compoundinglife

That they provide good stories to tell later ? :)

Yes. I guess it comes down to predicting what will happen in the future. For tech companies, I think that this is incredibly difficult most of the time. 2- I think that the whole wimpy core way of thinking came about because processors have been trending towards higher power consumption. I think that everybody will simply adapt. Intel will have a mix of products. Some of them will target various niches in the server market. So will AMD and various startups and ARM and RISC chip manufacturers. I don't see an inflection point where ARM kills off Intel and AMD in the server market. If anything, it might be the other way around. The historical trend has been commodity hardware killing off lower-volume specialized hardware. Server chips by these companies aren't entirely commodity consumer products (they have server features like ECC, hardware virtualization support, etc.). But you might expect "mass-market" server chips (e.g. Intel Centerton) to kill off low-volume specialized chips (e.g. Tilera, Calxeda). So that's my prediction. Of course it is possible that some startup has some radical new approach that totally changes the industry... e.g. radically different transistor technology, quantum computing, etc. Well I never said that ARM would kill Intel or AMD, I think my initial point was that these technologies could pose potential threats companies like Dell in the cloud space if they get large adoption. When you presented the paper about wimpy vs brawny I felt you were implying that wimpy cores don't stand a chance and I think they will have a high probability of having pretty big place in the future. It could be a product from Intel like a newer Atom it could be ARM it could be both or could something completely different. I don't see Intel going away any time soon either. One of the hotter programming languages would be Ruby on Rails. Its appeal is mainly that it lowers development time... whereas something like C++ would enable really high levels of performance and efficient use of hardware. The programmers only want to do really easy parallelization (e.g. each user of a cloud service is handled by a thread) and to stay away from hard parallelization. The historical trend has been for programming to go higher level... less development time, less efficient use of hardware (because hardware just gets faster and faster). Even in photo editing where performance can be better, many applications aren't written for parallel processing (yet) even though it is ideal for parallel processing and easy to do. The programmers were too busy adding new features. Familiar with Ruby and the Rails framework but that was not what I was thinking of. I was actually referring to are functional programming languages which are not designed around the Von Neumann architecture like the imperative languages that are in main stream use today (c, c++, java, ruby C#). Scala is a newer functional language that runs in the Java Virtual Machine that among other things is attempting to make it easier to deal with parallelism and concurrency. Here is a good video (16 minutes) to watch if you are interested: http://www.oscon.com/oscon2011/public/schedule/detail/21055 Yup. I guess we will see where everything is in 10 years. Good chance its different than either of use expect :) That being said I am still long DELL.

Yes it does lower labor costs and in addition it comes at a performance penalty. In a lot of use cases the savings trumps the performance penalties. I think you will see a similar shift in the brawny vs whimpy core argument. The place where you save money with wimpy cores is different than with virtualization, but the pattern is similar IMO. Pattern being, when there is a good way to reduce costs in competitive industries these shifts happen. You made the point earlier that it is usually cheaper to buy more hardware than change software, my belief is that Google and Facebook operate at scale where it will make sense to change the software to run optimally on hardware that allows higher density @ lower cost. For a run of the mill enterprise buying another Dell server is cheaper than paying a software engineer to optimize the software. But we are talking about huge scale that is only getting bigger. But you are talking cost of the physical chips correct? I was referring to the cost of energy, cooling, rack space in the data center etc... I agree that not all software can be easily parallelized, but that does not mean it won't happen. One thing that is happening currently is that there is huge interest in the cloud space in functional programming languages, one reason for this is that they are built in such a way that programming for parallel systems is much easier. This issue is not unique to wimpy cores, you have people building big data applications on EC2 with 100s or 1000s of virtual machines they are facing similar issues but not identical. Software is heading towards parallelization, its not an easy problem to solve but what ever is? I guess my point here is that I see trends in both the software side and hardware side that make me believe we are going to see a growing number of high density whimpy core based systems in use. Your arguments for why this may not happen at a large scale are because performance is important and rewriting software is expensive. My response is that I think people working on these problems are reaching scales where, if they can parallelize across lots of wimpy cores, it is cheaper to retool, rewrite software to utilize these systems optimally. This is how these things work right? You build a system that exceeds your capacity expectations, then it exceeds your expectations so you optimize it meet your growing needs knowing eventually you will need to rebuild it. Then you design and build a new system bring it online and eventually after a long time the old one goes away. Or in the cloud model you start adding more racks of newer gear running newer software handling the same workloads and as the old racks die off you just replace them with the new ones. One example of that is Facebook using Tilera initially for some of the work that they know can be easily done on whimpy cores and then investigating other places they can use it. Yes those are all accurate statements. I guess a better way to make my point my be this... I am willing to bet someone smart wrote a paper at some point about RISC vs CISC and how using CISC/Intel systems was not an option for one reason or another. Whatever the reasons were this mythical paper I just made up was wrong in the long run because the product evolved to meet the needs. That is the analogy I was trying draw, *not* that comparing ARM to X86 on a architecture level is similar to comparing X86 to Sparc or Alpha. I am totally willing to accept that this response is BS because I don't have a paper to cite. But I like to look at patterns that have occurred in the past where people say something is going one way or the other, then look at the present to try and find similar patterns. In this case is the pattern was experts assuring me that UltraSparc or DEC Alphas are here to stay when in fact they were pretty much dead wrong, in comparison to people saying today that low power cores are not going to be able to replace Intel or AMD x86 based servers. As I mentioned not apples to apples comparisons but similar patterns. Acknowledged. Apologies for any typos, was in a little bit of rush. To be honest I am not entirely sure at this point if we are debating ARM or wimpy cores impact on Dell and Enterprise or its impact to the Googles and Facebooks of the world. Either way, good conversation. I think it started with the former and ended up on the later.

http://www.marketwatch.com/story/einhorn-short-orders-chipotle-on-taco-bells-rise-2012-10-02 So I agree that CMG is in the nose bleeds and I know David Einhorn does very in depth DD before entering these positions. But one thing that stuck out to me was that he said Taco Bell's new strategy was going to eat CMG's lunch. Not sure I can buy that. The Chipotle I go to in downtown Seattle is full of a bunch people that would not IMO go to Taco Bell for lunch. They are there because CMG uses locally sourced ingredients and is perceived to be very healthy and high quality. I think its going to take alot for Taco Bell to get the same perception. Thoughts? Anyone seen or chowed on the new taco bell menus?

Sure, that paper is probably right. Whimpy cores (ARM) are not as good as Brawny cores (x86) for all things. But keep in mind that if performance were the issue people would not be flocking to virtual machines like they are. Virtualization increases latency and has all sorts of nasty performance impacts. The biggest of which tends to be overhead on storage IO. People still use the hell out of it though because performance is not everyone's priority or the performance is good enough to meet their needs. Go back to the 90s and you had very similar things being said about the prevalent RISC CPUs at the time in response to the much cheaper Intel stuff. People from SUN and DEC with would talk about how their architectures are what get the real work done and Windows or Linux on x86 for server applications was never going to happen because their architecture was superior. There were right in that architecture may have been better at the time but the cheap CPUs got better and people adapted their software stacks overtime to better utilize the cheaper hardware. I think the whimpy CPUs are in the same boat. Keep in mind ARM has been evolving for a quite a while a now, since the 80s (http://en.wikipedia.org/wiki/ARM_architecture). It will continue to evolve. And it looks like Facebook is a fan whimpy cores: http://gigaom.com/cloud/facebook-tilera/ 2011 http://www.eetimes.com/electronics-news/4375880/Facebook-likes-wimpy-cores--CPU-subscriptions 2012 It depends on what your optimizing for IMO. This argument that software is more expensive to develop vs buying more hardware only works up to a point. These data center companies are operating at such huge scales that I believe if the cost savings is high enough optimizing the software to run on cheaper hardware makes sense. Your right it could be somebody other ARM, Intel has their own product in this space. We are probably not going to see a shift in the Enterprise world for a quite a while. However, I don't whimpy CPUs will remain a niche market, I don't think some shortfall of a particular performance characteristic will prevent their adoption. My 2 cents.

But you can still read the threads to inspect the quality before you register for an account. If you can't figure out from the reading the board that its worth $10 for a lifetime membership to be able to participate in the discussions then you probably won't do well as a value focused investor IMO.

WPO has a stake in Celtic Healthcare: http://www.reuters.com/article/2012/10/01/us-washingtonpost-acquisition-idUSBRE89011T20121001

Considering I pay more than that for a subscription to Barron's and get better information here I think its a bargain and a great way to deal with spam. Having run many sites and email servers in the past, dealing with spammers is an arms race and a complete waste of time.

Didn't give my thoughts on that part of the question. Maybe tomorrow.

Should we start a new thread for this topic? Not sure what the protocol is on the board with regards to what is or isn't off topic for a thread. I think this question is very relevant to Dell. If you look at the large public cloud vendors like Google or Amazon, they use cheap custom hardware. Their software stacks consist of stitched together open source and proprietary software. They are going to buy very little software, services or hardware from Dell. Effectively, Dell gets locked out. So if a future customer buys SFDC licenses instead of implementing some part of it in a private cloud and if SFDC hosts it on AWS, there are very few dollars up for grabs for companies like Dell. If on the other hand, private clouds form a big portion of spending, enterprises need to buy a lot of hardware, software, services. Then Dell has a bigger play. The question then is, will they be able to compete against IBM and Oracle? Ok, random stream of thoughts on this subject... So clearly public cloud is a big deal. Amazon web services which is hidden under "other income" on their income statements is over 1 Billion now. One of these days I will start a thread on to value Amazon's AWS business properly, because I am trying to figure out what the IV of that part of their business is. Interest in private cloud ATM is big, I can't provide a real number because I don't know but maybe Gartner has an estimate somewhere. Companies want the ability to have an AWS like service behind their firewall. IMO the reason is not always because they want to buy cheaper hardware, its because of operational efficiency. Developers go to amazon and turn on 20 servers in 1 minute, they get excited about how much easier it can make their job. But they can't do their day to day work there because company policy prohibits it. No traditional company wants their IP or customer data on a public cloud. Even though the reality might be that Amazon's IT security folks are better skilled than theirs. IMO a fortune 500 company would pay normal prices for Dell or HPQ hardware and pay for services on top of that to have a private cloud because it would increase efficiency so much. You need a server to do some testing? You need 30? Well instead of going through the procurement process and waiting 3 months or more you can have it right now. IT can bill your department internally based on long you used those instances. You are spinning up these instances on a large pool of resources that are centrally manage by IT but you don't even have to talk to them to get your work done. They just setup a quota on your account for how many instances you can use. I think for Enterprise companies the cost savings in just getting "more work done faster" is a huge value by itself. Plus they already have IT staff and data center staff that they have to pay for their legacy systems, so migrating to a public cloud does not save then OPEX unless they move ALOT of stuff and lay off some IT folks shut down data centers. Where companies like Dell and HPQ play into this is by helping customer get it done. Currently Dell helps companies build private clouds using software called Openstack (http://openstack.org). Openstack is essentially an open source clone of amazon web services. It does not do everything AWS does, but its under very active development on a 6 month release cycle and is getting better all the time. Dig around the website and look at the companies who have developers working on openstack. You will see the usual suspects, IBM, HPQ, DELL, RAX, RHT and many smaller companies. The Openstack project was created by Rackspace and NASA, they were both working on private cloud software internally and decided to opensource their respective pieces. Dell's cloud website: http://content.dell.com/us/en/enterprise/cloud-computing Dell also has software tool they built to help provision openstack based clouds called crowbar: http://content.dell.com/us/en/gen/d/cloud-computing/crowbar-software-framework HP appears to be focusing more on building it's own public cloud: https://www.hpcloud.com/ When looking at companies like DELL and HPQ I don't think commodity servers are the end of their enterprise IT business and here is why... Google, Amazon and Facebook hire the brightest and the best and pay them handsomely to build solutions that allow them to utilize cheap hardware at scale. They had to build their own solutions because not even a 747 full of IBM consultants could do this for them, granted they would try and rack up the billable hours, three years later they would have something that doesn't work. I know a bunch of engineers that work at all of the companies I just mentioned and I can tell you what they do currently can't be done by normal companies. It requires a technology skill set and operational agility that can't be done at even the largest non-tech companies. Companies that are not in the large scale computing business want stuff that works and people to help them when its 3:00AM and stuff is down for some unknown reason. Data centers is not their competitive advantage so they are not going to innovate there. Instead they want something that can be run by someone with an average IT skill set and a support contract as a kicker in case stuff really goes wrong. So in short while there are tons of changes coming down the road in IT/Cloud/Servers/Networking, I still think customers want services, solutions and support. I think Dell has some real opportunities there. But in the end my enthusiasm is mainly based on the beaten down stock price and it goes up as the price goes down. I just read that GS put Dell on the sell block with a $9 price target, music to my ears :)

On that note, people always talk about float, Buffett's stock picking ability and understanding of the companies he invests in. But they always frame it such that his ability to do this has resulted in him finding fantastic investments, which is true. But I think whats often overlooked is the inverse of that. Buffett has said that Berkshire's mistakes are usually of omission not commission, its true for their wins as well IMO. Some of there biggest wins have been because omission. Things that he chosen not to do. His ability to say no to things that might appear attractive has resulted in him having very few investments go bad and resulting in permanent capital loss. He has had some bad ones for sure, but in general its not the picks that fascinate as much as the avoidances. Focusing on workouts when the markets were high during the partnership days, avoiding the junk bond and LBO debacle, avoiding the .com bubble, not owning any of the companies that went under during the crisis. Getting out of the GSEs long before the crisis. His ability to navigate and avoid folly is truly impressive.

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?) That sounds good to me. I was specifically though thinking of a thread for all the cloud talk since it had drifted away from Dell specifically.

WEB and Munger have always promoted continuos self improvement and investing in yourself. In particular the Univ. of Florida Buffett talk comes to mind where he asks the class to think about which classmates they would go long and which classmates they would short. So while thinking about this I have identified a couple of areas where I would like to improve and considering talking to a life coach to see if I can utilize that service to help me with these improvements. Anyone have any experience with using this type of service, any suggestions or even recommendations for people that are life coaches? Feel free to PM me if you would rather not post suggestions for particular people on the thread. Anyone have any tips or strategies they have used for self improvement or ways of investing in yourself?

Yeah his section was very rehearsed. He might of been reading a teleprompter.

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.

Should we start a new thread for this topic? Not sure what the protocol is on the board with regards to what is or isn't off topic for a thread.

Maybe I am crazy here, but his opinions do not seem grounded in practicality. For example, he talks about Project Denver here: http://perspectives.mvdirona.com/2011/01/16/NVIDIAProjectDenverARMPoweredServers.aspx "This is interesting for a variety of reasons, first they are entering the server CPU market." I don't think your crazy, a lot of what he is saying may not be relevant to *todays* market for companies like Dell. But I mentioned Jame's blog because it seemed like people were interested in what big data center people are thinking about and he is one of them. I don't think he cares about the general server market that much because his data centers are using custom servers and switches designed to be as cheap and efficient as possible in attempt to create a competitive advantage. But I don't know him personally so I can only speculate on what he thinks. I think when looking at people that are considered visionaries in their respective field you are going to have some off the wall ideas that stick and some that don't. Keep in mind he works at Amazon which offers GPUs as part of their web services offering already. Also people thinking about large data center stuff are thinking about it differently than just servers. They are thinking about the work that computers that do and how to do that work more efficiently. That is great site! Adding it to my reading list. Thank you. Ok so I will try and explain where ARM comes into play in my thinking... You will see a slow trend (already started) towards looking at the "stuff" we do on servers as "work" and instead of people buying or renting servers they are putting together their workloads or apps and paying someone to do them. There are currently people that do that with genome sequencing and other sorts of big data stuff. You just go their with your data and you don't care nor need to care about the underlying servers/chips etc... They find the most efficient way to run your work and deliver your results. Platform as a service is sort of like this. You write an application or job on platform, lets say some sort of java framework though it could be anything and then you can push to that app out to different platform as a service providers. Over time the people that build applications and tools care less and less about the underlying systems. They just want to write some software and be able to run it anywhere. Well all the apps can be run on ARM. So right now while you may go out looking for an X86 server or virtual machine instance to run your application. Eventually you will look for a an app container (this already exists with things like heroku, google app engine, and dotcloud) you could care less what is under the cover. It could be a virtual machine at amazon, it could be your app running on an ARM core somewhere. All you know if you write the app and upload it somewhere and it runs. Right now this exists in the public cloud offerings and it is starting to crop up in the private cloud stuff as well. Internally companies will start to have their applications written at a high enough level that they can run them on an internal platform as a service system or external. The more applications being built are abstracted from the underlying platforms the more this becomes possible and the more likely things like high density ARM cores will be desired. Not ARM but relevant to this discussion look at things Tilera is doing with their chips in term of performance per watt of power consumed: http://www.tilera.com/solutions/cloud_computing At this point I think this discussion is probably off topic to the original thread and might be good to start a new one. Thoughts?

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.

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?

Folks I know in the large scale data center area are excited about ARM. I think its a long way out before it will be replacing all their PC based systems. James Hamilton talks about it a little bit on his blog: http://perspectives.mvdirona.com/2012/01/02/ARMV8Architecture.aspx But in summary he sees advances in the server designs coming from the mobile space where power is already a huge constraint. I think right now there is not a huge space for companies making off the shelf ARM servers, its all custom stuff right now IMO. Might be why Seamicro went back to X86. Considering that the early adopters like Google, Facebook and Amazon will likely be getting their ARM stuff from ODMs I don't see anyone making a ton of money right now selling ARM servers. To be honest I am not deeply familiar with the UCS offering but my impression is that its just a package of existing components (network, server etc..) with some central management software in condensed form factor w/backplane. It also AFAIK is not any cheaper than most other hardware it selling point is that it's supposed to lessen operational burden.

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.

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.

Dejavu... I read almost the same thing about RIMM not too long ago. That is, people saying the IT department would never switch their Blackberriers to iPhones. *shrug* I have no opinion on Dell, so may the best analysis win. Not exactly the same IMO. The last BB only company I worked at refused to turn on Active Sync for Iphones on their exchange email server. Until the CEO bought an Iphone and he demanded it. Once that happened they made a special exemption for Execs, then they started to work out a plan on how to support the new platform and eventually everyone was allowed to hook their iphone up to corp. email server using their approved process. The same thing could and does happen on the desktop/laptop side with Macs as has been talked about in this and other threads. But on the server side these changes are not going to be triggered by end user demand. As we have seen the future for these companies is not selling desktops and laptops if they think it is then they are already toast :)

I have worked in some form of IT/Tech for 17 years. Initially Fortune 500 large enterprise and the past 7 years in start ups. My experience is that large enterprises that are not software innovators (not amzn, not google, not facebook) generally buy Dell, HP, or IBM/Lenovo (tier 1) on the server side and on the client side. I don't see that changing anytime soon (5 years). However there are some potential game changers in the pipe that could change this longer term. The first is private cloud, which is basically off the shelf cloud controller products that allow a large company to buy commodity (tier 2) servers such as ZT systems or supermicro and the cloud controllers take these cheap systems and make them into cloud storage and cloud compute, basically amazon web services behind your firewall. All the major IT players have a private cloud strategy at this point including Dell. The companies that are making private cloud products if successful will likely by buy out targets of the big boys in 5 years. But there is some potential for these products to really commodify servers as the standard redundancy features such as data replication, failure tolerance can be handled in the cloud/software layer and not with machines that have redundant disks, power supplies etc... Redundancy is lots of cheap machines and you can get them for a lot less than the standard SKUs at Dell or HP. This also plays into the OpenCompute open source hardware that folks have mentioned on the board before. The second is the trend in higher density, lower power platforms. Basically ARM based servers with tons of cores. You get more core density per rack at lower power consumption. The super efficient data center operators like amazon, google, facebook, msft are already working on this. This is evidenced by increased Linux support for ARM platforms and Windows 8 on ARM. If you are interested in where data centers are going I suggest you check out James Hamilton who works at AMZN formerly of MSFT. He is considered one of the large scale data center Guru's, his blog is: http://perspectives.mvdirona.com/ Both of these things are very interesting IMO and can potentially change server side computing and how it is done. I don't think these things change the Dell thesis dramatically in the next 5 years. I also think its likely that companies like Dell and HP will adapt to the new paradigm as it starts to unfold. If they don't then they are probably screwed. If they do it also gives them opportunities for great services business. They could start offer hardware that is priced near tier 2 levels but sell cloud setup/support services with it. Their customers would rather not do business with tier2 providers IMO. Once large enterprises start dealing with a services company they are likely a customer for the long haul. They are an approved vendor, they have relationships based on trust, past experiences etc... At that point the customer is yours to loose, its all execution and providing the customer what they want (adapting). So in conclusion I would agree that corporate IT is reluctant to switch vendors or to buy servers from the cheapest provider solely because of cost. However if the vendors they are currently working with fail to adapt to the new paradigm and provide the product/service mix enterprise customers will want 5 years from now they will suffer. IMO Dell recognizes these things and is adapting accordingly.

Quick question: What do you mean by "shift investing to 'workouts'"? Primarily Arbitrage style deals. Some good examples for Buffett are the Rockwell & Co. Cocoa bean deal (pre partnerships) and the Arcata Timber deal (Berkshire), those two of my personal favorites. The Rockwell story is great IMO because of how he handled it vs how he handled it for the firm.