txlaw

So all the bugs with Android will be more visible and the pixelated apps designed for phones will look better? :P well I suspect that's part of the point. Google is hoping that with their version of the retina display that will incent developers to develop apps for that resolution.. It will be interesting to see if they follow suit or not.. I think that's right. I believe developers do get paid more off of development for iPads, but that's in large part because it has been an iPad market. Now that the innovation gap is closing, the question is whether we will see market share taken by GOOG, MSFT, etc., which will result in more tablet-optimized development for their respective ecosystems.

Tons of people have been shorting iron ore, haven't they? I remember reading a while back on the board that some members were shorting FMG, for example.

Yeah, from what I hear from NYC friends who have been stranded in Austin, this weather event is sort of unheard of. But maybe that's just because we are relatively young and have never seen such a storm hit a place like NYC, where major substations go out and where the public transportation just shorts out. Hopefully, these kind of storms won't become more frequent because of global climate change. Stay safe, folks -- hopefully, you're in a position to read this post.

Look into the debt if you're going to look into anything. It's one that I've thrown out as a not gonna go there.

I've been watching the OSG price action for about a year now, mostly because I was intrigued by the insider buying, despite what seemed to be a very bad situation -- high debt, burning cash, overcapacity. Never really did find the time to really do any due diligence on the company itself or even the industry really. Perhaps FFH and Wilbur Ross will benefit from asset sales if/when OSG files for BK.

One thing that hasn't been discussed is the benefit of having financial accounts accessible through one UI. I have a BofA account, and I recently got a cash card from BofA to replace my Citi cash card because it's just easier to keep track of everything through one interface and because cash back is deposited directly into my bank account. No hassles at all. If the Merrill Edge interface were made more user friendly and more akin to a Schwab or Etrade, I bet a bunch of people would move their money there. So that's something to look out for in terms of deposit stickiness/cross selling. I wouldn't get a mortgage from BofA, though, as it's really known to be a PITA at this time and I doubt I'd be able to get a lower rate than with some other local banks.

Txlaw, fair questions and points. I will try to respond in kind. In terms of whether people think WFC can do no wrong, I do believe that many do think that. I have tried to make clear my point that I believe that WFC is a very fine bank. I don't think it's a great investment. Price determines value and I just think at best WFC is fairly priced. The comments in various threads definitely skew to the positive on WFC. If a bank like BAC is mentioned someone will invariably say "why invest in crap like BAC when you can do what Buffett does and invest in WFC?!" Surely you have seen these comments, they happen all the time. So is that "most" people? Probably you're right on that and it isn't. I also don't generally believe that all or most "board members" follow WEB or HWIC. I do believe there are significant amount though that do. See comment above. This is just a personal viewpoint. I think there are a substantial amount of independent thinkers who are very smart people though on the board and that's why I hang around. If I didn't, I wouldn't. Branding? I personally don't think that most people care all that much. It's more about pricing and convenience. Sure, something like the debit card fees hurt BAC, but it's a vocal minority that care. Take away the fee and no one gives a crap. I firmly believe that most banking is about pricing and convenience. Want a mortgage? Does someone care which bank gives it to them? No, it's about saving 2 bp and timeliness in closing. That explains a lot about the stickiness of deposits. It's not do no harm, it's do just enough so that people don't get pissed and walk. In terms of cross selling, that's all meaningless corporate speak. Every institution I've ever known does these things. It all depends on what is being measured. A teller can easily cross sell a mortgage so that would count as 1 cross sell, but a derivatives trader isn't going to cross sell that same mortgage and it's difficult for that guy to bring in an M&A client for example. So while it's impressive that WFC has the top spot in that, it's the kind of thing that has no magic to it. Someone else will have it some other time. I just don't think it means much. In terms of WFC not engaging in some of the more complex shenanigans, you are right, they didn't. Originally it was due to prudence. Later it was due to inability to catch up. They got lucky, pure and simple. I know that they desperately wanted to be in the biz. They saw the tremendous profits being generated from financial products and wanted their share. They didn't know how to build the business properly. By the time they started throwing money at it, it was very late in the game and so the damage was contained. I am unable to prove it to you. So I guess what I say means nothing, but I can't do anything about that. I have no more details I can provide. To sum up, everything being equal, if WFC was being sold at the same valuation levels as say BAC, I'd be all over it. I think it's a great bank. I think they have a polished image that in some respects is well deserved and in other respects is part of a good PR machine. I think that some of their good fortune is due to excellent management and some is due to being lucky to miss out on certain things. I think that there are a number of people who believe that WFC is a superior bank investment because it has the Buffett imprimatur. As I said, good bank, not good valuation. There are tons of banks that perhaps aren't of the same quality but selling for fractions of WFC. Banks that will be increasing by multiples, not percentages. What's the best that happens with WFC? It grows along with the economy and perhaps gets a little multiple expansion. Nothing wrong with that, I just think there's better out there. Hope I answered your questions fully. If not, feel free to ask again. I didn't intend to miss anything if I did. Thanks for the response, Kraven. I think we actually see more eye to eye than indicated by my last post. Yeah, I believe that WFC is nowhere near as undervalued as the other big banks, particularly BAC. And I agree with your summary paragraph as well. I guess our choice re BAC versus WFC goes hand in hand with the debate that people are having regarding owning fairly/reasonably valued high quality businesses and hedging (or forgetting about it) versus accepting volatility. Clearly, we are looking for much higher annualized returns with more volatility.

Kraven, I doubt that most people on the board who are invested in WFC think that it can do no wrong. More likely, they believe that the deposit franchise is one of, if not the best in the nation, due to its stickiness and low-cost nature; the management of expenses is phenomenal; branding there is great (it's higher end than grungy BofA); they appear to be better at cross-selling products than other financial institutions (I know you have doubted this in the past, though I don't really get why); they have been opportunistic acquirers as opposed to sucker acquirers (like BofA); and they didn't engage in some of the more complex financial shenanigans that took down a lot of the banks. A lot of people do think for themselves rather than following WEB or HWIC, contrary to your general attitude to board members. Now you appear to be questioning the following statement: WFC "did not participate to any significant degree in collateralized debt obligations (CDOs), structured investment vehicles (SIVs) to hold assets off our balance sheet, hedge fund financing, off-balance sheet conduits, the underwriting of low-covenant or no-covenant, large, highly leveraged loans and commitments to companies acquired by private equity firms through leveraged buyouts (LBOs)." My question to you is, why do you believe that the reason for this is due to their inability to get into the biz rather than prudence? I'm interested to know if you have an inside scoop or were a banker at that time that might have a different view of the saintly WFC. Note that I personally own no WFC and own a lot of BAC. I do have my parents invested in WFC.

Gio, rather than posting a new thread for each macro-focused paper you find interesting and want to share with the board, maybe consolidate into one thread?

I am going to post this in the Dell and HP threads. It would make sense to do this rather than start a whole new thread.

txlaw, you most surely are right! But consider that for each “astronaut” (the person who really succeed in getting into orbit), there are at least 999 people who stay on earth… Those 999 left behind should be content to manage a business as effectively as possible, extract from it as much free cash as possible, and use it to buy high quality enterprises at good (or, when possible, very good!) prices. They will have a productive life, a rewarding career, and they will create wealth. The quote I liked the best from the book “American Gridlock”, which I have just finished reading, follows: The late Australian billionaire Kerry Packer put this to me better than any theorist ever has: “Woody, if you meet someone very successful who thinks he deserved his success, you know you have met a real jerk.” Bingo! giofranchi giofranchi, good point. I might even go further. Those folks tied to the earth are not all the same. Some have business/investing acumen, and some do not. Some can pick folks to invest their money who do have business/investing acumen, and some cannot. For perhaps the majority of these grounded folks, the best course of action over the long run may be to focus on their own intangible assets that allow them to generate income from labor, save money when it makes sense (a penny saved is a penny earned), and use low cost tools to consistently practice index investing. And this is just growing material wealth we're talking about. Success is relative. It's entirely possible to have a rewarding life without having much material wealth or even a rewarding career, and those of us who live in countries that make this possible should realize how good we have it compared to many many other people in this world.

I guess it's about time to have an official Dell thread in the investment ideas section ... does anyone feel confident enough to right a short investment thesis? (txlaw?) I'll start a thread. It will probably incorporate most of what I wrote in my initial post on this thread, which was in response to a question from Sanjeev.

Actually it makes no sense. Compounding life posted about networkings (SDN), you responded by cutting and posting about storage. Two different things. I thought that Compounding Life's post about software defined networking (SDN) was very useful, and I wasn't trying to refute anything he said. Instead, I wanted to point out that DELL is thinking about this very interesting shift, which is occurring not just in networking but also in storage, which is a big part of DELL's IP portfolio. Clearly, you didn't read the excerpt that closely. The DELL guy's answer to the question he got -- which was about software-defined networking, software-defined storage, "cloud orchestration", etc. -- was interesting to me because it indicates that DELL has been thinking about the importance of software for provisioning cloud infrastructure. True, the guy focused on storage because DELL-owned IP is very storage heavy. But I would not be surprised if DELL had actually been looking at Nicira when VMware snapped it up. Just another sign that DELL sees where the puck is going. Honestly I thought Darren Thomas did a poor job of answering that question. He only touched on storage and he only talked about "virtualization" and storage not how Dell's storage offering fits into or adds value in the cloud space, cloud is not just a virtualization and in fact most clouds will probably have bare metal storage underneath not virtualized storage. But honestly I am not surprised given he is the VP/GM of storage. He is rooted in the sales of SAN/Storage products and probably not the best person to talk about Dell's cloud strategy. Dell has made some moves with SDN in conjunction with their Force10 product line. What was the date on that conference call transcript? Yeah, he didn't answer the full question, but as you pointed out, he's the storage guy. He may have also been avoiding giving an answer because there are active discussions going on in the company. You're exactly right -- build or buy is the question. DELL will adapt. Perhaps a more forthcoming answer would have been "Sorry, we can't comment on this right now but stay tuned." Providing a rambling, evasive answer filled with buzzwords that seeks to confuse is not what I call shareholder friendly. An AAPL shareholder talking about confusing answers with buzzwords? LOL. I guess you don't read many CCs. This is standard practice with analysts calls. You gotta read between the lines. I don't a daily or weekly basis but I have read and listened to my share and that was just my honest opinion on the quality of the response. I don't really think there was much in between the lines there. Actually that type of response IMO is very typical of people that sell traditional storage solutions like SAN and NAS. It's a "we have been doing this forever and know our stuff and these new kids haven't learned the lessons we have, do you want to trust your data to some new fangled thing?". Sometime they are right sometime they are wrong. Point well taken. Perhaps I'm giving him too much credit, and I was filling in the gaps myself. I do think that DELL is almost certainly aware of the SDN phenomenon, despite the fellow's non-response. I actually happen to know one of the Nicira engineers -- who I'm pretty sure is quite well off now that the company was acquired -- and we were discussing Openflow and the effect it might have on the Ciscos of the world. I actually specifically brought up DELL, but I can't really recall having much of a discussion about the company itself. The discussion was more about the commoditization of networking hardware and having all the value in the software/management side of the networking space. In any case, it is indeed a risk that we must be aware of when thinking about the cloud infrastructure hardware portion of the biz.

The problem is that the article conflates Berkshire's success (BV compounding) with WEB's success as an investor and businessman (investment performance and wealth compounding through OPM biz). Remember, WEB says that given a small amount of capital today (presumably, untied to an insurance operation), he could compound at 50%. I don't see him getting that performance solely from leverage and high quality companies. And no insurance company could have an investment portfolio made up the same way as the portfolio of the Buffett Partnership. But there is something interesting to be learned from WEB's changing approach over time, which is that when you become wealthy, you can actually stay wealthy and create dynastic type wealth by switching from a "let's get into orbit" strategy to a "let's compound our vast amount of wealth at a nice clip" over time. I don't really understand why very rich families who have some business acumen put their money in hedge funds that focus on all sorts of crazy strategies, when they could take the high quality approach. Ericopoly seems to be taking the smart approach. Get into orbit, and then put it all into Berkshire.

Yes, the videos they post every quarter are also very salesman-like. But then the heritage of this company is a sales company. I've met some of the DELL salesman, and boy are they what you would expect as the stereotypical salesman. IBM is also notorious for its people using buzzwords and terms of art when selling their productivity solutions, whether through the consulting biz or the hardware biz. Maybe CIOs just like to hear that sort of thing. But I would agree, I like to see straightforward answers. I love, for example, to listen to Charlie Ergen speak on CCs. But that's few and far between in the corporate world.

Actually it makes no sense. Compounding life posted about networkings (SDN), you responded by cutting and posting about storage. Two different things. I thought that Compounding Life's post about software defined networking (SDN) was very useful, and I wasn't trying to refute anything he said. Instead, I wanted to point out that DELL is thinking about this very interesting shift, which is occurring not just in networking but also in storage, which is a big part of DELL's IP portfolio. Clearly, you didn't read the excerpt that closely. The DELL guy's answer to the question he got -- which was about software-defined networking, software-defined storage, "cloud orchestration", etc. -- was interesting to me because it indicates that DELL has been thinking about the importance of software for provisioning cloud infrastructure. True, the guy focused on storage because DELL-owned IP is very storage heavy. But I would not be surprised if DELL had actually been looking at Nicira when VMware snapped it up. Just another sign that DELL sees where the puck is going. Honestly I thought Darren Thomas did a poor job of answering that question. He only touched on storage and he only talked about "virtualization" and storage not how Dell's storage offering fits into or adds value in the cloud space, cloud is not just a virtualization and in fact most clouds will probably have bare metal storage underneath not virtualized storage. But honestly I am not surprised given he is the VP/GM of storage. He is rooted in the sales of SAN/Storage products and probably not the best person to talk about Dell's cloud strategy. Dell has made some moves with SDN in conjunction with their Force10 product line. What was the date on that conference call transcript? Yeah, he didn't answer the full question, but as you pointed out, he's the storage guy. He may have also been avoiding giving an answer because there are active discussions going on in the company. You're exactly right -- build or buy is the question. DELL will adapt. Perhaps a more forthcoming answer would have been "Sorry, we can't comment on this right now but stay tuned." Providing a rambling, evasive answer filled with buzzwords that seeks to confuse is not what I call shareholder friendly. An AAPL shareholder talking about confusing answers with buzzwords? LOL. I guess you don't read many CCs. This is standard practice with analysts calls. You gotta read between the lines.

I think this is the one, from two weeks ago: http://i.dell.com/sites/doccontent/corporate/secure/en/Documents/2012_DB_Conf_Transcript_WEB.pdf That's the one. DELL may be one of the best companies I've seen in terms of disclosing info to shareholders. They're very shareholder friendly. http://www.footnoted.com/buried-treasure/dell-quietly-settles-shareholder-suit/ I take it you think the lawsuit was legit? Would love to see your analysis there.

I think this is the one, from two weeks ago: http://i.dell.com/sites/doccontent/corporate/secure/en/Documents/2012_DB_Conf_Transcript_WEB.pdf That's the one. DELL may be one of the best companies I've seen in terms of disclosing info to shareholders. They're very shareholder friendly.

Actually it makes no sense. Compounding life posted about networkings (SDN), you responded by cutting and posting about storage. Two different things. I thought that Compounding Life's post about software defined networking (SDN) was very useful, and I wasn't trying to refute anything he said. Instead, I wanted to point out that DELL is thinking about this very interesting shift, which is occurring not just in networking but also in storage, which is a big part of DELL's IP portfolio. Clearly, you didn't read the excerpt that closely. The DELL guy's answer to the question he got -- which was about software-defined networking, software-defined storage, "cloud orchestration", etc. -- was interesting to me because it indicates that DELL has been thinking about the importance of software for provisioning cloud infrastructure. True, the guy focused on storage because DELL-owned IP is very storage heavy. But I would not be surprised if DELL had actually been looking at Nicira when VMware snapped it up. Just another sign that DELL sees where the puck is going. Explain to me what happens to their Force10 acquisition in the era of SDN and what happens to their server business in the era of open compute. Why did they buy Force10? What market segment (not vertical) does Force10 target? At some point they will have to decide to build or buy. IBM uses switches made by these guys http://www.interfacemasters.com/. At some point Force10 may just become a brand or a group that does SDN software/integration on top of a ODM switch. Ideally having it currently will allow them to provide better end to end solutions today and get embedded with customers so they continue to provide solutions when shifts in technology happen. Same thing with open compute. They are complete solutions provider at this point. At some point down the line differentiation between the vendors products (specifically servers and switches/routers) will be negligible (almost are today) but customers will still need solutions and the hardware will be cheaper but the billable hours will be higher. Looking at how much large companies depend on consulting and service companies today, I don't see cloud changing that it may just move the $$$ into different areas of spending. To embrace cloud companies will need different solutions than they have today. +1

Actually it makes no sense. Compounding life posted about networkings (SDN), you responded by cutting and posting about storage. Two different things. I thought that Compounding Life's post about software defined networking (SDN) was very useful, and I wasn't trying to refute anything he said. Instead, I wanted to point out that DELL is thinking about this very interesting shift, which is occurring not just in networking but also in storage, which is a big part of DELL's IP portfolio. Clearly, you didn't read the excerpt that closely. The DELL guy's answer to the question he got -- which was about software-defined networking, software-defined storage, "cloud orchestration", etc. -- was interesting to me because it indicates that DELL has been thinking about the importance of software for provisioning cloud infrastructure. True, the guy focused on storage because DELL-owned IP is very storage heavy. But I would not be surprised if DELL had actually been looking at Nicira when VMware snapped it up. Just another sign that DELL sees where the puck is going. Honestly I thought Darren Thomas did a poor job of answering that question. He only touched on storage and he only talked about "virtualization" and storage not how Dell's storage offering fits into or adds value in the cloud space, cloud is not just a virtualization and in fact most clouds will probably have bare metal storage underneath not virtualized storage. But honestly I am not surprised given he is the VP/GM of storage. He is rooted in the sales of SAN/Storage products and probably not the best person to talk about Dell's cloud strategy. Dell has made some moves with SDN in conjunction with their Force10 product line. What was the date on that conference call transcript? Yeah, he didn't answer the full question, but as you pointed out, he's the storage guy. He may have also been avoiding giving an answer because there are active discussions going on in the company. You're exactly right -- build or buy is the question. DELL will adapt.

This I think is a big threat to companies like Dell. The big cloud companies get cheap, custom designed gear for themselves and don't buy from Dell. They have volumes high enough to do this and don't buy from the likes of Dell. Enterprises are shifting their data and computing to the cloud which means they don't buy as much gear as they used to. The end result - server and networking vendors get squeezed. Overall IT spending may increase, but the dollars may not go to current enterprise equipment vendors. This could mean that Dell is skating to where the puck has been. It is a threat if they don't adapt. There is potentially a day when individual companies do not buy any server hardware and they only rent it from Amazon or Google or someone else. However these companies will still need services and software to build and support their enterprises and products. That being said if it does happen, the shift will not happen overnight, enterprise IT moves slow which gives companies like Dell time to formulate a strategy and execute. Also the huge interest in private cloud solutions indicates that enterprises are not ready to give up all their infrastructure to cloud providers but they do want the ability to have computing and storage as a utility. That is why companies like Dell and HP and currently out their offer solutions and service to help companies build their private clouds. I think what will likely end up happening is that in the long term most enterprises will adopt a hybrid strategy where they have stuff in their own data centers and stuff in amazon or google's data centers, allowing them to shift load to where it makes the most sense whether it be because of cost or because of maintenance/outages. The threat is commoditization and buying power. With SDN, open compute, etc, they're moving to stringing cheaper gear together with high redundancy. This means price wars and lower margins. The move may be slow but the effects could be felt quickly. If enterprises decide to implement new projects in the cloud, they may not need to buy new gear as much as they did last year, they'll make do with existing gear. This could lead to very lesser new demand created, maybe even overcapacity, price wars, etc. Like I said, these are plausible threats to keep to watch, not predictions. No, Compounding Life is exactly right. The threat that DELL really must watch out for is failing to adapt to hardware commoditization. You're basically falling prey to the common misconception that DELL is simply a hardware seller. They're not. They are a productivity solutions provider that offers both software and services. Moreover, as Compounding Life points out, there are both public clouds, private clouds, and hybrid clouds. DELL will focus on private clouds, hybrid clouds, and turnkey solutions that include more than just the hardware. Your point about watching out for these plausible threats is a good one, though. Now if only you applied that rationality to AAPL and the potential threats they face to their margins.

Actually it makes no sense. Compounding life posted about networkings (SDN), you responded by cutting and posting about storage. Two different things. I thought that Compounding Life's post about software defined networking (SDN) was very useful, and I wasn't trying to refute anything he said. Instead, I wanted to point out that DELL is thinking about this very interesting shift, which is occurring not just in networking but also in storage, which is a big part of DELL's IP portfolio. Clearly, you didn't read the excerpt that closely. The DELL guy's answer to the question he got -- which was about software-defined networking, software-defined storage, "cloud orchestration", etc. -- was interesting to me because it indicates that DELL has been thinking about the importance of software for provisioning cloud infrastructure. True, the guy focused on storage because DELL-owned IP is very storage heavy. But I would not be surprised if DELL had actually been looking at Nicira when VMware snapped it up. Just another sign that DELL sees where the puck is going.

That article does not really dive into SDN (software define networking), but it mentions Nicira a SDN company that was just bought by VMWare for around 1billion. SDN is another thing driving the changes in switching and routing. You buy non-cisco, non-juniper switches that move bits at very high rates and then you virtualize the intelligence of the network using something like Nicira's solution. Again this is something that you are only seeing at companies that manage lots of data centers but something to keep a pulse on as it will change enterprise networking over the long haul. QUESTION: Thanks, Chris. Vijay Bhagwat, Deutsche Bank. My question for you is, we all read the same news. You saw the VMware acquisition from Nicira, and at VMWorld recently, you know, kind of had a sense of their strategy in terms of software-defined networking, software-defined storage, cloud orchestration. I would like to get kind of a Dell point of view on all of this, which is network virtualization, SDN, virtualized storage, what's Dell's point of view? DARREN THOMAS: Yes, that's actually a great question. There are so many moving parts going on here, I'm sure that the storage industry must look like a hornet's nest to you guys trying to track a single bee. So, in that particular issue, here's what's going on. You have companies, to some great degree application companies, saying, hey I can just put storage directly on the server, direct attach. That's pretty fast. Direct attach storage is pretty fast. And I'll manage all the reliability and stuff like that up above it. And now with virtualization you say, okay, so now I want to do all that virtually. So, I just want to snap my fingers, install a server, all that storage is under there, and I want to have it virtually managed with a software tool. So, this concept of software, just software only, so it's like storage is out of thin air. It's just whatever is on the disk. First of all, all our storage, all almost everybody's storage is about 98 percent software, only about 2 -- I have 1,300 engineers, I think like five of them are hardware engineers. And they help me build my hardware in some offshore design team, to be honest. All my IP is in software. Also, if you notice, Compellent runs on a Dell Server. Let's back what that means. Compellent runs on an Intel standard architecture. Compellent will run in a VM. EqualLogic, while it runs on a different architecture, will run in a VM. We can run it in a VM. And that's exactly that software. So, what you have is all these companies saying, hey, I can make a piece of storage out of thin air, and I'll do it like either at the Microsoft level or I'll do it at the VMware level. I'll do in one of those. But what you get is, you basically get reads and writes, and if it fails we'll copy it somewhere else and do it. Well, what about snapshots, replication, what about all of this stuff you got used to using? What about that stuff that protects you? What about thin provisioning? What about all that? Well, we haven't gotten there yet. We haven't even talked about it yet. Well, our virtual solutions, the ones I'm talking about running on VMs, come with snapshots, replication, thin provisioning, all that feature set. So, right now I'm saying bring it on, I would love to see that world where I can eliminate the hardware. I would like to see, if I do that, will you guys represent me as being a software-only company? Yes, that would be pretty cool, because at that point in time I've extrapolated myself from the hardware. I have no hardware at all. My value is pure software, and we all know the software companies have great multiples. So, I'm looking forward to that. But, to be quite honest, we can run our software on a server with no assist from any kind of storage hardware. And that's coming, that's actually coming. What I don't think is every customer out there is going to go to that, because there's a few little minor flaws with that. Number one is direct attach, if the server goes down, all those disks go down. Yes, you can copy that data somewhere else, but now you've got to pay twice the cost if you're copying the entire content to another location. So, RAID 5,RAID 6, that's out the window. All the cost savings of using six plus one or seven plus one are gone. Now every piece of data is mirrored to another piece of data. Those things have their value when you want to do it quick, set it up, run it in a virtual world, and then shut it back down again. But if you're going to run it and set it for a long period of time, you're going to pay about twice as much for the disk, roughly. So, they had their limitations. So, I think we're headed to a world where that just is one more bee in the beehive, to be quite honest. Does that make sense?

This I think is a big threat to companies like Dell. The big cloud companies get cheap, custom designed gear for themselves and don't buy from Dell. They have volumes high enough to do this and don't buy from the likes of Dell. Enterprises are shifting their data and computing to the cloud which means they don't buy as much gear as they used to. The end result - server and networking vendors get squeezed. Overall IT spending may increase, but the dollars may not go to current enterprise equipment vendors. This could mean that Dell is skating to where the puck has been. Nope, they're well aware where the puck is going. -------- Now, talking about the data center, the data center solutions I talked about are clearly quite different than the database solutions that you're bringing up, which is some very large service -- I'm just explaining your question -- some very large service providers are sophisticated enough that they want to bring the components down to the very base level buy the most inexpensive components, and they'll do all the integration, in essence, themselves. And there are some ODMs that are competing for various components in those, and quite successfully. Dell also competes in that business. We have actually a very large business in providing a very integrated set of solutions. So, for the companies that don't want to invest in all their own integration and engineers to do that, we have the ability to integrate not only the very low cost server elements, but also the networking, power, cooling, storage, into, in essence, a very large infrastructure that we can deliver, in essence, as a data center in a carrier, and we can drop that on people's roofs, and have, or we can put it in a field. And in a very short period of time it, in essence, is a data center. So, our offering is very different from what some of the ODMs are offering, which is very low cost piece parts, but you must integrate it and build the data center on your own to we have a very low cost and efficient integrated data center offering that we can drop and really shorten the time to deployment. Again, our strategy is all about ease of use and time to deployment. And so we are very consistent on those themes. So, our implementation dramatically cuts down on all of the effort that the customer needs to do in order to implement our solutions. So, we have a very different strategy there. Now, I also would like to explain that many companies must decide which applications they want on and off premise for the reasons I articulated before, whether it's security, regulation, performance, whatever the reason is, many customers, if not most, are going to live in a hybrid world where they run some applications on premise, and some applications off premise in some form of a public cloud, let's say. But once you've made that determination that you've got to have some applications in your environment. There are all sorts of advantages for a company like Dell that is a developer and distributor of those core components, because we'll be able to burst to a comparable environment. So, that will allow customers to operate their data center at average workloads versus peak workloads as long as they know the infrastructure on the public cloud side is comparable to the private cloud side. Then that provides all kinds of flexibility for them, which a traditional public cloud can never provide, because they can't mimic the exact environment they'll have on premise. So, again, a different strategy, but one that clearly in that space also advantages our unique capabilities. So, whether or not it's in the purveyor of data centers that lends itself to our capability to fully integrate, or whether it's a public-private cloud hybrid, it plays to our ability to provide a comprehensive set of software, hardware and solutions that represent the next generation of converged infrastructure.

Michael Dell interview at http://www.pcworld.com/article/2010574/michael-dell-on-surface-tablet-the-impact-will-be-limited.html We’ve undergone a significant transformation, but we’re not as different as you might think. Dell has always been about creating customer value and solving customer problems. For a long time we did that by advancing personal productivity through devices and the adoption of the PC. Today we’re still very focused on helping our customers get more value and better results from technology—but customer needs have changed, and we now offer a much broader set of solutions. It’s really an exciting time to be in IT. Innovations in areas like cloud, mobile, and big-data analytics are changing the way the world works, and we’re aligning our business with these new opportunities to better serve our customers. In five years, I expect we’ll be leading the way as an end-to-end IT solutions provider, but in some ways, we’ll also be the same—meaning very attuned to the needs of our customers. ----- We’re focused on the entire IT ecosystem. The devices our customers use to generate and consume information are a critical starting point, and that remains very important to us. We have some of the best products in the marketplace. For example, Dell Precision workstations and our XPS ultrabooks. But we recognize that PCs are just part of the picture. We have leading capabilities to manage customer information seamlessly and securely in multiple-device and BYOD environments, including virtualized desktop that you can access from any device. But beyond devices is an ecosystem of networking, storage, security, servers, virtualization, and cloud. This is where a lot of the opportunity in IT resides and where we believe we can lead. The total solution is world-class devices backed by world-class infrastructure and services that support, connect, manage, and secure customer information. If the only tool in your box is a hammer, then every problem looks like a nail. We’ve built a toolbox of customizable, scalable, flexible end-to-end solutions that put the customer first, not the technology or service we’re trying to sell. ----- More than 80 percent of our business is what we call commercial—a combination of SMB, Enterprise, and Public Sector—so that’s a strength and a priority for us. We are particularly focused on the midmarket, which is underserved and also a segment where we are positioned to lead with our open, scalable solutions. However, with the ongoing consumerization of IT, we are also fully aware of the blurring of lines between what is consumer and what is commercial, and the products and services we’re delivering today and into the future are designed to bridge that gap.