Dell Technologies = Facemeltingly Awesome, but shall we talk frankly?

What a cool day! Dell Technologies coming together brings Dell, EMC along with our family of strategically aligned businesses VMware, Pivotal, SecureWorks into a real technology powerhouse.

I’m personally pumped and excited about the opportunities that are in front of us, and our customers have a lot to look forward to.  

From another perspective – the biggest tech merger and “go private” ever is something to be noted :-)   #GoBigWinBig.

Clearly we’re excited – but enough with the rah-rah.

Let’s do something DIFFERENT. Let’s think about this through the hard, harsh lens of “truth” and “reality”, and dispense with the kool-aid.

Watch this – I’m going to use the “Socratic Method” (which is a form of cooperative but argumentative dialog – which helps debate, critical thinking and questioning unconscious bias or underlying assumptions)…. Play along, answer these questions!

Q: Do you think that in coming years Converged Infrastructure, in particular Hyper-Converged Infrastructure in all forms will play a more important role than it does today?

A: If you answer YES, think about how Dell Technologies will be able to innovate and compete in these domains even better than we do today:

• First – consider: leverage, scale, supply chain are critical to CI and HCI – where huge parts of the economic aspects (the differentiation or intellectual property is in the software of course) of the offer come down to hardware. Even in an HCI offer, a huge proportion of the COGS/Price is in the x86 hardware. You better be good at this if you want to win in HCI.
• Second – we’re starting from a GREAT spot. We are far and away the CI leader, and in the HCI domain, coming on strong –and I suspect that if I (and the team!) do our work right, by the end of 2016, Dell EMC will be the HCI leader by any metric – customer, nodes, appliances, revenue, you name it – and extending the air gap. Why is this important? It highlights something important – we don’t think CI/HCI is a “side show”, or a way to package what we already have – rather CI/HCI is an critical central strategic pillar, and we will invest to win.
• Third – while the hardware is a relative commodity, the software stacks are what make HCI work (and critical to CI’s future). We have a history of software innovation, and very strong alignment with the VMware, Microsoft Pivotal, OpenStack, the container ecosystem and more. Imagine all the IP in EMC, in Dell, EMC{code} on steroids – powering use-case focused HCI. Stay tuned for more!

Q: Do you think that while there might be growth in CI and hyper-growth in HCI for years to come, the much larger, but more traditional parts of servers/networks/storage markets that we will see pressure and in some cases decline?

A: If you answer YES, think about it further. If indeed the massive markets are under compression (from SaaS, from service providers, from public cloud IaaS), but are enormous server/network/storage markets (hundreds of billions of dollars) – business considerations are critical. Dell Technologies is a consolidator, and there is a huge opportunity to gain massive market share in massive markets with a massive (and awesome) portfolio. Even if the massive markets are under compression and in some cases shrinking, the spend isn't going away, certainly not for decades.  It's just shifting.  What's face meltingly awesome is that Dell Technologies not only can consolidate the traditional domain, we have all the pieces to lead where the spend is moving.   A large part of this is HCI, Hybrid Cloud, Cloud Native apps, new data fabrics, and next generation software defined datacenters.  We have leading offerings in each.  This allows us to offer the right answer without hesitation. If a customer wants to move away from traditional spend to where the ball is going - that's just fine.   If they want to consolidate their traditional infrastructure – that’s just fine.  We're still there for them as the partner/trusted advisor of choice.

I want to elaborate further:

• Of course, innovation and self-disruption in these “traditional” markets will continue to be critical – but the ability to bring together a whole portfolio in aggregate that is strong in many places to aggregate and simplify a customer’s life is critical going forward in these traditional “compressing” markets. Customers naturally want less partners, not more. I’ve heard Michael say “no one has ever shrunk themselves to success”. That statement has never been more true than when the core stability of the customers partner ecosystem is up for debate.
• I think that customers/analysts/press underestimate the existential pressure on even the biggest players in the infrastructure market (including us) – it’s not pretty, and it’s going to get crazier. While being “big” cannot substitute for innovation and value – this is NOT a good time to be big, shrinking, and not innovating – and a slave to the unnatural acts that public markets create. Today, our answer and go-forward is clear. That cannot be said generally.

Q: Do you think that while of course the huge enterprise estate of “packaged enterprise apps” (which supports the bulk of the existing IT infrastructure market) will remain for many, many moons – that too is in the process of being disrupted? In this case, do you agree that the major disruptive forces are SaaS and more and more new application models (Cloud Native Apps)… And do you think those forces will drive new application and infrastructure architectures – ones where open-source, containerized abstractions and rack-scale datacenter architectures will rule the roost – on and off premises?

A: If you answer YES, consider how we will be able to innovate and compete in these domains even better. Why?   I’ll answer with my PoV:

• First - pushing the envelope on high-risk projects is hard in larger enterprises, because it requires a trade-off against short-term economic interests. We’ve been doing it in EMC with things like ECS, RexRay/Polly, ScaleIO, VxRack Neutrino, DSSD. Dell has been doing it with things like Boomi, FX2, Dell Open Networking OS10, with Project Triton. VMware has been doing it with things like the Photon Platform, NSX, VSAN.  Pivotal is doing it in the whole application domain. In each of these cases, I’m SURE there have been lots of internal debates about “prioritization” and “relative revenue” and “near term”. This is ALWAYS there – after all, we’re all working to run businesses. BUT – in public companies whose existing portfolio is under pressure, these start to lead to very short term trade-offs.  We don’t have a lack of R&D budget – and being private means we can weigh the mid to longer term more appropriately.
• Second – there is NO question that the infrastructure stacks for these new worlds are shifting to software stacks that are lightly coupled to x86 server stacks. This was a tricky thing in EMC (trust me, I’ve been at the center of this), because it messes with the business model. To play the BIG game (not the startup game), you need to have a very efficient, VERY awesome x86 server innovation machine and as importantly GREAT supply chain. Enterprises of all sizes are dwarfed by the hyper-scale players – and cannot sustain their ODM-based, low-level hardware engineered supply chain. They want low-cost to be sure – but they want quality, support, sparing, and more.   While they don’t want hardware dependencies (NO!!!) they DO want turnkey systems and offers.   They don’t have the time or the disposition to waste time trying to tune/engineer at this low (boring?) level.   It’s not sexy, but it’s important.
• Third – we have the software IP. We have it directly in EMC (check out what you can find at EMC{code} here – and that’s just a start), in VMware, in Pivotal, and in Dell. And because customers want choice, they want open (and no one has a monopoly on innovation) we have it in the Apache Hadoop, OpenStack, and container ecosystems.  A weird factoid – look at Stackalytics.com and look up Cinder contributions in Newton – together Dell/EMC are second only to “Other”, beating Redhat, Mirantis and HPE – what!!!!  We have that Software IP organically, but also via incredible technology alliances with Microsoft, with SAP and with others.

Q: Do you think that Dell/EMC, VMware and Pivotal will need to work even more closely together as customer want more opinionated answers, more “outcome” focused answers – while still partnering in open ecosystems because customers also want flexibility and choice?

A: If you answer YES, then it’s time for the structural changes and a strong new leader at the top in Michael Dell. I love how the former EMC “Federation” recognized the fundamental need for VMware and Pivotal to have a high degree of autonomy. That said – customers are clearly signaling that they are willing to trade of “optionality” for “outcome” through stacks that are more tightly integrated and hardened. After all, when you pick SaaS, it’s totally turnkey, but the full stack is closed. When one picks a Public Cloud IaaS, you don’t get to pick ingredients. More and more customers are telling me clearly: “I want things that are more turnkey around my standards” and the success of VxRail is an example. Michael is pretty clear in his mind: open always, but when customer wants our stack – NAIL IT. We drive the same model with VxRack - and not just with VMware. Expect more down the path with Microsoft – where we will double-down on the on-premises stacks that Microsoft and Dell has been working on (CPS and other examples), and leading from the earliest days. And – moving further up – for Cloud Native Apps – it’s all about the developer. We will make the best opinonated PaaS (Cloud Foundry) even better – through code contribution as we have been doing, but also in turnkey stack offers like the Native Hybrid Cloud.

Q: Do you think that new economic consumption models (think full utility economic models) will be more prevalent – joining the well-understood enterprise IT purchasing model based on capex/ELAs?

A: If you answer YES, it’s time to operate as a private company – and embrace different business models that are otherwise simply not possible. It’s not a case (at least in my opinion) where the world will be all one way or another – capex, ELA, and full consumption models (and everything in between) will all be tools to use. BUT – today, almost all large scale IT businesses (software or hardware) are biased towards the traditional business model, and working hard to navigate this change. All you need to do is listen to an earnings call with Oracle, with Microsoft, with Cisco, with HP, with IBM – you name it. Each one is always peppered with the “how are you navigating the business model transition to annuity/consumption economic models?”  Why is it so challenging? As a public company, you are looking to each 90 day cycle. Annuity models can be great – but indubitably they mess with business in short time-frames. Furthermore – let’s be clear, our debt holders (being led by the founder) have a “success is about building something awesome” framing that is not common in the “go private” ecosystem :-)

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So, there you have it. In black and white terms – no kool-aid terms.

Axioms (things that hold true on their own) lead to corollaries, and those lead to implications. You may not like the implications – but if the logic holds (and the Socratic Method above is a short list), but they flow naturally from the Axioms – and therefore cannot be denied.

• Today, Dell Technologies is the world’s largest privately-controlled, integrated technology company. This enables us to focus on our customers first and foremost and gives us the freedom to both invest in R&D for the long term and to incubate high-growth businesses in emerging areas. Today, Dell Technologies brings together strong capabilities in the fastest-growing areas of the industry including hybrid cloud, software-defined data center, converged infrastructure, platform-as-a-service, data analytics, mobility and cybersecurity. Dell Technologies has recognized leadership in 20 Gartner Magic Quadrants and market share leader in key areas identified by IDC. Today, our unique structure enables us to be agile and innovate like a start-up while offering the trust, service and global scale of a large enterprise.
• Today, The new company will help our customers address their critical IT needs in the data center.
• Today, our customers now have increased choice, simplified technology options and deployment routes, single support access and an even richer experience.

So what does this mean for Converged and Hyper-Converged Infrastructure?

An important passion for me is around Converged and Hyper-converged systems which help our customers get to better outcomes faster as well as a solution’s portfolio that includes the industry’s leading choices of multiple Cloud options, all in hybrid scenarios for customers who need VMware oriented Cloud stacks, Microsoft oriented Cloud stacks, Cloud Foundry oriented Cloud stacks and business critical cloud choices with Virtustream.

Our CI portfolio will be unchanged – it’s a formula that is working. We’ll keep focused on refining, improving, and making deployment and update (RCM) easier and improving customer support. On the other hand, HCI will undergo a huge proverbial “hit the gas”.

So what is the Blue Sky view? IMO - Converged and Hyper-Converged Infrastructures are foundational and underpin the Next Industrial Revolution.

Much like how the physical Infrastructure (roadways, rail systems, aero-dynamic innovations) powered the Industrial Revolution of the 19^th century, we are standing at the cusp of the next industrial revolution where converged and hyper-converged become the de-facto standard for the modern data center…an adaptive, intelligent, super-fast, software-defined data center that is the backbone of ubiquitous connectivity driving the digital revolution of our era.

Freeing people from the most mundane parts of infrastructure.   Acceleration and simplification through standardization and software automation.   Enabling developers to accelerate release cycles to injecting agility into an IT organization, cloud-native and cloud choice can be delivered through Converged Platforms. Getting fast, getting agile is all about focusing where things matter – and infrastructure is just too boring :-)  Let us take care of it. This is all about moving forward on the “Build” to “Buy” continuum for things that should be evaluated as a commodity. We’ve gotten there on CI/HCI, and we’re getting there on the Hybrid Cloud Platforms that run on them.

Serving as one of the change agents and catalysts at Dell Technologies, we sit at the epicenter of this transformation. And yes, of course – there’s a TON of stuff (at the “Titans of Tech” session – not named by me! – a question from the audience had me spill some of the beans, which you can see here) already in the pipeline as the next waves of innovation.

Let’s face facts and speak frankly….

Leaders in this transformation, many of whom are comprised of our customers, are increasingly thinking bigger picture. They are thinking about their business, the longer view, and what they do that is unique (hint, it’s not about what server, network, storage, hypervisor you pick – and while have SOME differences at the infrastructure layer, you’re about as different as one elephant is to another – ergo, not that different) They have started thinking about end user customers and what they care about. I’ve found that this is perhaps the most important quality in IT leadership today – forcing hard realizations, clear evaluations of what matters in a sea of change and uncertainty. Getting smart about where you build and integrate, and where you buy and consume.

Recipe for Success: “Build” to “Buy” Continuum – and continuously “shifting right”

In IT, customers have two broad choices that can lead to successful outcomes.

They can either build their own outcomes by individually sourcing compute, networking, storage and software, or they can buy their outcomes through integrated solutions, and turnkey engineered systems and cloud platforms – on and off premises.

I’m NOT just talking about CI/HCI here – the idea is broadly applicable. A common example are people building their own PaaS and picking container engines, libraries, runtimes, cluster managers, sets of microservices and hand assembling. The flip side of that example are customers who say “I bet my needs are 90% the same as my competitors… so rather than designing for the exception 10%, I’ll just focus in on value ABOVE the PaaS and pick and use the leading PaaS”.

Build or Buy (which is not any single point but a continuum) is a debate each has a “stop” has a sweet spot depending on where the customer is in their digital transformation journey. I’ve been observing that with each passing day – people are moving more and more towards the “right” part of the diagram below (with the far right being Hybrid Cloud stacks which you consume as a platform).

How can customers meet these two very different sets of needs?

By embracing that they want choice, but only where it matters. Shifting to the right as much as possible is good, but this only works if they have the cajones to realize they are abrogating choice below that mark (that’s what results in speed, agility).

If the customer chooses an operating model that applies to their specific workload needs, and check it constantly in the harsh light of reality – you end up with: 1) minimized variation of things that should be boring; 2) more stuff on the right, less on the left.

That said - every customer has a unique set of issues that can’t be solved by a single solution. However partnering with the most trusted, reliable, industry leader helps our customers accelerate this journey towards buying infrastructure on demand, delivered on or off hybrid clouds. Choose their consumption models, choose your hybrid cloud stacks, we deliver the experience.

The purpose of Dell EMC’s converged platforms is to help businesses accelerate their data center modernization efforts. We believe there are multiple technology pillars that will be the underpinnings of the modern data center (flash, cloud enabled systems, scale out architectures, software-defined infrastructure, all wrapped in protection and trust). Converged infrastructure helps make the adoption of these new technologies faster, simpler, more agile, more efficient, less risky and less costly – all of which is for a simple purpose: go faster, better, and focus your efforts where you are unique and different.

Let’s CONTINUTE to speak VERY frankly…

It won’t all be sunshine, rainbows and unicorns.   There will be lots of change.  There will be challenges – both foreseen and unforeseen.  

I can say now, publicly – that here on day one, we are ridiculously organized, ridiculously organized and ready to GO.  The integration team has done amazing work to date – but this is the start.

It’s also important for us to be realists – this will not be easy – but aspirational big moves never are. We will be bringing together teams of people for the first time. We will have disparate systems and processes that need to be reconciled, and then integrated. We clearly will have things we can do differently, more efficiently together. There other things which clearly can be organized better as we come together. These are changes – some merely tweaks, some that are turns - that we will be working through over the coming months and into 2018.

I think back and celebrate 12 years at EMC.   To me, it’s always about the people, the learning, the friendships.  People are the “source” for culture.   So many friends – and I’m excited about the adventure over the next few years with old friends and new.  

I’ve been fortunate and blessed.  I’ve travelled around the world, MANY, MANY times…   And I can’t wait for more :-)

Today is a big day. A huge THANK YOU to every customer, partner, and employee who was part of getting here. There are exciting times ahead – and I’m optimistic about what we can do, the realities that we and the industry as a whole face. Most of all I’m hopeful. Hopeful that in our own way, we can help humanity forward – we are at the intersection of human progress, technology, and a future which is pretty darn cool :-)

I’m excited to be on this journey with you!