Thomas also talked about Dell's plans to expand its relationship with EMC and whether his company would consider buying EMC.
Do you see acquisitions playing into your storage growth strategy? My experience has been it's very hard to make acquisitions really work. You end up spending a lot of money and then the two companies end up struggling with a lot of overlap. So overall I think we're not inclined to acquisitions. But on the other hand, we never say no to a good idea. As I look at storage, the first thing I think of is I can get almost any company to play with me without buying the company. If I can get the value without paying the down payment, that's a better deal for Dell. I just want access to their technology, and I can do that with relationships like the one with EMC.
You say Dell is adverse to acquisitions, but could there be a time when Dell considers buying EMC? EMC, in my mind, is the rare exception. We work so well together. We've already done all the integration of the teams and the companies. It would be a smooth thing. But that's really a call beyond me. But I also have all the value without the acquisition. I can't imagine, other than just pocketing more of the profit, what I would gain. I have met my objectives with the EMC relationship. I have their technology, I meet my customers' needs, it's great stuff. But if Kevin [Rollins] wants to change the bottom line of Dell, that's his call. He and [EMC CEO] Joe Tucci are very close personal friends. I can't imagine the thought hasn't entered their minds.
Do you ever see Dell expanding its reseller agreement with EMC to include high-end systems? Yeah. We just added their NAS solutions earlier this year. If necessary, we can take any product they have and add it to an OEM relationship. We have an enormous number of products, including their high-end products, already in a reseller agreement, and there is no product EMC has that's outside of our reseller agreement reach. The only difference between reseller and OEM is when I figure there's enough volume in it for me to invest in doing my own services and management thing. I can imagine a time when that could happen. But as we sit here right now, the low end is accelerating. The high end of the business is slowing down. The opportunity for me is in the lower end. I think it's being driven by the fact that the low-end products are every bit as capable of what the high-end products had been.
Then there are "good enough" things, like iSCSI and SATA drives, that are also coming down. So our market has a confluence of technology, price declines, corporate partnerships that drive product sets down. There's a confluence at the sub-$20K price point. That's my sweet spot.
In what way will you expand your storage software development? Management software is one of the areas where we do development, but even there we develop it with partnerships. It's never our desire to develop technology so we can lock out competition and lock in the customer. That's the model of the proprietary vendor. We're very much the standards provider. We try to find ways to let customers leverage Microsoft ..., even EMC. We've opened up our PowerVault storage management software so EMC can manage PowerVault. As time goes on, we're going to make it so you can manage EMC through PowerVault technology. Our goal is to give the customers what they want, which is easier tools to use, not a proprietary use.
Are you talking about using the SMI-S standard or your own API to manage EMC's products through PowerVault systems? Over time we will continue to deploy more cross-management tools. I don't have the time frame right now. SMI-S is the endgame, but it's a couple years away because everyone is still designing to it. But in the short term, we can have their browser tools launched by our browser tools. We can also take all the error handling and pass it up to each other. Even though you wouldn't go to a PowerVault tool to launch a configuration device from EMC, you can go there to monitor the EMC device if that happens to be your corporate monitoring strategy. There are levels that cross management just doesn't make sense. For us to change the configuration utilities to map to your standards, you'd have to rewrite all the code. This is more about discovery, change management and error handling, but not the reconfiguration.
What's Dell's goal for storage? We're the fastest-growing storage company. We're the No. 1 Windows, Linux storage company in the U.S. We're now solidly in fourth place, and it's my goal to be in the top three of that market space and ultimately become No. 1. We're steadily moving like a juggernaut into that position. That's a Dell sweet spot. The SMB-like customers ... are today faced with as much storage management issues as a Fortune 1,000 company was 15 years ago. SATA [serial advanced technology attached disk drives] is just now beginning to get into big solution. ISCSI [Internet SCSI] is going to come out in a large way over the next 15 months. SAS [serial-attached SCSI drives] is right around the corner. That's an inexpensive, direct-attached solution that's more capable than any SCSI solution ever was. All of those companies now have the opportunity to buy all these new sub-$20K products. That's an explosive opportunity for Dell.
How is Microsoft's play into storage changing your road map? Microsoft is providing software tools that's allowing some of these new technologies to be accepted on a broader scale. What SATA drives have done is because the serial interface raised awareness for corporate users of these drives, it's really about software that makes those drives usable. Those drives theoretically have half the reliability that a Fibre Channel or SCSI drive does. So you have software tools that allow you to use these products not in primary disk applications, but in nearline applications, which is what the Data Protection Manager software is all about.
They've created a user-friendly data restore capability. That just opens the doors for hundreds of thousands of companies to do real-time backup with client-level restore. That's the impact Microsoft is having on us. Data Protection Manager is simple and more affordable. That's a huge movement in the Dell direction. And nobody sells Microsoft as good as Dell.
Even so, aren't they really entering into EMC's realm with those new capabilities and isn't that a point of conflict between two major partners of yours? My job is not world peace. What I'm trying to do is deliver to Dell's customers. Periodically, one of my partners is not in love with another partner -- Linux, Microsoft, Intel, AMD. But the bottom line is my job is to help customers sort their way through all the technology by helping them make good decisions in picking the right products. There's probably not a better fault-tolerant solution than PowerPath from EMC, but [Microsoft's multipath I/O server operating system] is a pretty good solution and it's coming along. If MPIO gets as good as PowerPath, I really don't care which one of them win. Neither one of them are my design, but both of them are my products. This is the beauty of my leveraged model. I partner with you as long as you have the best product out there.
No loyalty to EMC? We have loyalty to the customer. If you're our technology provider and you fail to provide technology, loyalty doesn't go that far.