EMC's (EMC) Management at Citi Global Technology Conference (Transcript)

Sep. 3.14 | About: EMC Corporation (EMC)

EMC Corporation (NYSE:EMC)

Citi Global Technology Conference

September 3, 2014 8:00 am ET

Executives

Dave Goulden - CEO, EMC Information Infrastructure

Analysts

Jim Suva - Citi

Jim Suva - Citi

Good morning. Good morning, ladies and gentlemen and thank you for joining us here today for the second day of Citi's Global Technology Conference. I'm Jim Suva, the Citi IT hardware and technology supply chain analyst. This fireside chat presentation is with EMC Corporation. Joining me on stage is David Goulden, the Chief Executive Officer of EMC Information and Infrastructure as well as many other [assets] (ph) he has worn and currently wears in the company.

The format of this is, Dave is going to spend about five minutes going over a few overviews slides of the company. Then I will have some interactive Q&A about recent demand trends and the company's strategic outlook. Following which there will be time for investor Q&A. We remind you to please raise your hand and ask for the microphone as this is being webcast and so others in this room, which is quite a large room, can hear your question.

So without further ado, I'd like to transition over to Dave Goulden. And Dave, thank you for joining us today.

Dave Goulden

Jim, thank you and good morning to everybody. Good to see so many people rising early morning in New York. I wanted to just say a few words to just introduce EMC for those of you who don't know us very well, will be very quick and brief and talk about how we see the industry and the landscape changing how we are positioning our company to succeed in this new world.

This chart depicts the huge change in IT spending as we move from what we call the second platform which is what really driven the IT industry for last 20 plus years, the PC-client serve era into the third platform of computing. The third platform is all about cloud mobile, big data, social, the applications in the third platform typically you have 1000x of many users as in the second platform, a 1000x larger data set per user making them fundamentally different.

And in fact IDC predicts this, all of the growth in IT spending in the rest of this decade will be in the third platform although it still represents a very small percentage of total spend today, it will represent all of the growth dollars for the rest of this decade. So people who are positioned themselves well with the platform are going to be the winners in this new era and of course, company that position their customers to breach from second to third are going to be even well and better positioned.

And this is really what we have been setting EMC of course over the last several years. You heard us talk about the EMC Federation, usually member companies of the EMC family and we set us all this way so that each company in the family are focused upon its area of expertise is committed to becoming and being the best of class, best of breed vendor in its space. But working together can provide some very creative and forward leading solutions in second platform and in the third platform. So EMC information infrastructure focused on the infrastructure ware, storage and converged infrastructure, the VMware focus on data center software, Pivotal on big and RSA working across all.

And this picture gives us the ability to have some very interesting conversations with our customers. And it's a picture that resonates very well with all of our customers both large and small.

To put into context for you, we have over last year or so developed some blueprints for five key areas that will become important for customers as we move into the third platform. The foundation layer is the software-defined data center where you can rehost your traditional applications more efficiently with platforms and service on top of that, you can build these new third platform applications, virtual work space, so let's celebrate your uses in desktops, Business Data Lake which is important for analytics in the third platform and applications like securities that sit on top of Data Lake. And these areas that we have targeted as a Federation to work together across the four members, I just mentioned.

And to put this into context with you, we have developed a series of solutions across these areas that leverage the power of the federation. Just an example of how you see the different parts of the company working together to provide these solutions in a form to our customers, can rapidly deploy them and easily digest them. And you can see from this chart, we can do this from premises or we can do it through our cloud service partners or through our own vCloud public cloud service, leveraging things like Vblocks and other forms of converged infrastructure.

So just in thoughts on how the Federation fixed together to provide customers some unique capabilities in the third platform. We believe that we have set ourselves up in a very forward looking view looking ahead to the tight shift in IT spending from second platform to third platform. We believe that we are well-positioned to help our customers who face these major transformations, the power of the Federation becomes even stronger in the third platform than it was in the second platform and therefore time and time again we believe that the Federation creates value for our customers, for our partners, for our shareholders.

So just a couple of words and direction on EMC and how are thinking and with that hopefully short and sweet, Jim back over to you.

Jim Suva - Citi

Yes. Thanks so much Dave. We appreciate that concise. If we can [audio gap] let me kick things off by talking about maybe the overall demand environment, most storage investors reported modestly better calendar Q2 results and found it a little more optimistic about second half demand. Can you maybe let us know about, are there any meaningful changes to storage demand recently or what are your customers indicating for the second half?

Dave Goulden

What we saw in the first half gave us no real signals that there will be any change in the demand profile in the second half. Our view of IT spending, to start the year it was going to be up by about 2% this year and we continuously believe is going to be up about 2% this year. So our view of the IT macro and how impact storage really hasn't changed from what we said in January through what we said in July.

And having said that, if there is an uptick in spend, I think with our portfolio, our customer reach, our go-to-market presence, we are better positioned to capitalize upon anybody else, but we haven't seen anything yet that will lead us to change our views.

Jim Suva - Citi

Sounds good. One thing that's been really unique from the last time you and I were here on the stage from a year ago is some shareholder activism currently surrounding your stock. Can you update us a little bit about have you had many discussions, I guess, and even more importantly help investors understand the importance of having a VMware within the Federation, the importance of why it's important, or is it strategically important? Could you just help people understand the rationale behind that?

Dave Goulden

Sure. So, of course, we meet with all of our big shareholders, including anybody who has an activism agenda. We are not going to call upon specific shareholder meetings nor anybody in the room expect us to. Having said that, I think we know what the general theme is out there that people are talking about. And I think I want to come back to my opening remarks. The key thing here is that the growth areas of our business are in the third platform, it's mobile, social, cloud, big data area. And our success in that will come from the combined assets of EMC, VMware and Pivotal.

And being a standalone company, being more focused just to encourage in the third platform, and in fact, increasingly our customers, they are asking us to come together, particularly when we talk about this third platform solutions to put together, solutions that really leverage all parts of the Federation.

So we believe that that will create – that does create value, we can point to many examples of wins. If you look at our lost earnings call, we pointed out several examples of big, existing and greenfield wins that came from the power of the Federation. We see that only increasing as we move forward and not decreasing.

Jim Suva - Citi

And then when we think about this past year or so EMC and NetApp have gained actually the past several years about 10 points of market share. That's a meaningful, meaningful increase of gaining share by your company it's mostly been at the expense of the server vendors to a large extent. Can you help us looking forward, do you expect your company to continue to gain share or the server share loss that kind of has played its course, so how should we think about those tremendous share gains that you have been able to embrace?

Dave Goulden

I give you three examples preliminaries which I think will lead to further share gains as the industry develops because there are important trends going forward where we're doing exceptionally well. The first one is converged infrastructure. If you look at the share that EMC has in CI through VCE, through VSPEX, it's actually larger than our share in the real storage. And as the market moves towards the higher percentage of infrastructure bought in the form of CI, that's actually strong for us that will lead us to get more storage market share and you will see us continue to enhance our converged infrastructure portfolio going forward.

The second would be Flash. You've seen the huge success we've had with our XtremIO platform going from no revenue to $300 million demand run rate in basically two quarters, one of the fastest-growing products that we've ever had. And we are going to do better in Flash in total than we ever did in disc storage in total. That's going to lead us to gain further market share.

And the third area, I would say, is Big Data back to these big third platform applications. We see early indications our big customers want to build out these Data Lakes to analyze new parts of business, Leverage Hadoop. And you look at our capabilities across our DataCom appliance, or DCA appliance, Isilon, ViPR and Elastic Cloud Storage. Again, we are going to do better in the Hadoop marketplace than they've done in general storage.

So I think that those three areas are growing faster than the average. We actually have higher than average market share, which will lead to further share gains in the future.

Jim Suva - Citi

That's encouraging to hear. I don't think any discussions surrounding EMC or storage would be complete unless you talk a little bit about the cloud. And you recently made an announcement of a partnership with Microsoft. Could you update us a little bit about your view on the cloud and the view of the embracing of partnership with Microsoft? There is some investors who view cloud as a big threat and some as an opportunity. Where do you stand in that? And also of course, we recognize that there is public clouds, private clouds and hybrid clouds, so can you discuss about cloud in your strategy there?

Dave Goulden

Jim, I think what you said last is really the key thing here, it's a power, its question of hands, data will exist in private clouds and public clouds and hybrid clouds that bridge across those two. And we will need to make sure that we can play in all those three years. Obviously, the private cloud as people transition their enterprise, there is private cloud, that's our traditional sweet spot. But the public cloud, there is some interesting opportunities.

The example, partnering with Microsoft to basically how – [this leverages computer] (ph) attached to our storage, lets people keep their data on the EMC storage systems, maybe replicate it back to primary data center and use as your computer engine for some of those applications. And this partnering approach has actually worked very well for us. If you remember, we said that in the last year 2013 about $2 billion of our storage revenue came from off framework loads in different formats, including our search provider partner program, which has been the fastest growing vertical we have over the last several quarters.

So this partnering approach and working with cloud providers has worked very well. And finally, I'd point out that the storage backbone for our vCloud Air platform that was recently renamed from vCHS. That has also driven our EMC storage. So we stand to win from that as well. So we'll play across multiple different aspects of public cloud, partnering with public cloud partners, having our own public cloud capability and also making some of our software apps, it's available over time for customers who want to run those in the public cloud world.

Jim Suva - Citi

And Dave, as a follow-up to that, any thoughts about the economics of the cloud versus traditionally as many investors here followed EMC for years and years?

Dave Goulden

In terms of the public cloud or in terms of private cloud?

Jim Suva - Citi

Just the cloud overall.

Dave Goulden

The cloud opportunity again is the power of hands. So the economics of the private cloud are going to be very good for us because basically that is on-prem, modernizing, virtualizing, taking advantage of all tiers of storage. The public cloud is not all about commodity storage as people think it is. When you look at our service partner program, a lot of those people are either doing virtual private clouds or multi-tenants public clouds, but they are offering high quality storage systems. So they're buying Symmetrix, they're buying VMAX, they're buying data domain et cetera.

And even on some of the lower classes of storage like pure object storage, we have – Elastic, our storage platform, which we talked about at EMC world, which provides price points to customers lower than they can get from the public cloud. Here we still make decent margin on that platform as well. So it's going to be a blend. The move to cloud doesn't mean to say that the underlying application changes or storage changes, there is a spectrum of storage at work in both the cloud world as well as in the traditional data center.

Jim Suva - Citi

And then if we start thinking about some of your products such as VMAX, I believe you are going through a high-end refresh there. Can you update us a little bit about what are some of the features or capabilities, and how should we think about that compared to previous cycles?

Dave Goulden

It is important to understand that the new VMAX is very much a game changer. To put that into context for you, in these high-end platforms, every six or seven years, you will introduce a brand you architecture and then probably every two or three years after that, you will refresh it or enhance it with additional speeds and capabilities. This is a start of a new architecture for VMAX. It's fundamentally different. It's a new operating system, a new architecture. It leverages multi-core more fully, it can run and ingest data center applications right into the VMAX. So the data center infrastructure apps, things like management consoles, backup consoles, this actually can run inside the system for the first time. So it's not a midlife kicker, it's the brand-new platform.

What that means from a transition point of view is it will be a slightly slower transition than if it were just a midlife kicker. And we went from VMAX 1 to VMAX 2. We basically took over existing platform and we tried to cater it into three new models. But the systems didn't change very much. This is a new system. So what this means is the customers will spend a bit more time to test and delve before they roll into production, our enterprise customers. So it will be a quarter or two longer than a fast platform transition before we get this magical 50% of the systems coming from the new platform.

Jim Suva - Citi

And speaking of new products and platforms, maybe if we can shift a little bit to software defined storage and ViPR, can you walk investors through about kind of what this means to your company, the financial model, shifting more to a license model, more and more important to software, warranty, longer tail economics and walk us through what's going on there with ViPR and software defined storage?

Dave Goulden

Great. ViPR is a very key platform for us and something we've been working on for several years as we've had our eye on these platform storage opportunities. So to explain what ViPR is, there are two basic parts to it. The first is the ViPR controller. Think of it as a control playing that can provide automation of existing storage platforms, but also provides the control playing in the new world where you have got software-defined storage platforms. And by the way with the new version of ViPR, we also introduced a new version of ViPR SRM, the Storage Resource Management system, which together gives you incredible amount of insight on automation on EMC and non-EMC storage in existing environments. And we are beginning to start seeing wins from ViPR SRM in non-EMC storage accounts, which is very interesting trend.

But the forward leaning piece of what we do in ViPR is really the ViPR data search, to your point Jim that's where you get the software-defined storage arrays. So we have an object storage array, an HFS storage array, a block storage array and those will run on both existing platforms, or more importantly they will run on commodity hardware. So we now have the ability to have software-defined storage arrays running on commodity hardware being managed by the ViPR controller and these were designed for these huge scale third platform applications.

With the ViPR 2.0 release, which we announced to EMC world which is now shipping, we also added cloud scale capabilities including georeplication and geodistribution data across multiple data centers around the world. So this platform is now mature and is ready for prime time.

Now, the question on economics is an interesting one because we offer the ViPR data services or these software defined storage arrays in two flavors. Customers can buy the software from us and they can put it on any hardware that they want to – any white box hardware. But we have also recognized that not many customers necessarily want to be in the hardware integration business themselves that's why we also introduced something called Elastic Cloud Storage, which is the ViPR controller, ViPR data services on EMC sourced integrated and supported white box hardware. And that is also a second route from which they can buy to us.

Now, of course its early days, so the economics in terms of the impact of – impact of top line, the gross margin is going to be a function of how many customers buy the software only versus how many customers buy the appliance? If it goes more software-only, rate for gross margin – for gross margin percentage, as they go appliance will get more gross margin dollars. But a lower gross margin percentage. But either way it's going to be very positive as we move forward, the gross margin dollar growth from ViPR is going to be substantial over time. But that mix between hardware and software is yet to be played out in the marketplace, which is going to be a key factor in terms if you look out over next three or four years plus people are building these third platform applications, that exactly what the ViPR data searches was built for and we are getting great success particularly in partnership with people like Pivotal, but also people like Cloud Air and [OnWorks] (ph) and building out these new applications running on top of a ViPR framework.

Jim Suva - Citi

Well, Dave, I can say that I looked around the room and lost counts after my count of people went over 100. So I think it would be best if we started to circulate the microphone amongst the investors if they have some questions, if you could please raise your hand and will get a microphone right away to you. And as we wait for investors to please raise your hand for questions, maybe if I can follow-up with one additional question, the adoption of Flash. Many of us in technology here are always knowing about innovation and price points come down over time and Flash is currently coming down over time, but there is still a big gap there.

Can you update us a little bit about Flash and what's going on with – your product your XtremIO and how it's differentiated versus competitors and kind of how you view the future of Flash in data centers and the likes?

Dave Goulden

So Flash is a very important new technology that is – if you like the first fundamental shift innovated, data has been stored in the past several decades. And it is going to become increasingly important in the data center in many different sizes, shapes and formats. Now, today, we offer Flash in all of our hybrid arrays, we started shipping Flash in 2008, in all Symmetrix. And if you look at our, hybrid storage array platforms, our Symmetrix, our VMAX, our Isilon systems, the vast, vast, vast majorities, we are the fast tier and with the automatic tiring software to move data sets dynamically up and down typically this two or three tiers and the system based upon use. More recently of course, we have introduced XtremIO, which is being hugely successful.

Now, the key thing in all Flash array is the architecture, and the reason we purchase and invested so much in XtremIO as we believe the architecture was fundamentally different in two ways. That is really important that these systems grow up in scale. The first thing is that the data services are always on over time. So for example when it comes to dedupe, we always dedupe in memory or we never write un-deduped block to disc. That means two things, it improves the longevity of the system, it also improves performance because if you don't dedupe your memory and you come back afterwards, you can get the system melting down when its (indiscernible) data and deduping background at the same time.

So overall data search is dedupe, compressions, snap et cetera are always on all the time that is architecturally difficult. The next thing, this is very important, it is a truly linear scale out system. So it's not just a dual controller system where the bunch of Flash drives behind it, if you know where the old flash arrays are, it's a truly scale out Flash system. So we recently enhanced the support up to six XIO systems in one logical system and that will enhance going further forward.

That again is architecturally very difficult to do building scale out as we have done from scratch. It's not you are going to add on to a system afterwards, so this combination of always on data services and linear scale out make our all Flash array architecturally different from anything else in the marketplace and that is why you seeing us doing so well. And by the way, we did so well in Q2 even before we have announced compression, we have now announced compression which expands the used case for Flash, all Flash arrays, or our all Flash arrays into most broadest set of general purpose data based workload, et cetera. So we couldn't be more excited about XtremIO.

In terms of future of Flash, Flash technology is going to continue to evolve all the things like 3D NAND, Big C NAND, which will over time enables to push the Flash tier further down into retention, or into used cases, right now it's really focused upon those performance or into used cases. So you will see Flash continue to expand its used case, as it moves further into the systems infrastructure. But again, it will be one sized flash workload just like one-sized fits all workload that will be tiring in the systems. Then importantly from our point of view, we are relatively agnostic to that particular technology curve because where flash or its drives, we are leveraging and in fact we are encouraging the industry to innovate and we take advantage those innovations, we are not locked into any one particular form factor when it comes to how that technology develops because our expertise is taking that and building into systems that are providing your high level of performance availability and reliability from our customers.

Jim Suva - Citi

Ladies and gentlemen, again, if you could please raise your hand for question, and we will get the microphone over to you – do we have any questions from investors in this quite large audience? The downside to that is, I get to keep interviewing up here.

Dave Goulden

It's early Jim.

Jim Suva - Citi

There is a question over here on this side of the room, please go ahead.

Question-and-Answer Session

Unidentified Analyst

Thanks Dave. Can you just talk about the guidance for gross margins for the rest of the year and what that looks like and how that happened, how you guys get there?

Dave Goulden

Yes. Sure. I think you perhaps talking about the infrastructure side of the business as supposed to consolidated?

Unidentified Analyst

Yes.

Dave Goulden

Okay. I thought the same. So we didn't expect the gross margins for the EMC infrastructure business which is principally the storage sector, obviously there is IIG, RSA and storage makes all the difference from a numbers point of view. To be approximately flat, this year versus last year, now that means a pick-up in the second half, most of our pick-up comes from the volume impact of the business changes we introduced early during the year.

If you remember we said that we are basically going to increase the amount of unshipped orders we had at the end of any particular quarter and that meant, 1 percentage shift in revenue from the first half of the year into the second half of the year bookings relatively flat throughout the year, but revenue a little bit more lumpy accelerating in the second half because our business practice has changed. And that incremental volume that we expect to get in the second half is going to have an impact upon gross margins. Our gross margin is quite sensitive to volume with obviously a level of semi-fixed cost in the business and that's how we get approximately flat gross margins for all the full year for the core business.

Jim Suva - Citi

There is a question towards the middle of the room right here, if you could please wait, still the microphone makes it way to you.

Unidentified Analyst

What are the pros and cons of spin-out off VMware completely, why do you don't want to do it, or why would you want to do it?

Dave Goulden

Sure. I think I addressed a little bit earlier. But let me be direct as I can in terms of the answer to the question. When we look forward, and we look at the systems that customers wants to build in the future. They wanted us to build systems incorporate Big Data, a virtualization layer a modern infrastructure. Customers are looking for us to do that as the federation increasingly in the third platform most of all they did in the second platform. The second platform is very mature, customers were quite comfortable in making their own decisions in terms of their infrastructure versus the virtualization layer versus their Big Data layer.

They want to still work together, so we believe that there are real synergies and real benefits – top dollar benefits in having VMware as planned in EMC and Pivotal in VMware in unless – in the same company. And we believe if we separate it, we would actually destroy value by doing so. It wouldn't be as efficient a mechanism and it wouldn't be a stronger competitor in the marketplace we are today.

Unidentified Analyst

Yes. But you can still have a business partnership where you can go together given the former parent in terms of marketing a product itself. I mean, it's just…

Dave Goulden

You can always have a business partnership; the customers really do understand the difference between business partnership and true tie alignments. Business partnerships come and go, there are subject to external forces including what happens to the individual – to the individual parts of the company in our business – then that business partnership. And the work that we have done and we have obviously, we have pulled out this and we engaged with customers and partners and talking about the benefit of the Federation. And we believe is absolutely real. And we believe that you would basically disperse value for shareholders, if you separate it. The two parts will be less strong individually then the company is together.

Unidentified Analyst

Okay. So on a plan B for – on a plan B I said, if you want to increase shareholder value, what would you do, would you do another partial spin-out or would you not address in terms of your shareholder creation plan, separate from there?

Dave Goulden

We have always look at different ways to create shareholder value, if you look at what we have done over the last year or so, if you go back to the beginning of last year, we didn't have a dividend, we introduced the dividend which we just increased by 15% this last two years. We'll have returned more than [$6 billion] (ph) of cash to shareholders in the form of buybacks.

In terms of financial engineering around the VMware, there really aren't many small options because of the tax bases and the way that VMware is structured and held within EMC. So we are looking at financial engineering options around VMware.

Unidentified Analyst

Thank you.

Jim Suva - Citi

Thank you. Are there additional questions from the investors in audience? There is a question right up here towards the front, center.

Unidentified Analyst

David, what are customers attitude towards moving more and more of their applications into the cloud, and how are they changing as you get more and more of these front page packing store is coming out, where security breaches and things and like that. Have you seen any retrenchment towards keeping more things in-house and slowing the migration to the cloud?

Dave Goulden

Well, I think the security has always been a big question for – I think you mean the public cloud when you talk about big cloud. Security has always been a question for the cloud, but of course, security in fact is also question for internal data centers as well. It's not just – it's only unsecure in the cloud, in a multi-customer environment obviously something did happen in the cloud world and obviously, more customers' data is in risk if something happen inside the single data center but the breaches exist in both worlds.

But, I would say that security is one of the underlying concern and potential inhibitors to people moving more towards public cloud. And certain industries including industries inside this room have very little or no data outside of their private world cloud for those very reasons. But, I think it's been a counter factor, one I would say, is the security is going to change just a way that applications are changing in the third platform.

So if you think about security in the second platform and inside the traditional data center, you basically try to keep the bad guys out. You put in anti-virus and firewalls; you locked your applications down there very static. And you relied upon premise based security to kind of keep people out from your data.

In the cloud world whether it's a public cloud or private cloud, you've got many of our people connected to your world. You've got external users, you've got mobile users. So in the cloud world, security becomes more about identifying anomalies and responding to them quickly. It's actually a big data problem because you want to be able to look at who is using data, what data is moving where and who is accessing it and then responding to anything strange that's happening. So the security landscape in the security technology is changing enormously in both public clouds and private clouds for the very reasons.

Jim Suva - Citi

Any additional questions from the audience? Dave, we have about five more minutes. So I have one that I continually get asked and that's about Pivotal. Some of us are still trying to understand what Pivotal is all about, what are the types of products and services that you're selling and type of customers you are adjusting with the Pivotal Solutions. So if you can maybe help us understand Pivotal and I also believe that there has kind of been a little bit of a change from, say, 6 or 12 months ago about what was all in Pivotal and the exact strategy and maybe update people on what you're all doing and the roadmap there you see?

Dave Goulden

Sure. Thank you. Great question. So let's talk about the highest level, we set Pivotal up little over a year ago, maybe a year and a half ago with assets from EMC and VMware focused upon application developments in the third platform, big data, Flash data. But we're also including that something called Pivotal Labs. Pivotal Labs which we also expanded now around the world, Pivotal Labs we took the name from Pivotal Labs and gave that to name of the Pivotal Company. Pivotal Labs started out in San Francisco helping Web companies, build the applications are very rapidly, using modern, prototyping, teaming of developers and a piece of our Pivotal business is still Pivotal Labs and in fact we've now got Pivotal Labs locations in several major cities around the world. And a big piece of what we're doing with Pivotal is helping enterprise and helping customers redefine and rediscover their application development skills because what's interesting is that the second platform, for most companies and most industries, it became a business of installing package applications.

You install ERPs email or Web service and the core ability to rapidly build customer unique applications left while the Pivotal Labs is an entry point for Pivotal in many, many cases. And we have large companies from all industries, many key companies by name coming to us and wanting to get Pivotal Labs engagement because they wanted to have a rapid development team set up inside, so their enterprises are building these new customer facing applications. That's the first thing we do inside of Pivotal.

Now, the course of Pivotal down the road is the technology which we are building, which we are taking to market in two formats right now. There is something called Pivotal Cloud Foundry. Pivotal Cloud Foundry is a platform-as-a-service application development platform designed for customers who want to build these new types of applications. It is built on something called cloud foundry, cloud foundry is a community source activity and we have members from Accenture, IBM, many technology companies and members of cloud foundry contributing to cloud foundry. Think of it as an open source movement.

And cloud foundry is available to all members of that consortium and other companies; it's based upon open source space. The Pivotal Cloud Foundry is our version of the cloud foundry framework with a lot of added runtime capabilities from Pivotal. So that's the one thing which we – that's the first piece of IP we have inside the Pivotal. The next piece of IP we have inside Pivotal is our big data suite. That things like Greenplum, GemFire, and we recently packaged altogether most easiest to consume suite. We used to sell in an a al-carte offerings, we sell versions that ran upon the Pivotal database, so the Greenplum database, we have another version around top of Hadoop database. We packaged all those together in one big data suite, which customers license on a per CPU basis and they get access to the entire big data platform.

So right now, we're monetizing Pivotal in the form of three basic areas. We've got Pivotal Labs, we've got the Pivotal Cloud Foundry suite, we've got the big data suite and then we've got implementation services going around that. And those pieces of IP increasingly coming together in this thing, which we call Pivotal One is kind of the overall strategic framework for how Pivotal fits together that's what we are doing in Pivotal.

In terms of the customers, it is interesting because it tends to be the very biggest enterprises in all most of the major industries where we have landmark wins. I don't think there is a major out there where we haven't got a landmark win with Pivotal in one of the top three or five companies in the industry doing something very transformational with us and with Pivotal.

Now, in their case it's early stages of rolling those applications out. But some of our customers have gotten beyond the development phase and they are now rolling out enterprise wide applications based upon pivotal technology and increasingly with license turning around to VMware and EMC to put the infrastructure together underneath this. So the model is beginning to work.

Jim Suva - Citi

Sounds exciting. Well, David thank you so much for you and your management time today. Ladies and gentlemen, this will conclude our fireside chat with EMC. And I personally want to thank David Goulden for joining us here today.

Dave Goulden

Jim, thank you very much. And thank you so to you in the audience. Thank you.

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