Yes. Customers are trained for it and the vendors are publicly traded companies, which means they think about their cash flow not at all. They only think about revenue and bookings, earnings per share and their forward-looking forecast; is it up, flat or down? The reason they do that is they are trained by the public markets and those are the only three questions that matter every 90 days. This means that there are institutional forces that make it difficult for companies whose business models are built on non-annuity or non-utility economic models to make that transition. You see Microsoft doing it as they move to Office 365 and Windows as a subscription.
Satya Nadella - I have great admiration for him - is doing a fantastic job navigating that transition but they’re able to do it because Microsoft is a giant entity. In their earnings calls, analysts are asking him: How is that transition going as one business declines and the other one grows? If you look at IBM, the same thing is happening to them and the same thing is happening at HP. The same thing is happening to everybody.
Our superpower is we will be a giant with incredible reach, assets and people that will also be a private company. You can expect to see VCE’s converged platforms, blocks, racks and appliances and the turnkey IaaS, PaaS and data fabrics that run on them to be available in flexible economic choices because we, unlike others, will not be hung up on where the revenue books.
I’m going to push back on this one. You will be a private company, true, but you will also have very large payments to creditors in order to support this deal. It’s not as if you’re immune from economic pressures. They may be less visible to the market each quarter, but it’s not an entirely different situation.
The thing I would highlight is that as a private entity that absolutely needs to cover debt, the primary metric is cash flow, not in-quarter revenue. Utility economic models can be great for customers and they can be great for companies as long as they have a frame of mind that is longer than three months.
Your point is that that structure will allow you to have a clear path, a clearer strategic direction than someone who is buffeted by the winds of quarterly results?
There is no question. Just to be clear, there is no question that this transaction does involve financing. The thing I would highlight is that Dell is a strong company that generates their own free cash flow. EMC is a great business, lots of customers and great cash flow. It’s a very good thing to actually have debt that you are financing and paying off. In fact, we will be, in my opinion, in a very good position and I’m excited about it.