers and partners and the receptivity to what we're doing as a company and the capabilities we're driving is pretty exciting it's kind of like the postgame show I guess the show's going to end today but I've been watching you and the analysts giving all the presentations you're what we call a Czech athlete you got a you got to hold the ship down make the numbers work you got a lot of great puzzle pieces that you know you guys have laid out here at the show across the portfolio aggressive new architecture around end-to-end operations a lot of moving parts being integrated in and the numbers are looking really good a scoreboard looks good give it take us through the highlights of inside the numbers up into the right give us the highlights well you know thank you for that but it's been we had a great fiscal 19 as you guys know by now right so 90 over 91 billion dollars of non-gaap revenue we added 11 billion dollars of revenue in the year or so if you think about that that's the equivalent of a couple of Fortune 500 companies coming into the company you know took share in all the categories that were focused on you know we took over 320 basis points of share and storage I mean over 200 basis points of share and main stream server revenue you know our PC client commercial clients you took over I think a couple hundred basis points this year so we're very pleased with the progress but I think what's most exciting as we think about value creation we're headed as a company is some of the things that we announced this week around the cloud platform and what you're beginning to see is the fill in of the capabilities and the tie together of the companies that are coming together with integrated solutions and capabilities and so you know I've been with the analyst and as you referenced and they had lots of good questions on how does this all fit together how does it then what's the acceleration point if you will how does this take off from here and you know so work and so we went through that in terms of let's put the platform out there let's begin to build on it you know customers are asking for that multi cloud capability this is what this does for them it ties this together and one single pane of glass from an orchestration and management perspective so we're really excited and then you know you saw Jeff introduce a bunch of new products the new latitude line some of the new server capabilities new storage arrays that are coming and so you know customer the buzz here is pretty strong so it's been pretty exciting this we congratulations on just a shareholder value I know from a numbers standpoint it's really been successful congratulations the question I want to ask you going back I remember the conversation you know HPE got smaller HP Enterprise got smaller Dell was getting bigger and the conversation at that time was scale as a competitive advantage and we were talking about how cloud was showing the way that scale actually has these synergies as you look back now and as the evolution started you guys start executing we was the the first sign of wow this is gonna be awesome well probably Michael was more optimistic about it than I was figure out how to pay for it come on that's a lot of money you know so but look I mean I think what we saw when we when we came together as with Dell and EMC was the fact that he come we needed each other right we had capabilities that didn't overlap they gave us great presence and technology in the data center and clearly they have brought VMware and pivotal with them we brought scale we brought maybe an execution framework and a focus and the combination of the has been pretty powerful and look I mean it's taken a couple of years of heavy lifting right but and we're not done and there's lots to go do but I think we're pretty excited about how this started to accelerate on us you know or pick up momentum I should say you know middle last year does it margin expansion or is it to go to market efficiency or supply chain all three I think it's all three right if you listen to us over the last couple years we talked about hey we needed to invest we had to invest in new capabilities from a solution perspective we had to invest in go to market coverage you know so we've spent a fair amount of investment dollars putting you know putting the pieces in place and so then it takes time for that to come together and coalesce and I think we're early innings on that you know you know lots of competition out there but we're excited about the positioning right now so the numbers are pretty remarkable I mean to be a 90 billion dollar company growing it you know 14 percent it's pretty amazing however you know this if you take VMware's market cap to multiply it by 0.8 which is your share subtract out your core debt you know subtract out your market cap you're left with like a billion dollars is that really how we should think about the core Danelle is worth about about a billion dollars you know it's you're now getting to where I spent all my last year talking about valuation right but look I we obviously think differently about the value of the core company you just think about free cash flow coming out of the core which is over you know two and a half to three and a half billion dollars sort of three and a half billion dollar range I mean how quo the valuation framework in some instances doesn't make a lot of sense we understand that you know we're a large-scale tech company and tech investors in general haven't been you know exposed to companies with tech companies with a lot of debt right and we have more debt than the average I think it's very manageable because what's the opposite side of of you know the other side of the conversation on debt is what your EBIT are right so you think about moldable and and so look we think look I can't art I can't win those arguments as you know right around I think what we have to do is continue to go execute the business over time and I think you've you know that will demonstrate the value creation opportunity that exists here and you know people will decide whether they want to invest in us and come along with it or not well I've said it's a really cheap way to own VMware I mean if you really look at no way don't do the EM we're so there is that play one of the things that I've been really impressed with this week is your emphasis on growth but profitable growth you're not just going for market share for market share sake you got but but you are going hard for market share it's an interesting balance how do you balance those two oh it's sort of this constant juggle right because look I mean you think about where we compete PC server external storage we can talk Software Defined and some of the other dynamics that are going on but those mark those areas are generally not double-digit growth areas right and so if you're going to grow you're generally taking share from somebody right and so we had this philosophy in these types of areas we got to grow and it's got to be profitable to your point and in these spaces you can go out and get a lot of market share that's doable but you can also spend a lot of money doing that right you can you can rent share so to speak if you want it and so there's this balance of pushing the team's on go grow I want it to be the right kind of growth which means what does that mean it means you go acquire customers that have a value stream associated with them and yes you may be aggressive to go get them but over time you build that cape you build the ecosystem around them in terms of the other solutions and capabilities they're buying and so it's this constant balance you know and so that's what we're we're trying to make sure we get right if you will yeah one more CFL question if I may and then we can talk about more fun stuff so it talks about the debt yeah I think you got that covered you've managing that very well you know we talked about the valuation fine one of the areas that that I have some concerns about I'd like your responses just the PC business itself it's a very important business for you guys yeah it's it's about half the revenue maybe it's not as profitable we know that but it also absorbs a lot of overhead of the company so big shifts in that business would have tectonic effects I would think on your business how do you think about that how do you manage that I wonder if I haven't heard much talk about that and I just wonder if you could you know educate CSG business which is our PC business we've got forty three billion dollar business last year so you're right it provides us great scale by the way and great supply chain scale but if you if you think about what's driving the PC Renaissance right now there's a Windows 10 refresh going on as you both know and you know Microsoft's estimate would be hey you got to probably another year or so that left and then you got through most of that refresh cycle and then the question I always get to your point is what's next yeah and then I'm good some let me pivot the conversation which is if you think about what's next is the feedback we're now getting when you think about the workforce and the generation that's in the workforce now wants good technology and so the days of let me give all of my employees and team members these $400 $500 thick pcs that wait eight nine ten pounds are gone companies want employees want technology that they can carry that they like that's usable you know the whole flexible workforce dynamic and so there's a whole conversation around workforce transformation that's happening the other thing is you you hear us talk about edge to quarter cloud that edge computing dynamic which is will include both data you know infrastructure and hard PC hardware at the edges an interesting dynamic so we think the evolution continues to evolve and the PC business stays healthy for us but yes you're right it's a big business but it's a great cash flow built at the same time if that if John if that edge becomes a tailwind for you guys I mean essentially there's an oligopoly Michael Michael is all Michael was saying the edges where the games going to be in ten years I would just iterate add one thing to your comment about the client businesses I think one i 100% agree I think the Alienware booth here is a canary in the coal mine if you talk to any of the younger generation gamers they have this phrase called pcmr which stands for PC master-race there's a shift back to the PC because of gaming mm-hm and they all want their rigs and they want horsepower they're into the tap yeah so the ease of use and simplifying the tech they want the best graph they want rate racing they want I mean they want all these new things so I think there's a whole nother generation to your point anyway back to my question on this a business model issue is that Michaels on yesterday said we're not in the headline in Silicon angle right now says we're not a conglomerate Michael Dell savers the integrated pieces of his growing company so I gotta ask you you know in in the intersection of innovation strategy business model innovation and financial and strategy you gotta have a financial strategy at overlays innovation strategy as well as the business model how would you describe the financial strategy of Dell technologies and how does that overlay directly on top of the innovation strategy and the business model look alright smile to man job is to help Michael to build his vision and fulfill his vision the subset of that is what's the job of a what what does a company do it's all about creating value and shareholder value so the overall a financial strategy and framework is shareholder value creation right and you step down from that you say how do you create value you create value these would be better capabilities better products and solutions how do you do that then you get into a capital allocation conversation on how much am I going to allocate of my capital to innovation to R&D how much a value creation is going to come through debt pay down to your point you know if you look at the levers we're pulling right now and how and simplified capital structures I should also say so the leaveners we're pulling right now are all those levers right we're pulling a let me build the innovation the integrated capabilities this concept of it we've got great capabilities across the family of Dell technologies how do we integrate them how do I create solutions that you customers want at the same point in time I'm pricing those effectively I'm creating cash generation that allows me to reinvest in the business and also pay down debt that ultimately drives shareholder value right yeah and this conglomerate come I thought was relevant because I don't see you as a conglomerate if you look at the success of say Amazon Web Services as part of Amazon almost half their revenues now that's one large distributed computer basically I mean it's integrated parts of a lot of things as an operating environment operating system so you've said on the cube that is a model you guys have a similar approach you're looking at the holistic picture of Dell technologies as an operating model with synergies and systems not this divisions pumping out all this cash they're siloed it's the integrations of key part comment on that piece yeah look I mean you know I've we've been we've been having this pushing on this conglomerate thing now for awhile right in the sense up we've got certain investors in certain analysts and that think about well you've got all these piece parts in you but these piece parts don't run independently they're integrated what we're using joint selling activity joint solution capability and development to sell to we sell technology right I'm not selling engines and lightbulbs and appliances right I'm selling technology to a set of buyers that are consuming that technology in an integrated fashion and that's how we're going to market and that's how we're building solutions to them and so look we're gonna you're going to continue to hear us push on that theme because I think it's an important theme that people need to understand about what we're trying to do but you know and so work that drives evaluation conversation which has been you know Andy jassie CEO of Amazon told me once on the queue you gotta be able to myth being misunderstood for a while before people figure it out but what's your free cash flow down to three billion you're throwing off what's the number there a lot of cash yeah I mean you're you're it's higher than that but when you throw in VMware thrown beware your your cash flow from ops is roughly riding around seven billion dollars right so you can't go on a business if you don't run out of cash all right that's why we talk about cash no word we're good but you know we're also thing about cash right so look I mean I think we're just going to continue to run the business right we've got to go execute the business it's a challenging you know it's always a competitive environment out there but you know that's our job is to go execute the business macro questions so I think I heard from you Tom this week that IDC has the IT market growing at 2x GDP and I'm thinking about the same hmm how is that you know are people gonna start spending more on AI technology as a percentage of revenue maybe but then I'm thinking what they're spending a lot today on labor yeah and I think what's happening is they're shifting a lot of those labor into technology and they're eliminating some of those labor costs and with that shift is that a plausible premise yeah I think I think it is but I also think that companies are thinking about their business model now and you've seen and you guys know this you're in the middle of all this you've seen a generational shift on IT used to be in the background that said hey go you know go roll up the numbers and pay the people and Peyton you know pay the bills and don't think about the business you know that's a simplification but now it's about how is technology used to differentiate my business model to capture new customers to give you a new experience to give you a competitive advantage and what's interesting for us is that these conversations are not just with CIOs there were Co CF CEO CFOs and so this investment cycle that's here is pretty interesting for us right and so look you asked me about the macro you know it's not a year ago what were we all talking about global synchronous growth right remember that a course we're not really talking about that right now there's you know there's pressure points around the globe depending upon where you are and and it's just a different environment so it is a bit choppier out there I mean I think the macro thing is to me is yeah I'm not as in the weeds as much you guys are but you got consolidation value creation and you guys saw with that big plan and then you got an exploding data ai business happening in the marketplace that's showing customers that they could actually reinvest and do new things drive new revenue source model expansions on the customer side as well as a massive tailwind of course cloud computing you could do it faster so between all these things that's a nice pop for you guys well the technology trends are clearly headed our way right you know there's data being created everywhere you got to do something with that data you got to store it you got to compute it if you want to get analytics and insight and so all of these things are sort of lining up now look I don't want to oversell that because we all know this this business is you know you got to go out and compete every day and to win but it's it's an interesting time are you increasing your spend on technology as a percentage of revenue or you know you know if you're talking about the R&D spend it's rough about four-and-a-half percent of my revenue right now so his revenues going up we're spending more money in IIT oh okay and might in my own tech we're up we're up right as a percentage yes okay digital transformation your premise is people are going to spend more as a percentage on tech because the return is higher but being a good CFO I'm also squeezing my guys in other you keep them in line right congratulations again on you your team Michael creating great shareholder value I still Dave still thinks it's undervalued he'll continue and I think he's right on that thanks for coming on spend your very valuable time sharing this summary of what's going on here at the Dell technology world thanks for being here guys and it's always fun to talk to you thanks great car tops we CFO chief financial officer of Dell technologies getting inside the numbers talking about the strategy how it all relates to customer impacts the cue bringing you all the action day three of coverage we'll be right back after this short break I'm sure for a devil on thing [Music]

(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 SiliconANGLE media's coverage of Dell Technologies World 2018. I'm Stu Miniman here with my cohost Keith Townsend, happy to welcome back to the program Tom Burns, who's the SVP of Networking and Solutions at Dell EMC. Tom, great to see ya. >> Great to see you guys as well. Good to see you again. >> All right, so I feel like one of those CNBC guys. It's like, Tom, I remember back when Force10 was acquired by Dell and all the various pieces that have gone on and converged in infrastructure, but of course with the merger, you've gotten some new pieces to your toy chest. >> Tom: That's correct. >> So maybe give us the update first as to what's under your purview. >> Right, right, so I continue to support and manage the entire global networking business on behalf of Dell EMC, and then recently I picked up what we called our converged infrastructure business or the VxBlock, Vscale business. And I continue also to manage what we call Enterprise Infrastructure, which is basically any time our customers want to extend the life of their infrastructure around memory, storage, optics, and so forth. We support them with Dell EMC certified parts, and then we add to that some third-party componentry around rack power and cooling, software, Cumulus, Big Switch, things like that. Riverbed, Silver Peak, others. And so with that particular portfolio we also cover what we call the Dell EMC Ready Solutions, both for the service provider, but then also for traditional enterprises as well. >> Yeah, well luckily there's no change in any of those environments. >> Tom: No, no. >> Networking's been static for decades. I mean they threw a product line that I mean last I checked was somewhere in the three to four billion dollar range. With the VxBlock under what you're talking there. >> Yeah it's a so, yeah-- >> Maybe you could talk, what does this mean? 'Cause if I give you your networking guy. >> Right. >> Keith and I are networking guys by background, obviously networking's a piece of this, but give us a little bit of how the sausage is made inside to-- >> Tom: Sure. >> Get to this stuff. >> Well I think when you talk about all these solutions, Cloud, Hybrid Cloud, Public Cloud, when you think about software-defined X, the network is still pretty darn important, right? I often say that if the network's not working, it's going to be a pretty cloudy day. It's not going to connect. And so the fabric continues to remain one of the most critical parts of the solution. So the thought around the VxBlock and moving that in towards the networking team is the importance of the fabric and the capability to scale out and scale up with our customers' workloads and applications. So that's probably the reason primarily the reason. And then we can also look at how we can work very closely with our storage division 'cause that's the key IP component coming from Dell EMC on the block side. And see how we can continue to help our customers solve their problems when it comes to this not your do-it-yourself but do-it-for-me environment. >> All right, I know Keith wants to jump in, but one just kind of high-level question for you. I look at networking, we've really been talking about disaggregation of what's going on. It's really about disaggregated systems. And then you've got convergence, and there's other parts of the group that have hyper convergence. How do you square the circle on those two trends and how do those go together? >> Well, I think it's pretty similar on whether you go hyper converge, converge, or do-it-yourself, you build your own block so to speak. There's a set of buyers that want everything to be done for them. They want to buy the entire stack, they want it pre-tested, they want it certified, they want it supported. And then there's a set of customers that want to do it themselves. And that's where we see this opportunity around disaggregation. So we see it primarily in hyperscale and Cloud, but we're seeing it more and more in large enterprise, medium enterprise, particular verticals where customers are in essence looking for some level of agility or capability to interchange their solutions by a particular vendor or solutions that are coming from the same vendor but might be a different IP as an example. And I'm really proud of the fact that Dell EMC really kicked off this disaggregation of the hardware and software and networking. Some 4 1/2 years ago. Now you see some of the, let's say, larger industry players starting to follow suit. And they're starting to disaggregate their software as well. >> Yeah, I would have said just the commonality between those two seemingly opposed trends it's scale. >> Right. >> It's how do customers really help scale these environments? >> Exactly, exactly. It depends a lot around the customer environment and what kind of skill sets do they have. Are they willing to help go through some of that do-it-yourself type of process. Obviously Dell EMC services is there to help them in those particular cases. But we kind of have this buying conundrum of build versus buy. I think my old friend, Chad Sakac, used to say, there's different types of customers that want a VxRail or build-it-themselves, or they want a VxBlock. We see the same thing happen in a networking. There's those customers that want disaggregated hardware and software, and in some cases even disaggregated software. Putting those protocols and features on the switch that they actually use in the data center. Rather than buying a full proprietary stack, well we continue to build the full stack for a select number of customers as well because that's important to that particular sector. >> So again, Tom, two very different ends of the spectrum. I was at ONS a couple of months ago, talked to the team. Dell is a huge sponsor of the Open Source community. And I don't think many people know that. Can you talk about the Open Source relationship or the relationship that Dell Networking has with the Open Source community? >> Absolutely, we first made our venture in Open Source actually with Microsoft in their SONiC work. So they're creating their own network operating software, and we made a joint contribution around the switch abstraction interface, or side. So that was put into the Open Compute Project probably around 3 1/2, maybe four years ago. And that's right after we announced this disaggregation. We then built basically an entire layer of what we call our OS10 base, or what's known in the Linux foundation as OPX. And we contributed that to the OPX or to the Linux foundation, where basically that gives the customer the capability through the software that takes care of all the hardware, creates this switch subtraction interface to gather the intelligence from the ASIC and the silicon, and bringing it to a control plane, which allows APIs to be connected for all your north-bound applications or your general analysis that you want to use, or a disaggregated analysis, what you want to do. So we've been very active in Linux. We've been very active in OCP as well. We're seeing more and more of embracing this opportunity. You've probably seen recently AT&T announced a rather large endeavor to replace tens of thousands of routers with basically white box switches and Open Source software. We really think that this trend is moving, and I'm pretty proud that Dell EMC was a part of getting that all started. >> So that was an awful lot of provider talk. You covered both the provider's base and the enterprise space. Talk to us about where the two kind of meet. You know the provider space, they're creating software, they're embracing OpenStack, they're creating plug-ins for disaggregated networking. And then there's the enterprise. There's opportunity there. Where do you see the enterprise leveraging disaggregation versus the service provider? >> Well, I think it's this move towards software-defined. If you heard in Michael's keynote today, and you'll hear more tomorrow from Jeff Clarke. The whole world is moving to software-defined. It's no longer if, it's when. And I think the opportunity for enterprises that are kind of in that transformation stage, and moving from traditional software-defined, or excuse me, traditional data centers to the software-defined, they could look at disaggregation as an opportunity to give them that agility and capability. In a manner of which they can kind of continue to manage the old world, but move forward into the new world of disaggregation software-defined with the same infrastructure. You know it's not well-known that Dell EMC, we've made our switching now capable of running five different operating softwares. That's dependent upon workloads and use cases, and the customer environment. So, traditional enterprise, they want to look at traditional protocols, traditional features. We give them that capability through our own OS. We can reduce that with OS partners, software coming from some of our OS partners, giving them just the protocols and features that they need for the data center or even out to the edge. And it gives them that flexibility and change. So I think it really comes at this point of when are they going to move towards moving from traditional networking to the next generation of networking. And I'm very happy, I think Dell Technologies is leading the way. >> So I'm wondering if you could expand a little bit about that. When I think about Dell and this show, I mean it is a huge ecosystem. We're sitting right near the Solutions Expo, which will be opening in a little bit, but on the networking side, you've got everything from all the SD-WAN pieces, to all the network operating systems that can sit on top. Maybe, give us kind of the update on the overview, the ecosystem, where Dell wins. >> Yeah, yeah I mean, if you think about 30-something years ago when Michael started the company and Dell started, what was it about. It was really about transforming personal computing, right? It was about taking something that was kind of a traditional proprietary architecture and commoditizing it, making sure it's scalable and supportable. You think of the changes that's occurred now between the mainframe and x86. This is what we think's happening in networking. And at Dell Technologies in the networking area whether it's Dell EMC or to VMware, we're really geared towards this SDX type of market. Virtualization, Layer two, day or three disaggregated switching in the data center. Now SD-WAN with the acquisition of Velocloud by VMware. We're really hoping customers transform at the way networking is being managed, operated, supported to give them much more flexibility and agility in a software-defined market. That being said, we continue to support a multitude of other partners. We have Cumulus, Big Switch, IP infusion, and Pluribus as network operating software alternatives. We have our own, and then we have them as partners. On the SD-WAN area while we lead with Velocloud, we have Silver Peak and we also have Versa Technology, which is getting a lot of upkick in the area. Both in the service provider and in the enterprise space. Huge area of opportunity for enterprises to really lower their cost of connectivity and their branch offices. So, again, we at Dell, we want to have an opinion. We have some leading technologies that we own, but we also partner with some very good, best-of-breed solutions. But being that we're open, and we're disaggregated, and we have an incredible scaling and service department or organization, we have this capability to bring it together for our customers and support them as they go through their IT transformation. >> So, Dell EMC is learning a lot of lessons as you guys start to embrace software-defined. Couple of Dell EMC World's ago, big announcement Chad talked about, ScaleIO, and abstracting, and giving away basically, ScaleIO as a basic solution for free. Then you guys pulled back. And you said, you know what, that's not quite what customers want. They want a packaged solution. So we're talking on one end, total disaggregation and another end, you know what, in a different area of IT, customers seem to want packaged solutions. >> Tom: Yeah. >> Can you talk to the importance of software-defined and packaged solutions? >> Right, it's kind of this theory of appliances, right? Or how is that software going to be packaged? And we give that flexibility in either way. If you think of VxRail or even our vSAN operating or vSAN ready node, it gives that customer the capability to know that we put that software and hardware together, and we tested it, we certified it, most importantly we can support it with kind of one throat to choke, one single call. And so I think the importance for customers are again, am I building it myself or do I want to buy a stack. If I'm somewhere in the middle maybe I'm doing a hybrid or perhaps a Rail type of solution, where it's just compute and storage for the most part. Maybe I'm looking for something different on my networking or connectivity standpoint. But Dell EMC, having the entire portfolio, can help them at any point of the venture or at any part of the solution. So I think that you're absolutely right. The customer buying is varied. You've got those that want everything from a single point, and you got others that are saying I want decision points. I think a lot of the opportunity around the cost savings, mostly from an Opex standpoint are those that are moving towards disaggregated. It doesn't lock 'em in to a single solution. It doesn't get 'em into that long life cycle of when you're going to do changes and upgrades and so forth. This gives them a lot more flexibility and capability. >> Tom, sometimes we have the tendency to get down in the weeds on these products. Especially in the networking space. One of my complaints was, the whole SDN wave, didn't seem to connect necessarily to some of the big businesses' challenges. Heard in the keynote this morning a lot of talk about digital transformation. Bring us up to speed as to how networking plays into that overall story. What you're hearing from customers and if you have any examples we'd love to hear. >> Yeah, no so, I think networking plays a critical part of the IT transformation. I think if you think of the first move in virtualization around compute, then you have the software-defined storage, the networking component was kind of the lagger. It was kind of holding back. And in fact today, I think some analysts say that even when certain software-defined storage implementations occur, interruptions or issues happen in the network. Because the network has then been built and architected for that type of environment. So the companies end up going back and re-looking at how that's done. And companies overall are I think are frustrated with this. They're frustrated with the fact that the network is holding them back from enabling new services, new capabilities, new workloads, moving towards a software-defined environment. And so I think this area again, of disaggregation, of software-defined, of offering choice around software, I think it's doing well, and it's really starting to see an uptick. And the customer experiences as follows. One is, open networking where it's based upon standard commodity-based hardware. It's simply less expensive than proprietary hardware. So they're going to have a little bit of savings from the CapEx standpoint. But because they moved towards this disaggregated model where perhaps they're using one of our third-party software partners that happens to be based in Linux, or even our own OS10 is now based in Linux. Look at that, the tools around configuration and automation are the same as compute. And the same as storage. And so therefore I'm saving on this configuration and automation and so forth. So we have examples such as Verizon that literally not only saves about 30% cost savings on their CapEx, they're saving anywhere between 40 and 50% on their Opex. Why? They can roll out applications much faster. They can make changes to their network much faster. I mean that's the benefit of virtualization and NSX as well, right? Instead of having this decisions of sending a network engineer to a closet to do CLI, down in the dirt as you would say, and reconfigure the switch, a lot of that now has been attracted to a software lever, and getting the company much more capability to make the changes across the fabric, or to segregate it using NSX micro segmentation to make the changes to those users or to that particular environment that needs those changes. So, just the incredible amount of flexibility. I think SDN let's say six, seven years ago, everyone thought it was going to be CapEx. You know, cheaper hardware, cheaper ASICs, et cetera. It's all about Opex. It's around flexibility, agility, common tool sets, better configuration, faster automation. >> So we all have this nirvana idea that we can take our traditional stacks, whether it's pre-packaged CI configurations that's pre-engineered, HCI, SDN, disaggregated networking. Add to that a software layer this magical automation. Can you unpack that for us a little bit? What are you seeing practically whether it's in the server provider perspective or on the enterprise. What are those crucial relationships that Dell EMC is forming with the software industry to bring forth that automation? >> Well obviously we have a very strong relationship with VMware. >> Keith: Right. >> And so you have vRealize and vROps and so forth, and in fact in the new VxBlock 1000, you're going to see a lot of us gearings, a lot of our development towards the vRealize suite, so that helps those customers that are in a VMware environment. We also have a very strong relationship with Red Hat and OpenStack, where we've seen very successful implementations in the service provider space. Those that want to go a little bit more, a little bit more disaggregated, a little bit more open, even it from the storage participation like SAP and so forth. But then obviously we're doing a lot of work with Ansible, Chef, and Puppet, for those that are looking for more of a common open source set of tools across server, compute, networking storage and so forth. So I think the real benefit is kind of looking at it at that 25,000-foot view on how we want to automate. Do you want to go towards containers, do you want to go traditional? What are the tool sets that you've been using in your compute environment, and can those be brought down to the entire stack? >> All right, well Tom Burns, really appreciate catching up with you. I know Keith will be spending a little time at Interop this week too. I know, I'm excited that we have a lot more networking here at this end of the strip also this week. >> Appreciate it. Listen to Pat's talk this afternoon. I think we're going to be hearing even more about Dell Technology's networking. >> All right. Tom Burns, SVP of Networking and Solutions at Dell EMC. I'm Stu Miniman and this is Keith Townsend. Thanks for watching The Cube. (upbeat music)

>> Live from San Francisco. It's the cue covering IBM thing twenty nineteen brought to you by IBM. >> Clever and welcome to the live coverage here. The Cube in San Francisco for IBM. Think twenty nineteen day Volonte where he with Urban Krishna, senior vice president of cloud and cognitive software at IBM. Man in charge of all the cloud products cloud everywhere. Aye, aye. Anywhere are great to see you. Thanks for spending time. Know you're super busy. Thanks for spending time. >> I'm ready to be here right >> now. So we talked at the Red Hat Summit last year. You essentially laid out the vision for micro Services. Coup Burnett is how this always kind of coming together than the redhead acquisition. And now you're seeing big news here at IBM. Think setting the stage here in San Francisco for a I anywhere, which is cognitive kind of all over the clouds, and then really clarity around cloud multi cloud strategy end to end workloads all kind of tied together on premise in the clouds. Super important for IBM. Explain and unpacked that force. What does it mean, >> Right? So I'm going to begin unpacking it from where actually I left off last year. So if I just for ten seconds, last year, we talked a lot about containerized platforms are going to become the future that'll be the fabric on which every enterprise is going to build their IT and their future. OK, we talked about that last year, and I think with the announced acquisition of Red Hat that gets cemented and that'll go further once that closes. Now you take that and now you take it to the next level of value. So take Watson. Watson runs as a containerized set of services. If it's a containerized set of services, it could run on what we call Cloud Private. Cloud Private in turn runs on top of OpenShift. So then you say, wherever OpenShift runs, I can run this entire stack. Where does OpenShift run today? It runs on Amazon. It runs on the IBM cloud and runs on Azure. It runs on your premise. So on the simple simple. I always like things that are simple. So Watson runs on Cloud Private runs and OpenShift runs on all these infrastructures I just mentioned that gives you Watson anywhere. You want it close to your data run it on-prem. You want to run it on Azure, run it there. You want to run it on the IBM cloud you run it there. And hence that's the complete story. >> says it was more important for you to give customers choice >> than it was to keep Watson to yourself. To try to sell >> more cloud. >> I think that every company that survives a long term learns that choice to a customer is really important and forcing customers to do things only one way is jelly in the long term. A bad strategy. So >> from a customer statement, just get the facts right on the hard news. Watson. Anywhere. Now I can run Watson via containers. Asian Open ship Things you mentioned on a ws as sheer Microsoft azure and IBM cloud cloud private. All that >> on on premise >> and on premise, all cohesively enter end. >> Correct in an identical way. Which means even if you do things one place you build up more than one place, you could go deploy a moral in another place gives you that flexibility also. >> So I'm Akash Mercy over This sounds too crazy Is too hard to do that. I've tried all this multi cloud stuff. Got all this stuff. Why is it easier? How do how do you guys make this happen? What's the key secret sauce for pulling that end to end a I anywhere on multiple clouds, on premises and through the workloads. >> Two levels. One. We go to a container infrastructure as that common layer that isolates out what is the bottom infrastructure from everything that runs on top. So going to the common services on a Cuban Eddie's in a container layer that is common across all these environments, does the isolation off the bottom infrastructure? That's hard engineering, but we do that engineering. The second piece is you've taken the Watson set of capabilities and also put them into just three pieces. What's in studio? What's an ML from water machine learning and what's an open scale? And there you have the complete set that you go need to run everywhere. So we have done that engineering as well. >> Congratulations. Get the cloud anywhere. I mean, it's cloud. It's essentially everything's every anywhere. Now you got data everywhere you got cloud everywhere. Cloud operations. Where's the multi cloud and hybrid fit in? Because now, if I could do a I anywhere via container ization, shouldn't I built? Run any workload on premise and in multiple clouds. >> So we fundamentally believe that when I was here last time, we talked about the container fabrics. And I do believe that we need to get to the point where these can run anywhere. So you take the container fabric and you can go run that anywhere, right? So so that's one piece of it, the next part of is but I now need to integrate. So I now need to bring in all my pieces. How I integrate this application with another? It's the old problem of integration back again. So whether you want to use MQ or you want to use Kafka or you want to use one of these technologies? How do we get them to couple one work flow to another work flow? How do I get them to be secure? How do I get them to be resilient in the presence of crashes in the presence of latency and all that? So that's another big piece of announcements that we're making. You can take that complete set off integration technologies, and those can run anywhere on any cloud. Again, using the same partner describes. I'm not going to go into that again. And on premise. So you can knit all of those together. >> How can you talk about the rationale for the Red Hat acquisition? Specifically in the context of developers, IBM over the years has made you know many efforts took to court developers. Now, with the redhead acquisition, it's eight million developers and talk about specifically the importance of developers and how that's changed >> your strategy or enhance your >> strategy. I'm an enhancement. It's not really a change. I think we all acknowledge developers have always been important and will remain important. I mean, IBM has done a great job, I think, over the last twenty years and both helping create the whole developer ecosystem, for example, around Job. We were a very big piece of that, not the only participant in there. There were others, but we were a big piece of that. So you not take red hat on Lenox and Open shit and Open source and J. Boss and all of these technologies. There's a big ecosystem of developers. You mentioned eight million number. But why did that set of people come along? They come along because they get a lot of value from developing on top of something that in turn has so many other people on top. I think there's half a million pieces of software which use redhead as the primary infrastructure on which they develop. So it's the network effect really. Is that value andan Africa can only come from you, keep it open, You keep it running on the widest possible base, and then they get the value that if they develop on that digger access to that and US base on which Red Hat Franz >> are, we have >> evidence that >> totally makes sense. But I want to get one dig deeper that we cover a lot of developer, the business side of developers. Not so much, no ins and outs, so developer tools and stuff. There's a lot of stack overflow. Variety of sources do that, So developers want to things they want to be in the right wave. You laying out a great platform for that, then this monetization Amazon has seen massive growth on their partner network. You guys haven't ecosystem. You mentioned that. How does this anywhere philosophy impact ecosystem because they want to party with IBM? Where's the white spaces? What's the opportunity for partners? How should they evolve with IBM? What's your What's your direction on that? >> Okay, so two kinds of partners one there's a set of partners will bring a huge set of value to their clients because they actually provide the domain knowledge. The application specify acknowledged the management expertise, the operational expertise, printable technologies, perhaps that we provide. That's what a partner's is always gonna have. Value talked yesterday at a portable conference about what, cognizant? Who's a bigger part. They do. They built a self service application for patients off a medical provider to be able to get remote access to doctors when they couldn't get enough. And that was not life threatening immediately. Well, that's a huge sort of valley that they provide built on top of our technologies and products. A second kind of partner you went on developers is people who do open those packages. I think we've been quite good. We don't tend to cannibalize our partners, unlike some others we can talk about. So for those partners who have that value, we can put our investment in other places. But we could help maybe give access to the enterprise market for those developers, which I think opens up. A lot of you >> guys make the martyr for developers. That's right. I want to ask you a question. You guys are all sleep in all in on Cooper Netease. Red hat made a great bed on Cooper Netease on. Now that you're harvesting that with the requisition, huge growth there containers. Everyone saw containers. That was kind of a no brainer. Technical world developers are. What's the importance of uber Netease? As you see Kou Bernetti starting to shrink the abstraction software overlay. In the end, this new complexity where Cooper needs a running great value. What does that mean? This trend mean for CEOs CTO CSOs as enterprise start to think, you know, cohesive set of services across on Prem multiple clouds. Cooper Nettie seems to be a key point. What is the impact of it? What does it mean? >> I think I'll go to the business. Benefit Secure binaries. In the end is an orchestration. Later takes over management complexity. It takes away the cost of doing operations in a large cluster ofthe physical resource is, I think the value for the CIA level is the following today, on average, seventy percent of the total cost and people are tied up in maintaining what you have. Thirty percent is on new. That's rough rule of Tom Technologies like communities have taken to where we wanted to go and flipped out to thirty seventy. We need to spend only thirty percent maintaining what you have. And he could then go spend seventy percent on doing innovation, which is going to make inclined, happier and your business happier. Your team's had a couple of announcements today. One was hyper protect, and the other is a lot of services to facilitate. Hybrid. Can you talk about those brats up to date on a quick one, so hyper protect means. So where do you put your data in the cloud everybody gets worried about? Well, if it's in the clear, it could get stolen. C Togo to encryption. Typically, encryption is then down with the key. Well, who manages that cake? The hyper protect services are all about that key. Management is comin across. Both are getting hybrid world across both your premise and in the cloud. And nobody in the cloud, not even our deepest system administrator in the cloud, can get access to the key. That's pretty remarkable when you think about it, and so that provide the level of safety and encryption that should give you a lot of reassurance that nobody can get hold of that data that's hyper protect. And then if I go to all of the other services were doing, sometimes I see a lot of help. Someone advice. Look, in the three client meeting I just had every one of them was asking what should keep regarded watching I slightly more nice. What should I write knew? That means a whole lot of advice that you need and how to assess what you have in what should be a correct strategy. Then once you do that, somebody will say will help me move it. Others will say, Help me manage it So all the services to go do that is a big piece of what we're announcing it end and to end in addition to but into end. But also you can cover it up. Not only give me advice, I know I got buying strategy laid out, helping move it on Oprah's do boards for me or help you manage it after I move it except >> armor. When you sit in customer meetings. Big clients write me, and when they say we want to modernize, what does that mean to you? And how do you respond to that? >> Well, some organizes. Normally today it means that you've got to bring cloud technologies. You gotta bring air technologies. You got to bring what is called digital transformation all to bear. It's got to be in the service of either client intimacy, or it's got to be in terms ofthe doing straight through processing, as opposed to the old way of doing all the business processes that you have and then you get into always got to begin with some easy wind. So I always say, Begin with the easy stuff, not begin with the harder stuff. What started the architecture that let you do the hardest off later? It's not throw away, and those are all the discussions that we have, which are always a mixture of this people process technology. That world has not changed. We need to worry about. All >> three are thanks for spending your valuable time coming on the Q. Bree. We appreciate the insight. I know you're super busy. Final question. Take take a minute. To explain this year. Think What's the core theme? What's the most important story people should pay attention to this year and IBM think in San Francisco? >> I think this two things and the borders. That is the evolution that is giving greater business value for using the word that is Chapter two off the cloud journey. And it's Chapter two off a cognitive enterprise. Chapter two means that you're not getting into solving really mission critical workloads, and that's what is happening there. And that's enabled through the mixture of what we're calling hybrid on multi cloud strategies and then the cognitive enterprises all around. How can you bring air to power every workflow? It's not a little shiny Tonda. Besides, it's in the very heart off every confirmation. >> The word of the day. Here's anywhere cloud anywhere, data anywhere. Aye, aye, anywhere that's a cube were everywhere and anywhere we could go to get the signal from the noise. Arvin Krista, senior vice president, cloud and cognitive software's new title man Architect in the Red Hat Acquisition in the cloud Multi cloud DNA. Congratulations on your success. Looking forward to following your journey. Thanks for coming on, thanks Thanks. Safe. Okay. More live coverage after this short break state with the cube dot net is where you find the videos were in San Francisco. Live here in Mosconi, North and south, bringing the IBM think twenty nineteen. Stay with us.