Michael Dell On Regulating AI, The Coming 5G Explosion And Considering Going Public, Or Not

Dell Technologies Chairman and CEO Michael Dell says his company's position as the largest IT infrastructure player in the world gives it an especially advantageous position in leading-edge technologies like artificial intelligence and 5G.

Essential Infrastructure

Dell Technologies Chairman and CEO Michael Dell is sending a message that his namesake company believes deeply in the power of technology to make the world a better place, but he's also intimately familiar with the cold hard realities of the global IT market and how the industry behemoth fits into it.

In a Q&A with global press and analysts during the Dell Technologies World conference Monday in Las Vegas, Dell reinforced his argument that Dell Technologies' position as the largest IT infrastructure player in the world gives it an especially advantageous position in leading-edge technologies like artificial intelligence and 5G.

It's been a little more than a year-and-a-half since Dell architected the largest buy-out in the history of the IT industry with the acquisition of data storage giant EMC. Since then, Dell said, the company has exceeded revenue expectations, while steadily paying down debt and continually developing its portfolio.

The company in February said it would consider an IPO, or a reverse merger with VMware, which is part of the Dell Technologies family of companies. Dell Monday, though, was not keen to elaborate on those considerations.

What follows is an edited excerpt of Dell's Q&A with reporters and analysts.

You compare AI to a rocket ship, and Elon Musk compared it to an atomic bomb and said it should be regulated. Do you think it should be regulated, and why?

Regulation usually happens because people are afraid of something, or something really bad happens. Is that possible with AI? Absolutely. It's our job to prevent that. Regulation also shows up in the contexts of the least-common denominator. Somebody does something really bad with something and regulators say we should regulate it. Our job as a responsible company is to say how do we make sure these things are being used for good. These are powerful tools, but that's really all they are. Let me go back a little bit in time and talk about some older technology, like fire. When fire came out, people said this is amazing technology, you can have light at night, you can heat stuff up, you can make food. Then somebody figured out how to do something bad with it. We can light the other village on fire. Every technology creates good and bad. Saying AI is really bad and we shouldn't have AI is nonsense. We have to figure out how to use it in a responsible way. That's our job.

How will 5G impact the IT market and its relationship with the telecom industry?

5G is a bit like if we were sitting here in the mid-90s and somebody cooked up this new thing that is now known as the Internet. 5G is a massive accelerator on all the things that are going on in technology. 200 Petabytes of data a day are generated by the typical city of 1 million people. If you take a level 4 autonomous car in 2020, it's going to generate 4 Terabytes of new data every single day. With a 4G network, you have zero chance of dealing with this autonomous car. You need 5G, and in fact, 5G may not be enough to enable it…There are challenges with 5G. In many countries, there are so many carriers that they can't make any money. Can all of the carriers in the world implement 5G? Probably not. It's expensive, and it's going to require all kinds of new equipment and expenses. VMware NSX with NFV is very involved in a lot of 5G deployments. We're super excited about 5G. We love what's going on there.

Will Dell Technologies go back to public trading?

We did make a [U.S. Securities and Exchange Commission] 13D filing. The 13D filing contains certain information about what we are considering, and not considering, as a company. The reason we made the filing is because when you consider certain things, you're required to make a filing. If you want to know what we're considering, or not considering, I would suggest you read the filing. I'm not going to tell you anything that's not in the filing, and the reason is if I did, we'd have to make another filing, which we don't want to do.

What's your strategy for paying down Dell's debt, and how does that play into your other strategic options?

Since the Dell-EMC combination, we've paid down about $10 billion in debt. We're very much on the schedule that we outlined for the banks. If you look at our debt and the way it's been traded versus last year or two years ago, you'll see that it's traded very well. We're doing what we expected to do. We have strong cash flows. Our business is excellent and we'll continue to pay down debt on a very predictable schedule.

A year-and-a-half into Dell Technologies, is there anything you want a do-over on?

Overall, I'm quite pleased. There's stuff we could've done better, but basically nothing really broke. The biggest surprise was that there weren't any big surprises. There was stuff early on where we should've aligned this a little bit better. The sales integration was incredibly important, and we optimized on not churning customer relationships, which was a very high priority, and we didn't really do that. But in that, there's some opportunity to improve, so we're going to continue to tweak that. In our results, I see us getting better and better and stronger and stronger every quarter as we continue to make tweaks, but I consider them tweaks as opposed to some massive revelation. If we had met our plan for revenue, I'd be pretty darn happy with that. We didn't meet the plan for revenue. We went way over. Several billion dollars over, and it's happening again so far this year. I'm quite pleased with how it's going.

What's Dell Technologies value proposition in AI and IoT, and how does Dell invest in AI in its own processes?

We see ourselves as the essential infrastructure company. When it comes to digital transformation, Pivotal, for example, is the operating system for the Internet of Things and digital transformation inside companies. It's about how the data gets used at the cloud level to create cloud-neutral and cloud-agnostic apps to use all the data. If you want to use AI, you start with algorithms for learning and inference, and you do that with your data. If you know how to draw inference from data, but you have no data, your AI is completely useless. Companies of all types are figuring out how to use their data. If you have your data in a hundred places in your company, you can't actually apply AI to it. You need to build data lakes, you need to aggregate this data and you need a lot more of it to be able to do the learning and the inference. We're helping customers build that infrastructure. As Dell Technologies comes together with VMware, Pivotal, Dell EMC, solutions like Isilon are critically important for these massive data lakes. What you want to be able to do with this data is in real time create a better product and service. You need a cloud, but clouds don't run on clouds, they run on infrastructure and there's a massive build-out that we're seeing.

You have the largest catalog of infrastructure in the industry. How does that match up with the fact that customers are trying to escape lock-in?

We're in a business that's always been about choices. Today, we're No. 1 in 22 different categories, but the way I think about it is we have 2.6 percent market share. We have an $80 billion business. Our total market is $3 trillion. That's 2.6 percent. The market is going to grow. The $3 trillion is wrong. I think it's going to be $4 trillion, $5 trillion, $8 trillion because technology is right in the center of everything. There are no shortage of competitors. There are all sorts of folks out there innovating. We have co-opetition going on. Customers continue to have choice. We're open, and we have choice, but customers also want to hear our opinion on how to run a modern data center, or how to run cloud data applications or how to do security. If they just want to buy the ingredients form us and do it themselves with their own open-source software, lots of people do it. That's great. No problem. We're open to choice with an opinion.

What makes Dell Technologies better equipped on ML, AI than others like Google, Apple or Microsoft?

If we were having this discussion in the mid-90s, the discussion wouldn't be about AI, it would be about the Internet. What are you going to do about the Internet? Where are your Internet products? Where's your Internet products division? Who's your vice president of Internet? What are you doing with the Internet? Remember that? Where's the Internet now? It's everywhere. The cloud, AI, same thing. These are all enabling technologies. They're super important. The reason we talk about data is data is the fuel for AI. What are we doing? We're building solutions. If you go to Dell Technologies Capital and look through the portfolio, you'll see a ton of new AI companies. There's going to be stuff in the cloud, on premises, on the edge. It's going to be all over... AI is just a big enabler. If you are not using your data with AI or machine learning, you're already doing it wrong. Every modern organization that wants to survive and thrive has to go figure that in their own way. It won't be an off-the-shelf solution. There will be tools that enable it. We have 200,000 partners around the world an in many cases, they're applying the vertical solutions to help customers take advantage of this. If you're not using AI and your data, you could be out of business real soon.

When will vertical AI technologies begin interacting with each other?

When you get into a specific business, the way the data is used is incredibly vertical. There isn't one vertical software solution that's going to solve all the problems. There's infrastructure solutions, and tools and enabling solutions that can help, but you take what any of the most advanced companies in the world are doing with AI, and it's artificial specific intelligence, not artificial general intelligence. That's the big difference. The AI that is going to figure out how to do a surgery in the best possible way is not going to be the same AI that's going to be great at autonomously driving your car. I'm not optimistic that there will be AI general intelligence anytime soon. There's tons and tons of development of AI around specific applications, and I think that'll be the growth area. That's why it'll be incredibly vertical. It depends on the data.

What are your plans for traditional networking portfolio? How does it fit in with the push for disaggregation?

Networking is growing rapidly for us. We kind of created this idea of open networking, which happens to go very well with software-defined networking, NSX. When you combine together we're doing with our new OS-10, our open networking strategy, some of the new fabric-based data center infrastructure we have, with VMware NSX, with VeloCloud SD-WAN, which is growing very rapidly, business is growing fast and we've got a great story. It's definitely an important part of what we do. Networking, if you measure by ports, we're huge in networking. The Dell EMC Networking business has been a forward-thinking company in terms of how we think about where networking is going.

How inclusive is the world of AI? What advice do you have for keeping pace with the AI market?

What I'm seeing is an absolute explosion in the number of use cases for AI. AI is an umbrella term inclusive of neural networks, deep learning, machine learning. You're taking all this data and you're using learning and inference to draw better conclusions from the data. We've seen a rapid acceleration in our server business. AI is a big use case. What you don't find is horizontal AI. AI gets very vertical very quickly because it's every industry. It's very specific to the data. We're also seeing the build-out of automated, modernized on-premise systems. The hyper-converged, converged. VMware is doing very well. There's AI going on in lots of different places and it's interesting to thing the boom in edge computing, which I think is just starting. Customers say, 'AI, I'm going to put all that on the public cloud.' They do that and then the amount of data, the charges, the speed at which you need to operate and the cost and they figure they're going to build their own. They're also saying the data is getting more and more valuable, do we really want to send it off to somebody else and then rent it back? No, we don't want to do that. We want to own our own data. There will always be variable outcomes. It's the nature of our industry. It's change or die, quick or dead.