Michael Dell takes a dig at Microsoft’s Surface (right in front of Satya!)

October 21, 2015, 6:06 PM UTC
S. Higginbotham for Fortune

When Microsoft got into the computer business with its elegant Surface laptop earlier this month Microsoft CEO Satya Nadella, may not have made a call to Michael Dell to let him know about the Redmond, Washington company’s plans, but he did eventually explain the strategy behind the move.

The companies are still good partners today. But that didn’t stop Michael Dell from taking a dig at the price of the Surface onstage on Wednesday during an interview alongside Nadella at Dell World, Dell’s annual customer conference.

When asked by the moderator, if the two CEOs were friends or “frenemies” after the Surface’s debut, Michael Dell responded, “We’re absolutely friends.” However, he then said that customer needs drives which alliances his company forges. And customers want Microsoft.

Dell voiced excitement about impact of the new Microsoft Windows 10 operating system and Surface family of products. He said called them part of an “icebreaker strategy” that will get people excited about an entire ecosystem of Windows products. And then came the dig.

“But the volumes are not very high, and the prices are pretty high,” Dell said.

The audience laughed, and Dell kept talking for a bit while Nadella looked taken aback. By the time it was his turn to respond, Nadella had recovered and said: “Michael said it right. At the core we’re friends. That friendship is about serving the customer and that’s what grounds us.”

Earlier on stage, the two CEOs announced a piece of computing gear that would let Dell offer customers a way to join their existing private or public cloud jobs to any other jobs running in Microsoft’s Azure cloud.

Dell is also happy to sell its PCs to customers that are running Microsoft 10, and Nadella is banking on an upcoming PC refresh cycle to reach his goal of getting Windows 10 on 1 billion computers in the next couple of years. Dell said that he expected enterprise users to start a wave of upgrades to newer computers in the second half of next year, but didn’t share number of the current level of Windows 10 upgrades so far.

As for Dell’s announced acquisition of EMC, the moderator asked Nadella if he saw Dell doing a big deal as a chance for Microsoft to make its own big acquisition.

Nadella replied that “I don’t wake up in the morning saying Michael did a big deal last week, I should do a deal tomorrow.”

Instead, he said Microsoft’s biggest growth will come from its own internal efforts. Any acquisitions, he added, will be in “big addressable markets where Microsoft has a unique opportunity to make a contribution”

The CEOs agreed that their bet on the hybrid cloud market was going to be a significant portion of the IT opportunity for a long time to come. They also mentioned the benefits of expanding the market for generalized technology to more companies.

As for the overall uncertainty and competition facing both of their business, Nadella quoted former Microsoft CEO Steve Ballmer’s advice to him, “Be bold, and be right.” To which Dell added “And don’t screw up.”

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