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

Good day, and welcome to Dell Technologies World. This is Day 3 of Dell Technologies World with 7,000 of our customers and closest friends. I'm Rob Williams. I head the Investor Relations function here at Dell. And with me today are Michael Dell, our Chairman and Chief Executive Officer. Welcome, Michael. Jeff Clarke, Vice Chairman and Co-Chief Operating Officer.

Good morning.

Good morning. Chuck Whitten, Co-Chief Operating Officer; Sam Burd, President of the CSG group; and Jeff Boudreau President of ISG. So before we get started, let me jump in with just a couple of housekeeping items. I want to just remind you that all statements made during this call that relate to future events are forward-looking statements and are based on Dell Technologies' current expectations. Actual results and events could differ materially from those expressed or implied by those -- by us in Dell Technologies. Those forward-looking statements because of a number of risks and uncertainties and other factors, including those discussed in Dell Technologies' periodic reports filed with the Securities and Exchange Commission. Dell Technologies assumes no obligation to update our forward-looking statements. I'd also like to remind you that we are in a quiet period this call is focused on our innovation, our software, the announcements that we made today at Dell Technologies and of course, yesterday and the day before. And so we would ask you to keep those questions directed towards those topics. And again, one question if you'd like to drop back into the queue for a follow-up, that would be great, and we'd be happy to take your follow-up questions. So with that, let me turn it over to Chuck to introduce this.

Well, thanks, Rob, and thanks to everyone for joining us today. It's been a great few days here at Dell Technologies World catching up with customers and partners and getting a chance to showcase our innovation, which is the topic of the day. So I'm going to set the stage today, Jeff and I are going to set the stage a bit by maybe connecting some dots. And I'd like to go back to our September Securities Analyst Meeting. It's maybe the starting point. At that meeting, Michael laid out a vision of Dell Technologies as the logical center of the multi-cloud world. And then Jeff and I laid out a long-term strategy that had really 2 strategic thrusts. The first is our objective to consolidate and modernize our core businesses, which sit in large, stable, growing markets where we are leaders from a market position standpoint and where we have enormous headroom to grow. And then second is to grow into adjacent markets where we have the ability to leverage the advantages that we've built in our core business -- our advantages like our services layer, our go-to-market, our supply chain and importantly, our innovation engine, including growing in places like delivering true multi-cloud. So Dell Technologies World is our opportunity to highlight innovations on both of those dimensions. So maybe I'll start with what we talked about on Day 1, and then I'll hand to Jeff to talk about Day 2. Day 1 was focused on multi-cloud. And so I think the conversation we had with customers was the debate is over. Customers are not solely in the public clouds. They're not solely on-premise, 75% of customers are operating 3 or more clouds today, and that is a strategic decision. They are saying, I want to access all of the innovation of the hyperscale public clouds. I see real value for the right workloads on premise, the security, the control, the efficiency, private clouds aren't going away. And increasingly, as data explodes at the edge and customers recognize that in order to deliver the real-time autonomous experiences that are part and parcel of this area of digital transformation, you can afford to send data back to a private cloud or a public cloud, and so edge clouds are prevalent, and it means multi-cloud is the reality in the future that we live in. And so on Monday, we made a number of multi-cloud announcements, reinforcing both that strategic intent, but also our position as a natural partner in the ecosystem and solving the challenges of multi-cloud. And so we first announced a new partnership with Snowflake that had 2 really exciting use cases. The first is enabling our storage arrays to easily, bidirectionally copy data between a private cloud and Snowflake's Data Cloud. And then second, and this was generated a lot of excitement with customers the ability to leverage Snowflake data services on-premise with our ECS storage as the underlying primary storage environment. That's the first time that Snowflake has partnered and integrated with an on-premise storage infrastructure player. So a really exciting set of announcements. We also announced a series of ongoing collaborations with the public clouds to extend our cyber recovery solution. So we announced CyberSense for AWS, which adds adaptive analytics to our existing cyber recovery solution in AWS. We announced PowerProtect Cyber Recovery for Microsoft Azure. So an isolated data center environment and Azure is delivered via our isolated cyber recovery vaults. And then we continued a steady drip of Apex innovation, notably our Cyber Recovery Solution, a full-stack service now managed by us in Cyber recovery. And we highlighted there's many more of those services to come this year, including high-performance computing, AI/ML-as-a-Service and VDI. And Jeff is going to talk more about it. We also highlighted project Alpine as one of the key thrusts in our multi-cloud and Jeff's going to talk more about that. So look, taken together, Day 1 was I think, an exciting set of proof points on that strategy that we described last September and importantly, our role as a partner in this multi-cloud ecosystem. So with that, maybe I'll hand to Jeff for Day 2.

Day 2, it's fun. We had a chance to showcase the technology that Jeff and Sam built for us. I sort of set up the day bridging from Day 1 to Day 2, talking about a number of technology trends that really led into the technology that we showcase. But fundamentally, our world now is one where there's no doubt, we have a hybrid worker that's trying to change the way they work and the way we respond to enable them and empower them in this new normal that we've created. I'm going to walk through how fast the world is digitizing, how fast data is growing. I talked about where the data is being created is very different tomorrow than where it's been for the previous decades, specifically out on the edge, out into the real world and how that will be a force of gravity pulling the compute resources and storage resources. With that, I talked about under construction. There's a new digital highway, fifth generation cellular. We talked about that being then a lead into software development and software-defined leading hardware innovation, then we talk about many clouds and then there's many clouds forcing a new operating model that ultimately will be connected by, for lack of a better way, describing it a data fabric that drives intelligent and automated systems, ultimately empowering developers. And that was to set up. We had fun talking about that's going to drive a new wave of innovation, buckle up for a heck of a ride because it's going to be a lot of fun. We pivoted over to Sam's area. We talked about the PC, how it's become more essential coming out of the pandemic. Always a great productivity device. Now it's the essential device of this new hybrid work play, learn and buy play. So it's a lot of fun when you think about the PC. Then we actually talked about some of the innovation that we built around collaboration, connectivity and helping engage people to showcase some embedded software, particularly around the AI engine that we put in it, that's allowed us to now use the touchpad differently, do connectivity differently, collaboration differently. Then we moved into a discussion around a future concept around low-carbon footprint and changing product life cycle or life cycle management with Project Luna. So a new concept aligned to our 2030 goals. And then I got a chance to pivot that into Mr. Boudreau's area. And we spent a lot of time talking about the innovation we call it the trifecta of software-driven innovation in the organization of the new software features that we put into PowerMax, PowerStore, and PowerFlex. And really trying to illustrate the level of innovation and the industry first and the differentiations in each of those stacks. In no particular order, I'll highlight a few of them. We started with PowerMax. And we took the world's most mission-critical and made it the most secure mission-critical storage on the planet. We talked about how we put in multifactor authentication and isolated vault. We had a lot of fun talking about 65 million immutable snapshots, 30 times more than our next nearest competitor. We talked about the industry's first and only mainframe compression, how we guaranteed 4 to 1. We talked about advancements in the underlying architecture, which actually doubles the performance and improved response time by 50%. That led our way into PowerStore, which we talked about similar sorts of things, how we've done ease of integration with VMware, how we've done ecosystem advancements, how we've improved response time, boosted level mixed workload performance. And then my personal favorite, we landed in the trifecta around PowerFlex, which, in our words, is the only software-defined infrastructure that knows no bounds, scales, almost limitlessly to help customers consolidate, automate, scales compute and storage independently all software. And today, my favorite thing that we talked about was the only platform on the planet that does bare metal, all hypervisors file, block, all on a single platform. Pretty exciting. And then we turned that into reality. We talked about what that means. We took a practitioner, our own CIO, Jen Felch, and we actually took Project Alpine that Chuck referenced earlier, which is really taking our enterprise class data services and making them available in the public cloud. So you can do cloud bursting, you can do test theft, so you can do cloud-based analytics, so you can do data and mobility or data and container mobility and Jen showcased it. It was so wonderful to have someone that's like the audience encountering the same problems that all of them do, get on the stage and talk about how this works. And what really, I think, captured was multi-cloud is real and the types of things we're trying to build around this orchestrated, distributed platform, multi-cloud, we're actually building the underlying capabilities to do it. So that's what we have fun doing. Michael?

Yes. So I'd say it's been a great event. The customer reaction to all the announcements that Chuck and Jeff just talked about has been terrific. The multi-cloud message absolutely resonates. I mean we've been hearing this for a long time, so we don't create any of these things in a vacuum. All these are created with customer input and the capabilities that we're pulling out -- have been well received. The cyber vault, I think has -- we've had tremendous traction in the market with that. Chuck talked about over 2,000 implementations, and it sort of become a must-have for a mission-critical business in today's world. We also talked about making all of our infrastructure programmable and the pivot to developers. And there's sort of this arc in the industry where the IT organizations want to spend much more time on apps and data and creating competitive advantage and less time managing and running infrastructure. And so the path we've been on for some time with appliances, a converged infrastructure, hyperconverged and now the shift to consumption-based models with Flex on Demand and Apex is all super consistent with automating all that infrastructure and making it fully programmable and customer action has been super positive. So turn out the event has been quite strong. We weren't really sure what to expect coming back from a pandemic, but it was more than we anticipated. We had a standing room only in all the keynotes and customer partner reception has been super positive.

Appreciate it. Thanks Michael. It's pretty amazing actually to think about the buzz out on the floor has been really and obviously, the evolution of our solutions portfolio and multi-cloud portfolio over the last few years is really phenomenal stuff.

I think what's one consistent theme I've heard from partners and most importantly, customers, multi-cloud is more real than I thought. I think they're leading this, oh my gosh, this is closer to reality. Then I thought Chuck used this the other day in his keynote, where they've kind of got to multi-cloud by default. And now they see a multi-cloud by design. And I love that phrasing of it because I think it really tells you that the hodgepodge we got into there's now architectural answer long term that can actually simplify this for our customers.

And the edge is real. We've been seeing this in manufacturing, in retail and transportation, logistics and hospitality and we're seeing the demand and customers are putting intelligence out there in field, and that's requiring new kinds of infrastructure, and of course, the development of 5G and private 5G is just going to reinforce that cycle of data being created at the edge. A lot of it is going to stay at the edge.

Yes. For sure.

Let's jump into Q&A. Okay. So first question is from Samik Chatterjee, JPMorgan. So Samik, you've got the floor, take it away.

Yes. I hope you guys can hear me, and thanks for the opportunity to ask a question. I guess I wanted to start with the -- can you hear me?

Yes. we can hear you.

Yes. Great. So the question I really wanted to get into was the announcement with Snowflake.

Samik, if you could repeat your question. We lost you. Go ahead.

So the question was really on the announcement with Snowflake. And it's a very interesting announcement, but really being able to leverage there, it takes on on-prem indications here. Maybe talk a bit about the opportunity you see there. Is this something that you are hearing from customers that they do some increase and we look at or the customers asking for it? Or is this more about you're now trying to go and create a new sort of market itself? And how much further can you take this sort of down the road? I mean we all know the multi-cloud opportunity. But enabling cloud services, in some cases, on-prem could be an opportunity in the long run. How do you see that market evolving?

Sure. So let me start with that, and maybe Jeff will get some thoughts on this. So first of all, this came from customers. Customers were asking us for a way to be able to use the Snowflake analytical capabilities with their on-premise data. Plenty of customers have unique data, secure environments, data they can't leave their premise or colo. And we've done some unique things with special costumers, but now kind of rolling this out at scale. And look, I think if you take any of these born in the cloud companies, another big theme here at Dell Technologies World has been the edge. And if you think about there are 600 data centers in all the public clouds combined. There are 7 million cellular base stations, which are all becoming multi-access edge compute data centers with our equipment in many cases inside those mini data centers and I think a lot of these born in the cloud companies are coming to us now to say we need a multi-cloud architecture. Customers don't want to be locked into one environment. They want their workloads to be able to move. And compute is going to follow the data.

Yes. For me, I'm super excited about the innovation. I'm super excited about the opportunity and the partnership with Snowflake. I will be very clear, it was customer driven. We talked a lot about the show. It's been about data. It's about the multi-cloud, which basically means data is going to be everywhere, and we need to embrace that. And if that's the edge or the cloud, it doesn't matter. And that's what this is all about, we're really delivering that for our customers. and that's the joint innovation. And where Michael was going as you think about and what Jeff said just a few minutes ago, where data is going to be created, 80% of the data in the next 2 to 3 is going to be created out of the core data center or the cloud, right? It's going to be out of the edge, is what Michael is referring to. And that data has to be processed and stored and analog in real time, if you want real-time insights. So I think it's a huge opportunity. It's a great partnership. It also shows as part of the multi-cloud. We've talked about having a modern, open architecture, but it's also important to talk about the open ecosystem. And this is just another example of that. And going back to the edge where Michael was. And I know we didn't talk about it in the keynote, we had some amazing announcements around edge, right? One was around a validated design for the retail edge. We did that in partnership with VMware and Deep North going back to the open ecosystem. And then we also announced the design -- validated designs for our manufacturing edge as well at the show here today. And that was with PTC and also [indiscernible]. So again, creating a broad open ecosystem, helping our customers solve real problems.

Jeff, I think you agreed it's an innovation and discussion. Customers asking for persistent on-prem storage is a key attribute and you enable that with direct access or the bidirectional copy capability that we worked with Snowflake to achieve. So when you look at the technology that we've built between the 2 companies to solve the problems that both Michael and Jeff talked about, this is pretty advanced and sophisticated and it leads to perhaps more opportunity. And then probably the single -- the last point I'd make is -- we talked about the multi-cloud ecosystem another example.

So our next question is from Wamsi Mohan, Bank of America.

Can you guys talk a little bit about how investors should think about the pricing and economics of as-a-service solutions relative to on-prem? And how different will the go-to-market be. It sounds like there's a lot of pull from customers. How different will this go to market be? And any CapEx impact as well as you build this out?

Maybe I can jump. Yes, maybe I'll jump in and then Jeff and Jeff, you guys should try to -- look, it's 1 dialogue with customers right now about their consumption models, right? We have customers that say, I want to continue to consume as I always have is CapEx. We have ones that say, look, I would like to see all of your portfolio as a subscription, the natural sort of continuation of our leasing business has existed for a long time, but a much more modern instantiation of it in Apex. And some that say, no, I want you to do it for me. I want to manage service on top of that. And often, it's the same customer consuming 3 different ways. And so from a go-to-market standpoint, Wamsi, obviously, there are changes whenever you end up in a fully managed service standpoint, right? The software companies out there talk a lot about their customer success motions. You've got to have that as part of getting the most out of the technology that we're going to put in front of customers. But I would just start by saying it's one dialogue, and it's often with the same customer. And what we're trying to provide through APEX is choice across our portfolio, the choice to be able to consume it as a subscription as a service with real outcome-driven metrics behind it or in a traditional CapEx model.

I guess for me talking to customers, they're all in different spots in the journey in regards to where they offer subscription, not one size fits all. They're looking for different multiples, on financing, consumption, deployment, managed service, configurability, depending on what markets you serve. So that's something we're very focused on. APEX for us is that consistent experience for our customers that they come to and have that regardless of the offer of the service that we're going to provide. So right now, the feedback has been fantastic. Customers are really bullish about the opportunity and they're looking forward to the services we just announced, but even more to come as we pick up our innovation.

Yes. And I would say the sales motion, we're evolving to an outcome-based approach. And not all of our 35,000 sellers are there, but that's clearly the direction we're heading in. And reception's been positive.

Thanks, guys. All right. Next question from Toni Sacconaghi with Sanford Bernstein.

Hi, everyone. Thanks for taking any questions. I hope you can hear me?

Yes.

Okay. Good. A lot of your announcements at Dell Technology World have been software related. And I would imagine the vast majority of your R&D and engineers are working on software rather than hardware. I'm wondering if maybe you can assume now a little and talk about sort of software as a business within Dell. Do you view it more as an enabling technology or they even characterize? I know there are very defined software products that you sell within the storage group. Obviously, PowerFlex is an emerging software product. But maybe you can zoom out and just talk about the beside software being an enabler or project APEX and other things. Is it 20%, 30% of kind of storage revenue. I know some of that's kind of deferred over time. How does an investor think about the importance of software beyond just being an enabler for some of your partnerships, project APEX. Where do we see it as a line item in the income statement and how should investors think about that either growing faster or slower and the revenue recognition associated with that?

Toni, maybe a couple of thoughts and then rest of the team can jump in. But how you described it as the very discussion that's underway primarily with Jeff's business of how do we take what has historically been embedded software into our products to ultimately build software-based only products. And this maturation that we're going through I think it's going to be pretty profound over the next several years. You're going to see us offer -- in fact, we just had an architectural discussion and ultimately a pricing discussion, most recently on the inherent value of PowerFlex as a software product, not part of a server, not part of an appliance, what's the inherent value of that piece of software. If I think about the software assets that we've just now made available, we'll make available in the public cloud over project with Project Alpine, the same conversation. What's our file? What's our block? What's our object? What's our data protection software work as customers use it? I'm not going to sit here and tell you we know the answer today, we are in a discovery phase. But the very question you ask, we are beginning to think about how we extract what has been an enabler or inherently embedded into our products that's specifically built packaged software offers offered as a service. and continuing to build out that portfolio, Jeff mentioned the edge. When we look at our long-term edge plans, it really is about adding the software for edge on top of the platform, not integrated in it. And I think that's what you'll see from us. I'm not going to get into when do you see it in the bottom line, what's our forecast for software revenue. But I'd like everybody to walk away with the thought, we are absolutely moving to a model where our most valuable assets are software, and we are going to package them as traditional software products and extract value for that. Jeff, did I miss anything?

No, I think -- I think you nailed it, Project Alpine is all about enabling exactly what you just said. So that's a key component here. So taking our industry-leading software, storage and appliance assets and then that's tracking them from the underlying hardware and being able to deploy those anywhere we want. The only thing I'd add besides file block, object data protection is there will be more advanced data services layers that will bring as well that we'll be able to monetize.

Those are all great points. I think it's so important when you think about multi-cloud and our ability to kind of sit at the center of that for our customer, that fabric at management and orchestration layers that substrate that's going to really...

That substrate that's going to connect cloud, that's substrate that brings this together as an orchestrated distributed system. That is absolutely distinct value and you ought to think of us actually pricing it accordingly for the value that it provides our customers.

Good. All right. More to come on that. Okay. Great. Yes. This question is from Steven Fox from Fox Advisors. He was somewhere that was pretty noisy. Where we're in spot is pretty noisy, too. So we can all relate to Steve there. But let me ask this question for you. So the company is arguing for a dramatic shift to data compute storage to the edge over the next 3 years, for example, the statistics we've used it. So 75% of the data process outside of traditional data centers in the next , I think it is 5 years. So what does this transition -- when does it truly start? When does it become apparent to us being us as investors or analysts. And what are the use cases? What can we see what's occurring, what's happening on the enterprise hardware sales? And when will we start to see that [indiscernible] through the results of the company?

Well, maybe I'll start and then but you can jump in. Look, the edge is evolving now, will continue to do so. Again, our comments through the first keynote, the second keynote, some of Michael and Jeff's comments today. This notion of everything becoming digital in our world. And these things, as a result, create data on the edge of the network is absolutely in front of us today. And what we're hearing from customers consistently, what do I do with all that data? And increasingly, what people want is to deal with the data they're collecting in real time. Well, that absolutely draws a distributed architecture. The architecture has to be distributed near where the darn data is collected. So you can see compute resources or resources moving to the edge. What are examples, factories today, smart hospitals, smart cities, the transportation sector. There are a number of places where we see this. We just announced an edge retail. Retail is a great example of where data is being collected in various stores, various retail formats, we want to do something with it. So this is going to evolve and what I think -- it's important to know with new workloads, the applications that are going to take advantage of all of this or in their [indiscernible].

Yes. To me, that's a key indicator. So if people want to look at it, if you think about the rise of the cloud feedback, you see all the born in the cloud companies or the applications and the software features that were being built, they were built with the cloud native. You're going to start seeing a major pickup of all the cloud -- of all the app developers and the new software being built on the edge. So some that's a leading indicator as things shift more and more. People got to come in and provide additional value. That's where you get some new apps created, it's going to be all around taking advantage of the edge.

I'm just going to say one of the fastest-growing solutions we have is our VxRail satellite nodes, which we announced, I think, about a year ago. And if you think about a multi-location retailer, we've got many of them, whether they have 100 locations, 1,000 locations, a manufacturer with 150 locations around the world, they're putting 1, 2, 5, 10 VxRail in every location at the edge and using that as part of their multi-cloud network that they're creating. And so it's happening. Those 7 million cellular base stations that I mentioned, all of those are becoming data centers. 5G is not about connecting people. It's about connecting things, and that's going to move and require a lot of compute power, data, analytics and storage.

And a substrate to connect them all. You can have all of these isolated data centers or edge clouds as we like to call them, they have to be aggregated.

I guess that [indiscernible] say, it's up to us to make that real from a disclosure standpoint over time to find the right ways to help the investment community understand what's happening in Jeff's business and Sam's business and across the company. So that's a to do item for us over the next year or so.

Yes, sure. I mean, look, it is driving the edge because it's real today, it's driving what you see in the infrastructure market it accelerated. So yes, how we counted and what is an edge -- incremental edge growth versus what's part of our core infrastructure growth, hard to parse, but it's real today.

But it's like core infrastructure like my friend here, Sam. The more device he sells that's more data being created. It's a good thing.

Yes. All right. Our next question is from Erik Woodring from Morgan Stanley. Erik?

Thank you, guys, for taking the question. I obviously appreciate it. Maybe I'll direct this question towards the CSG side of the business. Regardless of how you feel about the introductory into PCs or let's call it the next 1, 2 years, it's clear that the PC is entering a new paradigm where it is a higher value to the user regardless of whether you're in the home, in the office or a gamer. And so I guess my question is, what features of the PC do you believe are becoming higher value to the user? And really, how is that dictating in not only your product launch cadence, but maybe where your dedicated resources to R&D and development.

No, we're absolutely excited about the lessons in the last couple of years thinking about this work-from-home, do-from-anywhere environment and delivering the kind of experience on our PCs that allow people to be productive and get done what they need to do. So features we see. It's really the marrying -- we've been talking about a little bit here, but we're seeing really hardware and software be fused together in the devices we're putting together. So cutting-edge innovation, Jeff talked a little bit about our Latitude products, collaboration, Touchpad, superthin, mobile, long battery life, our XPS 13 plus boldly reinventing a product, many considered to be the absolute best ultraportable system out in the market, zero-lattice touchpad, a zero-lattice keyboard, a seamless class touchpad. You put all that together then with software that let people get stuff done. So Jeff talked about in the keynote on our Day 2 here building an AI engine in our systems that allow intelligence around privacy, collaboration, connectivity. So think about things like onlooker detection, automatic lockdown of the screens. So when someone's looking at your screen, it blurs and you get privacy, you look away from the screen, it locks. We have the industry's first multipath connectivity. So for less latency, faster bandwidth, higher transfer rates. So it's really putting together all those different pieces that fold into the usage models we're seeing today that make the commercial space. It was vibrant pre-COVID, vibrant during COVID. We see that demand for technology really important so people can get things done. Same thing in the higher end of consumer space. We've gone from one PC per household to each household member having a PC and wanting it to be one. They can really get stuff done for productivity for gaming for the things they want to go do in life. So it's that mirroring of hardware and software, great features in each -- delivering the experience our customers want. And it's in the spaces where we've really targeted with our engineering teams for some time. They're the ones that are stable, producing growth in the past, and we think we'll do that in the future.

And you've done a really good job talking about the end user experience and the peripherals that go around that with the opportunity, particularly what we learned through the pandemic, maybe a little bit on some of our peripherals and the engineering that goes with that to create a collaboration system, the ability to work in today's modern world?

Yes. We see that it's a great point, Jeff. And thank you for that. We see a great opportunity around the device. So the other thing we've learned over the last couple of years is people want to connect peripherals and otherwise you think about keyboard, mouse, display. Our study show 42% more productive when you put all that together. It just lets you get more stuff done. You think about cameras, microphones, do that in a seamless way. We had a couple of great concepts we were showing up here around how you can collaborate wirelessly, connected with intelligence using WiFi sticks to just be seamless moving between workspaces. We look at collaboration concepts we have that allow you to engage and be connected with people in hybrid worlds. And then we're looking at the whole space in peripherals, where we have the #1 displays business. We have over 20% share in displays, gained nice share last year, have been a leader in that space for a long time. And there is a peripheral opportunity outside PCs. It's about half the size of the PC business. It's about twice the margin rates of the PC business, and our customers are asking us to go into that space, make it all seamlessly connect and deliver the kind of experience they want. Again, hardware with software that is good for our customers and a great opportunity for our business.

Yes. And I think organizations have figured out that the employee experience that is represented by a super capable end user environment is unbelievably important in a period of a shortage of skilled knowledge workers. And employees in organizations, most associate the technology of a firm with the thing that's right in front of them. And so it's been elevated to be a first-class experience, and we continue to invest in that commercial productivity experience and Sam and his team have led 9 consecutive years of share gain in the client business. And you saw in the first quarter, IDC data, certainly, we're continuing to have that momentum.

And Michael, that's a great point. We started seeing that 5, 6 years ago and started talking about it, and I go fast forward to today. Every CIO I talked about is saying that the experience really matters. It used to be -- it was the super enlightened companies, everyone sees that. So I look at an age today when you start up on the company, social media, it's the picture of the kid you got, and you want your employees -- it's kind of a bragging thing, get me the right stuff, so I can get my job done.

And if a company is not investing in that, people will leave the company because they don't have the right tools.

All right. Next question is from David Vogt at UBS.

Can you hear me.

Yes.

Great. So thank you for taking the question and doing this in, it's incredibly helpful. Can you talk to the conversations you're having with customers around their technology road map, specifically around the new software offerings. I ask this because, for example, I think cyber recovery was available last year on AWS. Now you announced and Azure announced it. So does that validation from AWS open new doors going forward? And has it increased interest. And also, is that opportunity or is this new opportunity already contemplated in the growth rate, sort of framework that we're thinking about for IC going forward or is this incremental and can potentially be margin accretive over the longer term? I know it's nascent, but just trying to get a sense for what's been contemplated and sort of the expectations going forward?

So I'll start with the software in regards to what we did. So yes, we had -- as Jeff and Chuck and Michael can hop on. We did Project Alpine, which was about having the right endpoints in the cloud. A lot of that goes back to data. It goes back to multi-cloud. We talk about how that is for our customers, the issue what they're having is that drives a lot of complexity, right? So and what customers are looking for, do you think about infrastructure complexity, you think about operational complexity in their IT staff and the demand center what you're going to talk about the productivity of the teams. Our customers were asking us for leveraging similar tools in the different ecosystem. So if they could have an on-prem experience and an off-prem experience, they don't have to continue to train their IT advents. They don't have to have different staffs and different training and all that stuff. So that's really been the big lift. It's really going back to addressing a customer pain point specifically. Yes, we did have the offering last year. We did get some lift on that in regards to that, and that's why we're actually deploying across all the cloud players, the major cloud players as we go forward. That's going to be a consistent theme because our customers have as part of multi-cloud. We have the large hyperscalers and then they have the private clouds as well. We want to make sure we enable that whole ecosystem as we go forward. I won't get into the financials, but.

But Jeff, if you take what you said, and again, tying what we've tried to message these 2 days, we've had our data protection assets in the public cloud for years with DDVE and had, I think we quoted yesterday, Caitlin might even said it 10 zettabytes of data protection.

Sorry, I missed that. Exactly. Sorry. And we think about that as the foundation that we've been in the public cloud, now cybersecurity. The announcements of file, we've been into file with our OneFS. If we think about what we're doing in Vblock. So it's really building out this our enterprise data storage services in the public cloud is this ecosystem that we think is very important. And then if you take the specific part of cyber, there should have been -- we should have delivered a consistent theme yesterday. Every announcement we made in the enterprise and on Day 1 and Day 2, had cyber in it. You talked about cybersecurity, cyber resiliency. It's a conversation that none of us can have with any of our customers, whether we have with our customers where cybersecurity and resiliency doesn't come up. And whether they buy it as a fully packaged service, the first time we've ever done that in Apex or extensions in the public cloud, our own cyber vault or the technology we just put into the 3 arrays that we talked about yesterday and announced it is absolutely top of mind in an opportunity and what we put out yesterday differentiates our storage assets over everybody.

And we already have customers that are doing it today. When you see us introducing something on the stage here at Dell Technologies World, these are heavily customer-driven innovations where we already have some of our lead customers that have worked with us to make these things happen for their unique environments. And look, we're proud to be able to serve 99% of the Fortune 500 and some of the most complex environments out there.

Yes, talking about customers. Chuck was on the cube yesterday and [ David ] want asked him what's the most important asset that you got. What was your answer?

It's our customer relationship.

Absolutely.

Michael, you hit it so well, I just think -- we talk a lot about our durable competitive advantages, and there are many of them. But I think the fact that we touch more customers than any one in technology and have, as you said, for thinking what's your biggest problem? What's the unsolved problem you're working on, we're working on the next Dell Technologies world today with those customers. That's how real stuff happens, so, yes.

Great. Next question is from Jim Suva at Citi. So Jim, go ahead.

Thank you very much. We've known your company and have followed you for decades. When we think back about the security analyst meetings that you've given over the past several years, is multi-cloud going kind of the direction that you expected in the rate or is it accelerating? Or is it kind of keeping the change in its character and you're just agility adapting to it so much? We seem like it's always been part of the plan and just a natural fit.

Kind of sort of started as hybrid cloud, and you probably remember that, that term was from maybe 10 or 12 years ago. But as the world has moved more towards software-defined, it's gotten a lot more real. Certainly, the move to containers and Kubernetes and sort of programmable infrastructure, software-defined, everything has accelerated all of that. And as Jeff said, every customer is a sort of a different place in the journey, but there's a resounding signal around multi-cloud. And even the sort of public cloud-only companies are coming to the multi-cloud conclusion, as we saw with some of the announcements here. And it's not super surprising to us, but I'd say the pace of adoption for multi-cloud as the correct operating model is accelerating.

I agree with data growth and data as we talked about being decentralized in regards to that growth that allows for more clouds to be built if it's a private cloud or public cloud or what have you, which drives more multi-cloud. So I do see an accelerating in that pace. And a lot of it is we talk about decentralization of IT. It's about distributed compute. It means I have the process data in real time. I got to store that data in real time. I got to recover that data in real time. I got to secure that data and so.

And IoT was a topic 10 years ago, and that sort of morphed into the edge as sort of a broader conception of intelligence in the entire physical world, and that's becoming real. If you take, for example, some of the examples we talked about in manufacturing and retail, if you went to those companies 5 or 10 years ago, you said, what are you doing with IT. They were taking it out of the factory floor and out of the retail location and putting it in the center somewhere. Now they're going the other way because they need real-time insights and real-time action and it's the build out of the edge, which just reinforces the whole multicloud.

Yes. This goes back to this idea that we talk about this when we talk about strategy, which is that IT is really at the center of our customers' digital transformation. It's really -- it's a part of the global and the fabric of the global economy as they are inseparable today. I mean it's just -- it's not like IT was something different in the economy and GDP is something different. They're intertwined in a way that means that the importance is just going to continue to grow in my humble opinion.

To that point, I actually think the persona has actually evolved a bit more. So we traditionally think about the IT Ops. But the IT Ops is DevOps, come back to Mike's point of developers. As the DevOps team, the data science team, the business analytics team, they all want access to this data in real time, right? And that's how we're going to try and drive this. So the personas are growing again, creates opportunity for us.

Yes, for sure. All right. We're going to take one final question from Amit Daryanani at Evercore.

Perfect. Thanks a lot for squeezing in there. One of the topics that really struck me to some of the keynotes especially Michael was this focus of Dell around making developers the center of focus versus perhaps I think it used to be around infrastructure appliance back in the day. Can you just talk about what is driving that dynamic? How does Dell differentiate from the peers when you talk about, Michael, I think you said embracing the developer in your keynote. How is that different from what your peers are doing right now? And maybe to the extent you can even Project Alpine broadly in that discussion, it would be really helpful to understand how that is different from what, again, some of your peers are there?

Right. Well, when you make things programmable or you make things -- provide things as a service, it kind of matters what you're actually -- what the base layer of functionality and capability is. And when you think about storage and the unprecedented leadership that Dell Technologies has in file block object and all kinds of storage technology, it's a clear leadership position. And I'll say we've had lead customers that have been pulling on us for some time to make the infrastructure programmable and some of our newer team members have been pushing us along the way. But Yes. I mean it's a full embrace of developers. Jeff, do you want to speak to sort of...

Yes. It kind of goes back to the conversation you t mentioned about the personas have evolved over time from the IT Ops and IT developer community. And for all of them, it's about accessibility, right? They want access to the technology. And what we have to do, if I take -- so I have a large -- obviously, I have a large development team. So I understand the space. The first step is around configurability. So think about our partnerships with people like Ansible or TerraForm or [indiscernible]. The next thing is all around containers as you're going back to like containers, orchestration with Kubernetes and things that effect. Then we get into workflow and automation standpoint and [indiscernible], excuse me. But the key point of that whole thing is just the developer community. And what they're looking for is access to technology to make themselves and the teams more productive, leveraging our technology. So Michael, talked about making it more programmable, but that's exactly what we're doing, right? Think of it like Infrastructure as code. Everything is all with Project Alpine, right? It's software, so that we can be deployed anywhere depending on the SLA that you're trying to provide, you might get a better thing on a physical appliance versus a cloud endpoint, but it allows you to have a consistent user experience. It provides more access, more flexibility of their teams to really innovate more and really about how do we help them be more productive, how do we help them innovate better and faster.

With software developers, we see it in our own community, Jen described it yesterday in our IT organization; Jeff, in our product development organization. They want easy, accessible infrastructure fast as they feel empowered by. So if you look at Project Alpine at the core of all of the works that we use, think of it as the first time we now have a pool of storage, file block, object data protection enterprise clouds, all public clouds, developers across the world now have an easy access to a single pool of storage, as a developer isn't that...

It's super cool, in regards to that so you can extend to the -- for an endpoint like a cloud endpoint as an example, if you have a power scale file system on-prem and you have a certain attribute that you can't get access, you could spin something quickly, at an end point up in the cloud, you get your development project going. And then when you need more of a predictive SLA, you come back to your on-prem use case and what have you.

Back in production, which is the exact example Jen described yesterday.

All with the same environment, same tools, same workflow, same product...

Thanks for joining me, and thanks for being here and being here for our customers. I think it's been a great week to showcase the things that we're doing really was innovation in software, which is a big topic today. So I appreciate that, and thanks, everyone, for joining us today. We'll, of course, see you for our earnings announcement on May 26, and look forward to catching up then. Take care.