Dell Technologies Inc. (DELL) Earnings Call Transcript & Summary

Good day, and thank you for joining us at Dell Technologies World. I'm Rob Williams, and I lead the Investor Relations function at Dell. With me today are Dell's Founder, Chairman and Chief Executive Officer, Michael Dell; VMware's Interim CEO, Zane Rowe; Dell's Vice Chairman and Chief Operating Officer, Jeff Clarke; VMware's Chief Operating Officer of Products and Cloud Services, Raghu Raghuram; and Dell's President, Infrastructure Solutions Group, Jeff Boudreau. Before we dive into Q&A, I'd like to remind you that all statements made during this call that relate to future results and events are forward-looking statements and are based on Dell Technologies and VMware's current expectations. Actual results and events in future periods may differ materially from those expressed or implied by these forward-looking statements because of a number of risks, uncertainties and other factors, including those discussed in our periodic reports filed with the Securities and Exchange Commission. Dell Technologies and VMware assume no obligation to update our forward-looking statements. I also want to point out that all questions for today's event should be submitted via the Ask a Question function in the tool. As a reminder, please limit yourself to 1 question so that we can get to as many of you as possible. Also, given that we are in a quiet period, we will not be taking any financial questions about current performance. Today's session will be focused on DTW announcements, our product and solutions and our joint innovation and work with VMware. You can now begin submitting your questions.

All right. While we assemble the questions, let me go ahead and kick it off with the first question for Michael and Zane. Michael and Zane, maybe you could share your perspective from each company's individual point of view here. Obviously, last month, about 2 weeks ago now, we announced the separation and distribution agreement with VMware. Can you briefly touch on the strategic benefits for separating the 2 companies? Michael, I'd ask you to start first.

Great, Rob, and thank you all for joining us. As part of this, we created a commercial agreement, and that maintains the benefits of the relationship while it also increases strategic flexibility for both Dell and VMware, and I believe both companies are positioned for growth. Our Dell shareholders will benefit from management's increased focus on the attractive growth opportunities we have in the core business, and they'll continue to benefit from VMware ownership. It obviously simplifies the capital structure for both companies. It increases VMware's eligibility for key indices and increases the public float. It unlocks the discount in valuation of the current capital structure for all shareholders, and it positions Dell for investment-grade ratings, also aided by the recent Boomi announcement, while maintaining VMware's investment-grade ratings post share distribution. Zane?

Sure. Thank you, Michael, and good morning, good afternoon to all of you. As Michael pointed out, we believe this adds and creates tremendous value for both shareholder groups. On the VMware side, in addition to what Michael said, as a stand-alone company, VMware will have more strategic and financial flexibility to pursue our any app, any cloud, anywhere vision, which will accelerate our customers' digital transformation, which, of course, we also work on collectively. It simplifies our corporate ownership structure and our governance model to support those growth opportunities. And the removal of the dual-class structure converting the class fees with 10 votes per share into the Class As with 1 vote per share on a 1:1 basis will make VMware eligible for indices like the S&P 500. And obviously, we're encouraged by that. So in general, it broadens our ecosystem and allows VMware to execute on our broader growth strategy and provide our customers solutions and services on multiple clouds in a multi-cloud environment. And obviously, we think that benefits not only our shareholders but our customers as well. We will maintain our investment-grade profile and rating while paying a dividend to all stockholders. So Rob, I'll stop it there unless there are any follow-up questions.

Great. Thanks, Zane. Our first question comes from Cowen and Company and from Krish Sankar. Krish says, as part of your commercial agreement with VMware, can you help us understand what that collaboration looks like? And can you give us examples of the joint innovation with VMware? What are the -- and also what are the milestones to watch out for? So I would ask maybe Jeff to start and Zane or Raghu to weigh in maybe from the VMware point of view.

Jeff, you're on mute.

Darn it. I'm sorry. Didn't pass that damn test.

Do a mulligan.

Yes, mulligan. It was a nugget that I -- my first sentence, I can't replicate it now. Nevertheless, we go back and regroup. So what we've largely done is formalize the informal relationship we've had in place now for many years. And there's no question that we remain strategically aligned. There's no question in our mind the commercial agreement that we put in place allows us to execute at a high level. The commercial agreement keeps our go-to-market engines aligned and driving the revenue synergies that we benefited from for the past many years. And then also it specifically allows us to continue to jointly innovate and build solutions that our customers want. So if I was to walk through that as the framework, what have we really done? You look at some of the statement of works that we've referenced in some of the public remarks in the past, and we have a wide range of activities that we've pointed to, whether that's the data center of the future, to use a VMware codename, Project Monterey, inside our nomenclature, again, next-generation data center and what that becomes, the 2 teams are aligned, the 2 teams work together. Zane and I overlook a series of meetings that allow us to gauge progress against that strategic agenda, the specific development work and when time comes, the go-to-market release of such activity. That range of statements of work is from 5G to what we're doing in telecom to what we're doing in the edge to what we're doing in things like SmartFabric Director, what we're doing in things of VxRail across every aspect, security, unified workspace with Workspace ONE. And each of these programs, again, actually gets a regular inspection, spirited technical debate amongst our teams that Zane and I oversee. There's a series of go-to-market, for those that are in the marketplace, reviews and allows us to really drive the same momentum we've been doing going forward, again, in a very structured, methodical way that was in place before. It remains in place. We've actually structurally written that down and allows us to deliver those consistent results in the alignment across the organization. Most importantly, it allows us to continue to think about this for, as Michael said earlier today, the next 5.5 years. There's no change, as Sanjay said in one of our earlier discussions and we'll hopefully continue past it, 10 and beyond. So our customers will see the consistency they had in the past. Our technical teams and field teams remained aligned and are strategically aligned with where we see the world going. I hope that answers the question specific enough.

Yes. Rob. I can just jump in and hand it to Raghu to talk a little bit more about the innovation, especially some of the announcements this morning. On the commercial agreement, as Jeff alluded to, we spent 4.5 years delivering significant strategic value to our customers through joint innovation, collaboration and, of course, the scale. So from the VMware side, we feel like we've clearly benefited from that, and we'll continue to drive that. It's those learnings that will advance, we believe, the growth profile with the joint solutions and across our expansive go-to-market effort. So we're excited about that. We're excited about leaning in. We believe we've better aligned this agreement over the last number of years. And as we look to the next 5 years, we think we've got our interests really nicely aligned to continue to drive growth together. So we're excited about it. And then Raghu, maybe I'll hand it over to you to talk a little bit about some of the innovation we're working on together.

Yes, [ so I've learned ]. Thank you. The important thing about this, just go after the points that Jeff and Zane made, is these areas of innovation that we identified are identified from the customer end. It's not just, hey, something -- it's good for Dell, so let's go to do that or something's good for VMware, let's go do that, right? We all share a common view of market or a customer set of problems that is big and exciting and profoundly valuable to the customer base. And those are the ones that we have identified as worthy of our joint innovation and joint go-to-market as well. So just to give you -- I think Jeff gave a very comprehensive list. This is what led to VxRail, to begin with, but continues to be far and away, the leader in the category of hyperconverged infrastructure. We saw the need for customers wanting to have a more managed -- into a managed offering, a cloud-delivered offering in the private cloud, and that led to VMware Cloud on Dell, et cetera, et cetera. The go-forward ones that -- I mean, personally super excited by is the work that, I think, Jeff referred to in the area of next-generation systems, what we call as Project Monterey as a fundamental building block. And the reason this is exciting is that we are jointly innovating literally from the silicon up, all the way to the workload on top, including things like management and security and so on and so forth. That was a fundamental area of innovation that you won't see the result right away but this is something down the road you will see an offering in the marketplace, that is a category that's targeted at the workloads of tomorrow, not just the workloads of today. And then telco and edge are the 2 other areas that I would say we are starting to do tremendous work together, and there is a 5G in the area of edge. And there's really some number of announcements today, as you saw. I think all of these we will build on. And the continuing requirement are interesting. Customers from having their IT solutions delivered more and more as a service through the EPIC program. So these are the areas that I would say you should expect to see a lot more news in the coming months and years.

Raghu, I think you would agree that this is just -- it's more than just software running on hardware. This is deeply integrated technical solutions building, whether it's an appliance or a highly integrated solution stack that we both are taking significant roles in playing from, to your point, from the bottom of the hardware stack all the way through into the higher-level frameworks, which is a level of orchestration between our 2 teams, I think, is key and important and different -- a differentiator going forward long term.

Yes. And the mechanisms you outlined on the governance and how to get -- how the 2 teams are working together as critically can do such deep collaboration without this level -- such deep product innovation without this level of collaboration.

All right. Great. Thanks, Jeff. Thanks, Raghu. Appreciate that. Next question comes from Aaron Rakers of Wells Fargo. First he says, thanks for doing the call today. And with regard to your APEX announcements, can you provide a quick overview of the new capabilities that were released today relative to what has been announced back in 2020 in some of our prior offerings through Dell Financial Services? So I guess, Jeff or Jeff, I'll let you guys take that one.

Sure. Maybe, Jeff, I start and then you can fill in any places that I missed and then add to that. Is that okay? I'll take that as a yes. The first thing I think is important is we've gone from Project APEX to its life, available today a wide range of offers that allow our customers to focus on outcomes and the insights they gain from the data and their infrastructure. And rather than historically looking at speed, feeds and talking about gear, we have changed the conversation because customers have asked us to change the conversation to be outcome-driven. So we've really put together a series of offers that drive simplicity, agility and control to our customers to work in this modern cloud operating environment that they want to be in. So we've delivered a modern consumption and customer experience. We've delivered a continuous delivery model of features and capabilities. And we have delivered a cloud service or support model as well. Specifically, if you look at the range of offers that are now live and we've gone, again, specifically from the word project to a series of announcements of the console is alive and up and running today, we have launched APEX infrastructure services, specifically APEX Data Storage Services, giving our customers the ability to pick a wide range of options from file and block to a performance tier to the capacity point in the term and, for that matter, the location. And they can do all of that in a relatively few clicks, specifically 4. So within 4 clicks, You can actually spin up a service from Dell, will deploy it in 14 days and have it up and running at our customer sites, managed by us, operated by our customers, giving them, again, the control, agility and simplicity they need in their enterprise. We announced APEX Cloud Services, which has 2 components, APEX Hybrid Cloud and APEX Private Cloud; APEX Custom Solutions, which is made up of APEX Flex On Demand and APEX Data Center Utility. And then lastly, a new exciting area for us is APEX partnerships, specifically a APEX variant for the largest colocation provider in the world, Equinix. So for those customers that want the ability to place an asset not in their direct -- on their premise, but through a colocation, we provided the capability to do that. We're quite excited about the range of options. And each of the things that I described as the new services, all within a series of 3, 4, 5 clicks, you spun out of service, and we can build and deliver it quickly and drive a modern customer experience, a single invoice, a clear invoice, a pricing methodology that is consistent in your peak times, in your average times, which I think is highly differentiated in the marketplace. Jeff, did I miss anything?

No. I think you covered it.

Okay. Great. Maybe a quick follow-up on that one for Michael. Michael, what was the customer perspective on APEX and is more of a consumption-based, OpEx-based IT delivery model? What have you been hearing from customers?

Well, I think, certainly, among the big trends of multi-cloud and edge, this increasing demand for outcome-based offerings has been there for some time. And if you think about a continuum where we start with products and we end up with a complete as a service, we've actually been on this journey for some time, right? We started with a product business. We added services. We added managed services, we added flex on demand, utility. Now we have APEX. Look on our balance sheet, you'll see remaining performance obligation was $41 billion at the end of last quarter. That's a substantial sum. So there's been quite a few dots of progress along that journey. And we've sort of had, what I would call, bespoke solutions for lots of customers, and we had as-a-service initiatives all over the company and this was one of the challenges for us. So with APEX, we brought all those together into a unified company-wide initiative. And you're going to see us with kind of rolling thunder here as we roll this across the entire business. But customer demand for this, we think, is substantial. But again, shown by the balance sheet and the growth in RPO, it's not a completely new phenomenon.

And Michael, we've talked about how we take the learnings of APEX and adapting to these new ways customers want to buy and applying it to our traditional core businesses to make them more efficient, more sticky, adding value beyond the box. So there's an opportunity here not only to adapt to the new ways customers want to consume infrastructure services but to take those learnings and to make even our traditional businesses more competitive long term.

And if you -- one of the questions was on colocation and Equinix. And if you think about that, we're offering one bill that includes telecom and all the colocation services. Again, this continuum from products all the way to APEX is a massive expansion in our TAM and the available opportunity for us. So we're quite excited about this also as a growth vector for our business.

All right. Great. Thanks, everyone. Those were follow-up questions were from Shannon Cross at Cross Research and Sidney Ho at DB. So appreciate those questions. Let me go to the next question here. Let's -- how about this one from Katy Huberty of Morgan Stanley. Could you talk a little bit about where you see your market share in edge infrastructure long term compared to the current market share, say, in hybrid and infrastructure being defined as cloud plus on-prem? So a little bit of a longer-term perspective on where do you see the edge headed. And how does Dell play there? What are our competitive advantages? What's the real -- what's the TAM opportunity that's out there for us?

Maybe I start, and then Jeff Boudreau can help me along the way here. Look, in our mind, the edge is the third premise, and it's not been won by anybody. There's been a lot of initial deployments that are highly fragmented. The way that we look at the edge today is a very verticalized, fragmented siloed premise today. And customers are really looking for turnkey solutions. So the very thing that Raghu and I were talking about just moments ago about highly integrated solutions, from the bottom of the hardware stack through into the higher-level frameworks, that's the opportunity to bring value to the edge. And then if you look at all the data points that say 75% of the data growth is going to be outside of traditional data center, $700 billion of capital is going to be spent over the next decade building out the edge, most of the edge is going to be new applications. I think the application growth on edge is 800% over the next 3 or 4 years. There are applications that we can't even comprehend yet that are going to be developed in new usage models. It is clearly the growth opportunity for our company. And what it really has is attributes that are, I think, play to our strength. It's a highly distributed compute model. Proximity matters, or if you will, location matters, which is code for latency matters because data is being created in real time. It needs to be consumed and ingested real time. Computation needs to be done on it real time to drive the insights customers want to ultimately drive better outcomes. We believe it's going to require massive scale to be able to reach all of the points at the edge. Well, that's what we do every day. And then if you think about it, Jeff uses the word cost, I use the word data gravity. It's expensive to move data, so being able to synthesize data appropriately at each stage in the stack, we think, is very important. And when you look at those attributes, oh my gosh, it's just a huge opportunity for our company. It's ripe for solutionization, if that's such a word, but turnkey by vertical orientation. And a company like Dell working with VMware, we think, provides a tremendous opportunity for us to grow in the edge. And I'd tell you we're in the really, really, really early innings. And then for us, it's the next strategic battleground. It is the third premise. And we are investing significantly to make sure that we win. And I won't give you our market share targets, Katy, but you can imagine our current market share positions in the enterprise. There's no reason to believe it shouldn't be that or greater as this evolves in the future. Jeff, did I miss anything?

I think you nailed it. I just -- the one thing I would add to is going back to your point of data is going to be everywhere and the edge is going to be in all these different vertical locations, if you will, it's going to require a different architecture, right? And going back to your point of latency scale or cost or data gravity, making sure we have a -- it's going to be more of a decentralized distributed architecture that can support that, where we're bringing compute, storage, data protection, data mobilization closer to the way the data is being created. So going away from the centralized model to more of a distributed model, I think, is important for people to understand, which I think [ kind of swings ] to our advantage as well.

All right. Great. Thanks, Jeff and Jeff. Hopefully, everyone can hear me here. Maybe some audio problems, but I'll keep going. This is from Steve Fox at Fox Advisors. Question specific to PowerStore, so Jeff, we'll pitch this one over to you. But Steve's question is, can you discuss the PowerStore software upgrades in more detail? These are the announcements that were made about 1.5 weeks ago and how it better positions the company to solve next-generation mid-range needs. Also how does the PowerStore 500 better position Dell at the lower end of the mid-range storage market? And how may customers choose to mix and match Dell's storage offerings across different applications?

Sure. So thanks for the question. First, I want to take a step back and just highlight the momentum we've seen on PowerStore. It has been a game changer for us. It's the fastest ramping new architecture that we have in Dell history, and we grew 4x in Q4 of fiscal '21. We shipped over 400 petabytes of effective capacity to customers in all industries and all geos, which is something pretty impressive. And we're winning against the competition. We tripled our number of wins against some of our key competitors in Q4. So really impressive output already so far. This allowed us to return to mid-range store and share business. We actually got back to growth in Q4, which was the first time, I think, in 8 quarters that we've done that. And I think Jeff mentioned that in the last call. So a lot of great innovation there. Now going specifically to your question in regards to the software release. So yes, last month, we announced PowerStore version 2.0. I would say it is a significant upgrade in regards to our software. And I also want to mention that it's nondisruptive, going back to the modern containerized microservice architecture. It's free, but it increases the levels of performance, intelligent, resiliency and scale. It's across the whole environment, just a major upgrade for our customers. And going back to the architecture that we designed, it's a microservices container-based. So you're going to see the notion of the CI/CD that Jeff talked about APEX and Cloud. You're going to see that innovation just keep coming on this platform. So it really sets us up well for the future. Shifting to PowerStore 500. It opens a ton of new doors for us, right? It's a new entry point platform. It starts at about $28,000. It really helps us get into the low space and bringing like enterprise-level options and features and functions to midsized businesses, small businesses and edge solutions. So really getting all the great technology you've seen in all the other PowerStore offers that we have today, we are able to do this in a 2-year form factor and [ perhaps ] about 1.2 petabytes of capacity in there. So a really powerful box enterprise-level capabilities and less than $25,000. So a really huge win for us, opens a lot of new doors. I think as most of you know, for us, in regard to the portfolio, we're doing -- we've been on a journey simplifying the portfolio over the last few years, and that's been a clear mission. We want to make sure we have industry-leading products in each of the different segments. This past summer, we launched the Power portfolio. So examples of that would be PowerMax in the high end, PowerStore in the midrange, PowerVault in the entry and PowerScale in the unstructured space. We are clearly the market leader in all these segments. I will say the one area that we've been challenged, which Jeff and Michael have talked about in the past, was the mid-range space. We are the leader. We are the leader in that space today, but we're not doing as well as we should and we needed to grow. And this is why we built PowerStore, was to go right at the heart of that growth, large part of the market, the fastest-growing part of the market, and that's why we brought PowerStore in regards to going right after that opportunity for us. And we're feeling really good about where we are and where it's going.

Jeff, I feel it's worth noting and even overstating this new modern architect you talk about is the first new architecture introduced in the midrange in over a decade. And you've made reference of micro service-based architecture. And the reason that's important and what's different from what we've historically done and the work that you've led over the past handful of years here, if, in the past, if we launched a new product, we launched it and then we would take years before you would see a new set of features. What we've done here is really brought this notion of continuous delivery of capability. And Jeff referenced it, but I think it's so important to say we are going to be able to deliver consistent new features and capabilities on a regular basis that we've never been able to do before to continue to disrupt and to bring new capabilities to our customers across this broad-based platform, which is significant for us and I think highly differentiated in the marketplace.

All right. Thanks, Jeff and Jeff. We've had several questions, the APEX-related questions, that are kind of along a similar vein from Mat Cabral, from Wamsi Mohan at BofA and Amit Daryanani at ISI. Most of those kind of started to get into the implications for revenue and the financials over time. And I just want to remind folks that we're going to avoid those questions today. And given the timing of the quarter, we really want to focus on product solutions, joint innovation. So happy to continue to kind of get into more detail on some of the product and solutions side of the business. But let me see if I can kind of wrap all of those into like a single question. And I guess one of the questions that came through, again, related to APEX was we've seen others in the industry move towards these capacity-based pricing models and there's generally a pretty decent understanding, a good understanding of why customers are interested in this. Maybe we could touch a little -- maybe one of you could touch a little bit on what you think the biggest differentiators will be for Dell, both now and in the future, relative to the competitive offerings and why it's important for us to make it more kind of a vocal push into this category, even though we've been providing these solutions in various forms for some time. So I'll leave that to Jeff or Jeff, if you want to start on that. Or Michael, if you want to jump in.

Jeff Boudreau, would you like to start, then I'll come in and add to that. Jeff Boudreau? Well, he's figuring out mute that I struggled with. Look, one of the things that we talked about and even the first question, I would highlight what we're focused on in driving is this notion of customer outcomes, which really talks about customer success. So our initial focus is really about driving customer success, getting customers on the platform, showing them the ability to deliver the simplicity and agility and control that we believe what we've brought to the marketplace with APEX. We believe that is a game changer for our customers. And the way that we have done it, we think, it's highly differentiated from many of the other offers that are in the marketplace today: whether that's the fact that our offer includes services, it's not a get it from somebody else; whether that is the ability to get a single invoice; whether that's the ability to get the spun-up service in a short number of clicks; whether that's the ability to get the actual product from clicks or they should say, the service from clicks to 14 days on your floor ready to go; whether that's being able to deliver additional capacity in 5 days beyond that, all of which we will improve on in time; whether that gives customers the flexibility in that transaction to be able to deliver that to a different location, we think those are only scratching the surface of what's differentiated about our offer and what we will build going forward. If you think about this, I think we mentioned in the keynote this morning that we go file block object on the storage side, we think about playing that beyond to storage, to data protection to compute, infrastructure as a service. I think a broad-based solution from us is highly differentiated over our competitive set today. And again, this is really about driving customer success and really trying to give them the control they want, the flexibility they want to be able to work in this hybrid mini cloud environment that the world has become. Jeff, how is that for the setup?

First, I apologize for the technical difficulty. But yes, it's a good setup. So I think you nailed it with the simplicity, agility and control that allows in regards to how or where or who our customers want to consume, acquire, deploy, consume and manage and even retire their IT. So I think that's really important. And to your point around the simplicity and the partnerships that we're driving, I think, are really key. So...

Yes. Just to add to that. I mean customers increasingly want to focus on their applications and their data and AI, and they don't want to manage infrastructure. And in many cases, they don't want to manage their own data centers. So working with the colo providers, making everything as a service, managing it for customers, we're definitely providing those capabilities and doing it in a very flexible way that is responsive to all the input and demand we've heard from our customers.

Okay. Great. Thanks, Michael The next question from Wamsi Mohan of Bank of America. I guess I'd direct this one towards Jeff Boudreau and anyone wants to weigh in. Jeff, do you see AWS Outpost in Azure -- Azure stack with on-prem options as a credible competitor in the hybrid cloud world versus, say, HPE's GreenLake offerings or IBM and their Red Hat in the multi-cloud world? So maybe you could expand on that competitive set, I guess, would be the best way to describe it.

Sure. So I'd say in the competitive set, I take everybody seriously in regards to competitive threat, in regards to what's going on. And we talked before about the edge and where data is being created and the notion of it is a hybrid world, it is a multi-cloud world and all these folks are players. They have different offers and different skills and different strengths, which is what Jeff was mentioning before. A lot of the stuff as you go on-prem and you get reach in this distributed world, the distributed architecture, we have a lot of unique benefits that position us well versus other competition, leaving any specific name alone. So leaning into the things that we talked about with APEX around the simplicity, the agility, the controls of the digital first, the cloud experience, if you will, that Jeff referenced with our other skills around our reach with our go-to-market and our services and our partner ecosystem, our supply chain, just there's a lot of attributes there in regards to why we feel good about our position in that space. But as we said, going from a centralized world to more of a decentralized world, I think, really comes to our strengths. Taking all the work we're doing around -- what Jeff just referenced around APEX, merging that with our partner ecosystem and all our core capabilities of today, we're in a good spot.

Okay. Great. And just as a reminder before I go to the next question, if you have specific questions, please submit them on product and solutions focused questions. And next question is from Simon Leopold at Raymond James. Simon says, hey, we've heard less about hyperconverged solutions from Dell recently. Perhaps that reflects the maturity or the effort to get us focused on newer products. But can we hear an update on how Dell sees this market opportunity and its position? And I'd love to have Raghu weigh in on that one as well, given the unique relationship we have on that solution.

So for me, it's -- I'll start, and then we'll go to Raghu, if you don't mind. But -- so obviously, it's critical in regards to what we're doing. If you think of the large external storage market and the size of the market and the growth of the market, HCI is one of the key growth drivers in that space. We have a clear market leadership position and especially with our VxRail assets. That doesn't change. As you can see, prior quarters, I can't talk about this quarter, we've had great success, and we expect that momentum to continue. And we were just talking about the midrange growth and specifically of being a large market, it's 50% of the external storage market. A lot of that growth, it's not just the PowerStore. It's going to be also what we do with HCI. So having, I guess, the winning hand of what we have with our VxRail assets in addition to what we have with PowerStore, is just the 1-2 punch, I think, is pretty much unstoppable in that space. I'll let Raghu jump in. Now he's having technical difficulties.

It was not technical difficulties. It was just forgot to turn on back to mute. I'm sorry for that. Yes, but I just sort of talked about the other industry, a category leader in hypercloud infrastructure. It has grown to serve the widest variety of use cases, from traditional workloads to data-intensive workloads to modern -- even big data workloads in cases. And the performance on databases, if you look at them from any category of any benchmark, we performed really well against it, against the competition. So that's the part number one. Part number two is some of the systems innovations that we talked about earlier in the conversation, those are rather the go-forward innovation of -- around VxRail. And so not only do we have a market leadership position today, we are innovating furiously to continue to bring new use cases and advance our joint leadership in this category. Jeff, you were going to say something?

I was going to add, and I think, Raghu, you'll wholeheartedly agree here, we talked about hyperconverged as a category, but if we step back the collaboration between Dell and VMware on VxRail has led to VMC on Dell EMC, APEX Hybrid Cloud, APEX Private Cloud. It's the basis of the work that we're doing in our collective telecom efforts. It's the basis of our work that we're doing in 5G deployment. It's the basis of our work in edge and the emerging edge, even the announcement we made today, what is fundamentally on a VxRail. So that architecture that we've collectively built and the highly integrated appliance and software that the 2 organizations have built is the basis for all of our -- almost all of our modern interactions and modern architecture thoughts that we're driving forward with. And if we haven't talked about it in specifics, shame on us, but it is absolutely core, this 2-tier architecture that plays a significant role in most everything that we do in the marketplace and certainly most everything that we do with our colleagues at VMware. I think you would agree with that, Raghu.

100%.

Yes. And I think that at the core of the core, right, is the VMware Cloud Foundation, and that's the substrate for this multi-cloud architecture that allows consistent operations and consistent infrastructure wherever the customer wants to deploy those workloads. VxRail is sort of the easy button for customers to get on that platform, and that's why it's worked so well and continues to grow quite fast.

Okay. Thanks, gentlemen. All right. I'm going to make this the last question. I'll wrap it up. This is -- these are questions from Toni Sacconaghi at Sanford Bernstein as well as David Vogt at UBS. They both asked a similar question, so I'll try to blend them together in an appropriate way here. But both asked about the decision to sell Boomi and kind of what led to our decision to sell that. And then the follow-on to that would be how do you feel that the portfolio, the core Dell Technologies portfolio is positioned for growth as we kind of move through the balance of this year and into the future? So more a long-term growth question, which I think would be an appropriate way to wrap up the day. So Michael, I'll pitch that one over to you. And Jeff, maybe you'll weigh in on that one as well.

Sure. So look, I mean, Boomi has flourished as part of Dell over the last decade. And we're confident that this is a great transaction, both for Boomi and for Dell and our shared customers. It's another example of how we're simplifying our business and focusing on our core strengths. And you've heard today at Dell Technologies World about how we're modernizing and growing our core infrastructure business. Certainly, the PC business is well positioned. APEX is a big TAM expansion opportunity for us, opportunities in hybrid and private cloud, at the edge and telco. And it's a great transaction and confident in the growth opportunities we have in the core business.

Yes. Maybe to add to that, Rob. If you look at where we're focused as an organization, it's grow and modernize our core businesses, it's to build the ecosystem of the future, it's win the edge and lead with APEX. And if you think about our internal R&D organization, which maybe it's not as well understood as we'd like it to be, now what's our organization of 20,000 engineers, 80% of them write software. And we, over the years, have been pivoting our internal organization to software and into the new areas that we've talked about throughout the day. So when I step back and look at do I feel comfortable where we are, we are absolutely shifting to an organization that builds highly integrated solutions, whether it's an appliance like VxRail or the new APEX offers that you've heard about today of really driving more value-added software throughout our stack. Even our PC business today, half of our engineers are software engineers, which may be different than most people think about. And particularly if you look about the new opportunities of where the PC is going to go, we're going to have many more software opportunities on top of that. I think about the work that we do in storage, the work that we've been doing in services of doing predictive analytics, doing telemetry, doing support a system, helping our customers do forms of self-healing, it's all software. I think about Cloud IQ, which fundamentally is the backbone to be able to manage APEX Data Storage Services, it's a cloud control point. It's software. I think about where we're going, many of the examples that Raghu and Zane we've talked about throughout the discussion, whether it's in 5G or the opportunities around edge, are all software solutions orientation. And what we're finding and where we think the value is, is the tight integration of hardware, software and services. Through software, stacks is allowing us to differentiate and that's where our investment dollars are going in R&D. That's the pivot that both Jeff Boudreau and Sam Burd are making in their organizations and really moving forward across those 4 fundamental tenets that I talked about at the beginning of pivoting our organization to drive more software value, more stickiness throughout our stack, and I'm quite excited about that. I think the prospects and opportunities for us are immense.

All right. Great. Thanks, Jeff. Thanks, first of all, thanks, Zane, and Raghu, for joining us today. We really appreciate it, and thanks, everyone, for joining us, of course. And please enjoy the rest of Dell World, and we'll be speaking with you soon. Thank you very much.

Thank you.

Thank you.