>> Voiceover: Live from Las Vegas, it's theCUBE. Covering InterConnect 2017. Brought to you by IBM. >> Okay, welcome back, everyone. We are live in Las Vegas for IBM InterConnect 2017. This is IBM's Cloud show and, now, data show. This is theCUBE's coverage. I'm John Furrier with my cohost, Dave Vellante. Our next guest is Meg Swanson, VP of Marketing for Bluemix, the whole kit and caboodle, SoftLayer of Bluemix. Now you get to watch some data platform, IOT. The Cloud's growing up. How you doing? Good to see you again. >> It's good. Good to see you guys. Every time we get together, it's just huge growth. Every time, every month to month. Under Bluemix, we've pulled together infrastructure. The area that was called SoftLayer. And because we had developers that absolutely you need a provision down to bare metal servers, all the way up to applications. So we pulled the infrastructure together with the developer services, together with our VMware partnership, all in a single console. Continuing to work on, with clients, on just having a unified experience. That's why we have it under the Bluemix brand. >> You knew us when we were just getting theCUBE started. We knew you when you were kicking off the developer program, with Bluemix, was announced here in theCUBE. Seems like 10 dog years ago, which is about 50 years, no, that was, what, four years ago now? Are you four years in? >> I think so. Yeah, 'cause I remember running from the Hakkasan club, we had just ended a virtual reality session, and I had to run, and then I sat down, and we started immediately talking about Bluemix 'cause we just launched it. >> So here's the update. You guys have been making a lot of progress, and we've been watching you. It's been fantastic, 'cause you really had to run fast and get this stuff built out, 'cause Cloud Native, it wasn't called Cloud Native back then, it was just called Cloud. But, essentially, it was the Cloud Native vision. Services, microservices, APIs, things, we've talked about that. What's the progress? Give us the update and the status, and where are you? >> Yeah, obviously just massive growth in services and our partners. When you look at, we had Twitter up with us today, we've had continual growth in the technology partners that we bring to bear, and then also definitely Cloud Native. But then also helping clients that have existing workloads and how to migrate. So, massive partnerships with VMware. We also just announced partnership with Intel HyTrust on secure cloud optimization. When we first met, we talked so much about you're going to win this with an ecosystem. And the coolest thing is seeing that pay off every day with the number of partners that we've been so blessed to have coming to us and working together with us to build out this ecosystem for our clients. >> And what's the differentiator, because what's happening now is you're starting to see the clear line of sight from the big cloud players. You have you guys, you have Oracle, you see Microsoft, you see SAP, you all got the version of the cloud. And it's not a winner-take-all market, it's a multi-cloud world, as we're seeing. Certainly open-source is driving that. How do you guys differentiate, and is it the same message? What's new in terms of IBM's differentiators? What's the key message? >> That we're absolutely staying core to the reason we went into this business. We are looking at, what are the challenges that our clients are looking to solve? How do we build out the right solutions for them? And look at the technologies they're using today, and not have them just forklift everything to a public cloud, but walk with them every step of the way. It's absolutely been about uncovering the partnerships between on-premises and the Cloud, how you make that seamless, how you make those migrations in minutes versus hours and days. The growth that we've seen is around helping clients get to that journey faster, or, if they're not meant to go fully public Cloud, that's okay, too. We've been absolutely expanding our data centers, making sure we have everything lined up from a compliance standpoint. Because country to country, we have so many regulations that we need to make sure we're protecting our clients in. >> I want to ask you, and David Kenny referenced it a little bit today, talked about we built this for the enterprise, it didn't stem out of a retailer or a search. I don't know who he was talking about, but Martin Schroeter, on the IBM earnings call, said something that I want to get your comment on, and if we can unpack a little bit. He said, "Importantly, we've designed Watson "on the IBM Cloud to allow our clients "to retain control of their data and their insights, "rather than using client data "to educate a central knowledge graph." That's a nuance, but it's a really big statement. And what's behind that, if I can infer, is use the data to inform the model, but we're not going to take your data IP and give it to your competitors. Can you explain that a little bit, and what the philosophy is there? >> Yeah, absolutely. That is a core tenet of what we do. It's all about clients will bring their data to us to learn, to go to school, but then it goes home. We don't keep client data, that's critical to us that everything is completely within the client's infrastructure, within their data privacy and protection. We are simply applying our cognitive, artificial intelligence machine learning to help them advance faster. It's not about taking their insights in learning and fueling them into our Cloud to then resell to other teams. That, absolutely, it's great that you bring up that very nuanced point, but that's really important. In today's day and age, your data is your lifeblood as a company, and you have to trust where it's going, you have to know where it's going, and you have to trust that those machine learnings aren't going to be helping other clients that are possibly on the same cloud. >> Is it your contention that others don't make that promise, or you don't know, or you're just making that promise? >> We're making that promise. It's our contention that the data is the client's data. You look at the partnerships that we've made throughout Cloud, throughout Watson, it's really companies that have come to us to solve problems. You look at the healthcare industry, you look at all these partnerships that we have. Everything that we've built out on the IBM Cloud and within Watson has been to help advance client cases. You rarely see us launching something that's completely unique to IBM that hasn't been built together with a client, with a partner. Versus, there are other companies out there in this market where they're constantly providing infrastructure to run their own business, maybe their own retail store, and their own search engine. And they will continue to do that, and they absolutely should, but at the end of the day, when you're a client, what do you want to do? Are you trying to build somebody else's business, or do you want someone who's going to be all in on your business and helping you advance everything that you need to do. >> Well, it seems like the market has glombed on to public data plus automation. But you're trying to solve a harder problem. Explain that. >> When you look at the clients that we're working with and the data that we're working with, it's not just information that's out there to work in a sandbox environment and it's available to anyone, baseball statistics or something that's just out there in the wild. Every client engagement we're in, this is their critical data. You look at financial services. We just launched the great financial services solutions for developers. You look at those areas, and, oh my word, you cannot share that data, yet those clients, you look at the work we're doing with H&R Block, you have to look at, that is absolutely proprietary data, but how do we send in cognitive to help us learn, to help teach it, help teach them alongside, for the H&R Block example, the tax advisor. So we're helping them make their business better. It's not as if we ingested all of the tax data to then run a tax solution service from IBM. It's a nuance, but it's an important nuance of how we run this company. >> So seven years ago, I met this guy, and he said, the 2010 John, you said, "Data is the new development kit." And I was like, "What are you talking about?" But now we see this persona of data scientist and data engineer and the developer persona evolving. How are you redefining the developer? >> Yeah, it's a great point, because we see cognitive artificial intelligence machine learning development in developers really emerging strong as a career path. We see data scientists, especially where as you're building out any application, any solution, data is at the core. So, you had it 10 years ago, right? (laughs) >> (mumbles) But I did pitch it to Dave when I first met him in 2010. No, but this is the premise, right? Back then, web infrastructure, web scale guys were doing their own stuff. The data needs to be programmable. We've been riffing on this concept, and I want to get your thoughts on this. What DevOps was for infrastructurous code, we see a vision in our research at Wikibon that data as code, meaning developers just want to program and get data. They don't want to deal with all the under-the-hood production, complicated stuff like datasets, the databases. Maybe the wrangling could be done by another process. There's all this production heavy lifting that goes on. And then there's the creativity and coolness of building apps. So now you have those worlds starting to stabilize a bit. Your thoughts and commentary on that vision? >> Yeah, that's absolutely where it has been heading and is continuing to head. And as you look at all the platforms that developers get to work in right now. So you have augmented reality, virtual reality are not just being segmented off into a gaming environment, but it's absolutely mainstream. So you see where developers absolutely are looking for. What is a low-code environment for? I'd say more the productivity. How do I make this app more productive? But when it comes to innovation, that's where you see, that's where the data scientist is emerging more and more every day in a role. You see those cognitive developers emerging more and more because that's where you want to spend all your time. My developers have spent the weekend, came back on Monday, and I said, "What'd you do?" "I wrote this whole Getting Started guide "for this Watson cognitive service." "That's not your job." "Yeah, but it's fun." >> Yeah, they're geeking out on the weekends, having some beer and doing some hackathons. >> It's so exciting to see. That's where, that innovation side, that's where we're seeing, absolutely, the growth. One of the partnerships that we announced earlier today is around our investment in just that training and learning. With Galvanize. >> What was the number? How much? >> 10 million dollars. >> Evangelizing and getting, soften the ground up, getting people trained on cognitive AI. >> Yeah, so it's really about making an impactful investment in the work that we started, actually a couple years ago when we were talking, we started building out these Garages. The concept was, we have startup companies, we starting partnering with Galvanize, who has an incredible footprint across the globe. And when you look at what they were building, we started embedding our developers in those offices, calling them Garages because that is your workshop. That's where you bring in companies that want to start building applications quickly. And you saw a number of the clients we had on stage today consistently, started in the Garage, started in the Garage, started in the Garage. >> Yeah, we had one just on theCUBE earlier. >> Yeah, exactly, so they start with us in the Garage. And then we wanted to make sure we're continuing to fuel that environment because it's been so successful for our clients. We're pouring into Galvanize and companies in training, and making sure these areas that are really in their pioneering stages, like artificial intelligence, cognitive, machine learning. >> On that point, you bring up startups and Garage, two-prong question. We're putting together, I'm putting together an enterprise-readiness matrix. So you have startups who are building on the Cloud, who want to sell to the enterprise. And then you have enterprises themselves who are adopting Hybrid Cloud or a combination of public, private. What does enterprise-readiness mean to you guys? 'Cause you guys have a lot of experience. Google next, they said, "We're enterprising." They're really not. They're not ready yet, but they're going that way. You guys are there. What is enterprise-readiness? >> Yeah, and I see a lot of companies have ambitions to do that, which is what we need them to do. 'Cause as you mentioned, it's a multi-cloud environment for clients, and so we need clouds to be enterprise-ready. And that really comes down to security, compliance, scalability, multiple zones. It comes down to making sure you don't have just five developers that can work on something, but how do you scale that to 500? How do you scale that to 500,000? You've got these companies that you have to be able to ensure that developers can immediately interact with each other. You need to make sure that you've got the right compliance by that country, the data leaving that country. And it's why you see such a focus from us on industry. Because enterprise-grade is one thing. Understanding an industry top to bottom, when it comes to cloud compliance is a whole other level. And that's where we're at. >> It's really hard. Most people oversimplify Cloud, but it's extremely difficult. >> It is, 'cause it's not just announcing a healthcare practice for Cloud doesn't mean you just put everybody in lab coats and send out new digital material. It is you have to make sure you've got partnerships with the right companies, you understand all the compliance regulations, and you've built everything and designed it for them. And then you've brought in all the partner services that they need, and you've built that in a private and a public cloud environment. And that's what we've done in healthcare, that's what we're doing in finance, you see all the work we're doing with Blockchain. We are just going industry by industry and making sure that when a company comes to us in an industry like retail, or you saw American Airlines on stage with us today. We're so proud to be working with them. And looking at everything that they need to cover, from regulation, uptime, maintenance, and ensuring that we know and understand that industry and can help, guide, and work alongside of them. >> In healthcare and financial services, the number of permutations are mind-boggling. So, what are you doing? You're pointing Watson to help solve those problems, and you're codifying that and automating that and running that on the Cloud? >> That's a part of it. A part of it is absolutely learning. The whole data comes to school with us to learn, and then it goes back home. That's absolutely part of it, is the cognitive learning. The other part of it is ensuring you understand the infrastructure. What are the on-premises, servers that that industry has? How many transactions per second, per nanosecond, are happening? What's the uptime around that? How do you make sure that what points you're exposing? What's the security baked into all of that? So, it's absolutely, cognitive is a massive part of it, but it is walking all the way through every part of their IT environment. >> Well, Meg, thanks for spending the time and coming on theCUBE and giving us the update. We'll certainly see you out in the field as we cover more and more developer events. We're going to be doing most, if not all, of the Linux foundation stuff. Working a lot with Intel and a bunch of other folks that you're partnering with. So, we'll see you guys out at all the events. DockerCon, you name it, they're all there. >> We'll be there, too, right with them. >> Microservices, we didn't even get to Kubernetes, we could have another session on containers and microservices. Meg Swanson, here inside theCUBE, Vice President of Bluemix Marketing. It's theCUBE, with more coverage after this short break. Stay with us, more coverage from Las Vegas. (techno music)

>> Narrator: TheCUBE's live coverage is made possible by funding from Dell Technologies, creating technologies that drive human progress. (upbeat music intro) (logo background tingles) >> Hi everybody, welcome back to day three of MWC23, my name is Dave Vellante and we're here live at the Theater of Barcelona, Lisa Martin, David Nicholson, John Furrier's in our studio in Palo Alto. Lot of buzz at the show, the Mobile World Daily Today, front page, Netflix chief hits back in fair share row, Greg Peters, the co-CEO of Netflix, talking about how, "Hey, you guys want to tax us, the telcos want to tax us, well, maybe you should help us pay for some of the content. Your margins are higher, you have a monopoly, you know, we're delivering all this value, you're bundling Netflix in, from a lot of ISPs so hold on, you know, pump the brakes on that tax," so that's the big news. Lockheed Martin, FOSS issues, AI guidelines, says, "AI's not going to take over your job anytime soon." Although I would say, your job's going to be AI-powered for the next five years. We're going to talk about data, we've been talking about the disaggregation of the telco stack, part of that stack is a data layer. John Kreisa is here, the CMO of Couchbase, John, you know, we've talked about all week, the disaggregation of the telco stacks, they got, you know, Silicon and operating systems that are, you know, real time OS, highly reliable, you know, compute infrastructure all the way up through a telemetry stack, et cetera. And that's a proprietary block that's really exploding, it's like the big bang, like we saw in the enterprise 20 years ago and we haven't had much discussion about that data layer, sort of that horizontal data layer, that's the market you play in. You know, Couchbase obviously has a lot of telco customers- >> John: That's right. >> We've seen, you know, Snowflake and others launch telco businesses. What are you seeing when you talk to customers at the show? What are they doing with that data layer? >> Yeah, so they're building applications to drive and power unique experiences for their users, but of course, it all starts with where the data is. So they're building mobile applications where they're stretching it out to the edge and you have to move the data to the edge, you have to have that capability to deliver that highly interactive experience to their customers or for their own internal use cases out to that edge, so seeing a lot of that with Couchbase and with our customers in telco. >> So what do the telcos want to do with data? I mean, they've got the telemetry data- >> John: Yeah. >> Now they frequently complain about the over-the-top providers that have used that data, again like Netflix, to identify customer demand for content and they're mopping that up in a big way, you know, certainly Amazon and shopping Google and ads, you know, they're all using that network. But what do the telcos do today and what do they want to do in the future? They're all talking about monetization, how do they monetize that data? >> Yeah, well, by taking that data, there's insight to be had, right? So by usage patterns and what's happening, just as you said, so they can deliver a better experience. It's all about getting that edge, if you will, on their competition and so taking that data, using it in a smart way, gives them that edge to deliver a better service and then grow their business. >> We're seeing a lot of action at the edge and, you know, the edge can be a Home Depot or a Lowe's store, but it also could be the far edge, could be a, you know, an oil drilling, an oil rig, it could be a racetrack, you know, certainly hospitals and certain, you know, situations. So let's think about that edge, where there's maybe not a lot of connectivity, there might be private networks going in, in the future- >> John: That's right. >> Private 5G networks. What's the data flow look like there? Do you guys have any customers doing those types of use cases? >> Yeah, absolutely. >> And what are they doing with the data? >> Yeah, absolutely, we've got customers all across, so telco and transportation, all kinds of service delivery and healthcare, for example, we've got customers who are delivering healthcare out at the edge where they have a remote location, they're able to deliver healthcare, but as you said, there's not always connectivity, so they need to have the applications, need to continue to run and then sync back once they have that connectivity. So it's really having the ability to deliver a service, reliably and then know that that will be synced back to some central server when they have connectivity- >> So the processing might occur where the data- >> Compute at the edge. >> How do you sync back? What is that technology? >> Yeah, so there's, so within, so Couchbase and Couchbase's case, we have an autonomous sync capability that brings it back to the cloud once they get back to whether it's a private network that they want to run over, or if they're doing it over a public, you know, wifi network, once it determines that there's connectivity and, it can be peer-to-peer sync, so different edge apps communicating with each other and then ultimately communicating back to a central server. >> I mean, the other theme here, of course, I call it the software-defined telco, right? But you got to have, you got to run on something, got to have hardware. So you see companies like AWS putting Outposts, out to the edge, Outposts, you know, doesn't really run a lot of database to mind, I mean, it runs RDS, you know, maybe they're going to eventually work with companies like... I mean, you're a partner of AWS- >> John: We are. >> Right? So do you see that kind of cloud infrastructure that's moving to the edge? Do you see that as an opportunity for companies like Couchbase? >> Yeah, we do. We see customers wanting to push more and more of that compute out to the edge and so partnering with AWS gives us that opportunity and we are certified on Outpost and- >> Oh, you are? >> We are, yeah. >> Okay. >> Absolutely. >> When did that, go down? >> That was last year, but probably early last year- >> So I can run Couchbase at the edge, on Outpost? >> Yeah, that's right. >> I mean, you know, Outpost adoption has been slow, we've reported on that, but are you seeing any traction there? Are you seeing any nibbles? >> Starting to see some interest, yeah, absolutely. And again, it has to be for the right use case, but again, for service delivery, things like healthcare and in transportation, you know, they're starting to see where they want to have that compute, be very close to where the actions happen. >> And you can run on, in the data center, right? >> That's right. >> You can run in the cloud, you know, you see HPE with GreenLake, you see Dell with Apex, that's essentially their Outposts. >> Yeah. >> They're saying, "Hey, we're going to take our whole infrastructure and make it as a service." >> Yeah, yeah. >> Right? And so you can participate in those environments- >> We do. >> And then so you've got now, you know, we call it supercloud, you've got the on-prem, you've got the, you can run in the public cloud, you can run at the edge and you want that consistent experience- >> That's right. >> You know, from a data layer- >> That's right. >> So is that really the strategy for a data company is taking or should be taking, that horizontal layer across all those use cases? >> You do need to think holistically about it, because you need to be able to deliver as a, you know, as a provider, wherever the customer wants to be able to consume that application. So you do have to think about any of the public clouds or private networks and all the way to the edge. >> What's different John, about the telco business versus the traditional enterprise? >> Well, I mean, there's scale, I mean, one thing they're dealing with, particularly for end user-facing apps, you're dealing at a very very high scale and the expectation that you're going to deliver a very interactive experience. So I'd say one thing in particular that we are focusing on, is making sure we deliver that highly interactive experience but it's the scale of the number of users and customers that they have, and the expectation that your application's always going to work. >> Speaking of applications, I mean, it seems like that's where the innovation is going to come from. We saw yesterday, GSMA announced, I think eight APIs telco APIs, you know, we were talking on theCUBE, one of the analysts was like, "Eight, that's nothing," you know, "What do these guys know about developers?" But you know, as Daniel Royston said, "Eight's better than zero." >> Right? >> So okay, so we're starting there, but the point being, it's all about the apps, that's where the innovation's going to come from- >> That's right. >> So what are you seeing there, in terms of building on top of the data app? >> Right, well you have to provide, I mean, have to provide the APIs and the access because it is really, the rubber meets the road, with the developers and giving them the ability to create those really rich applications where they want and create the experiences and innovate and change the way that they're giving those experiences. >> Yeah, so what's your relationship with developers at Couchbase? >> John: Yeah. >> I mean, talk about that a little bit- >> Yeah, yeah, so we have a great relationship with developers, something we've been investing more and more in, in terms of things like developer relations teams and community, Couchbase started in open source, continue to be based on open source projects and of course, those are very developer centric. So we provide all the consistent APIs for developers to create those applications, whether it's something on Couchbase Lite, which is our kind of edge-based database, or how they can sync that data back and we actually automate a lot of that syncing which is a very difficult developer task which lends them to one of the developer- >> What I'm trying to figure out is, what's the telco developer look like? Is that a developer that comes from the enterprise and somebody comes from the blockchain world, or AI or, you know, there really doesn't seem to be a lot of developer talk here, but there's a huge opportunity. >> Yeah, yeah. >> And, you know, I feel like, the telcos kind of remind me of, you know, a traditional legacy company trying to get into the developer world, you know, even Oracle, okay, they bought Sun, they got Java, so I guess they have developers, but you know, IBM for years tried with Bluemix, they had to end up buying Red Hat, really, and that gave them the developer community. >> Yep. >> EMC used to have a thing called EMC Code, which was a, you know, good effort, but eh. And then, you know, VMware always trying to do that, but, so as you move up the stack obviously, you have greater developer affinity. Where do you think the telco developer's going to come from? How's that going to evolve? >> Yeah, it's interesting, and I think they're... To kind of get to your first question, I think they're fairly traditional enterprise developers and when we break that down, we look at it in terms of what the developer persona is, are they a front-end developer? Like they're writing that front-end app, they don't care so much about the infrastructure behind or are they a full stack developer and they're really involved in the entire application development lifecycle? Or are they living at the backend and they're really wanting to just focus in on that data layer? So we lend towards all of those different personas and we think about them in terms of the APIs that we create, so that's really what the developers are for telcos is, there's a combination of those front-end and full stack developers and so for them to continue to innovate they need to appeal to those developers and that's technology, like Couchbase, is what helps them do that. >> Yeah and you think about the Apples, you know, the app store model or Apple sort of says, "Okay, here's a developer kit, go create." >> John: Yeah. >> "And then if it's successful, you're going to be successful and we're going to take a vig," okay, good model. >> John: Yeah. >> I think I'm hearing, and maybe I misunderstood this, but I think it was the CEO or chairman of Ericsson on the day one keynotes, was saying, "We are going to monetize the, essentially the telemetry data, you know, through APIs, we're going to charge for that," you know, maybe that's not the best approach, I don't know, I think there's got to be some innovation on top. >> John: Yeah. >> Now maybe some of these greenfield telcos are going to do like, you take like a dish networks, what they're doing, they're really trying to drive development layers. So I think it's like this wild west open, you know, community that's got to be formed and right now it's very unclear to me, do you have any insights there? >> I think it is more, like you said, Wild West, I think there's no emerging standard per se for across those different company types and sort of different pieces of the industry. So consequently, it does need to form some more standards in order to really help it grow and I think you're right, you have to have the right APIs and the right access in order to properly monetize, you have to attract those developers or you're not going to be able to monetize properly. >> Do you think that if, in thinking about your business and you know, you've always sold to telcos, but now it's like there's this transformation going on in telcos, will that become an increasingly larger piece of your business or maybe even a more important piece of your business? Or it's kind of be steady state because it's such a slow moving industry? >> No, it is a big and increasing piece of our business, I think telcos like other enterprises, want to continue to innovate and so they look to, you know, technologies like, Couchbase document database that allows them to have more flexibility and deliver the speed that they need to deliver those kinds of applications. So we see a lot of migration off of traditional legacy infrastructure in order to build that new age interface and new age experience that they want to deliver. >> A lot of buzz in Silicon Valley about open AI and Chat GPT- >> Yeah. >> You know, what's your take on all that? >> Yeah, we're looking at it, I think it's exciting technology, I think there's a lot of applications that are kind of, a little, sort of innovate traditional interfaces, so for example, you can train Chat GPT to create code, sample code for Couchbase, right? You can go and get it to give you that sample app which gets you a headstart or you can actually get it to do a better job of, you know, sorting through your documentation, like Chat GPT can do a better job of helping you get access. So it improves the experience overall for developers, so we're excited about, you know, what the prospect of that is. >> So you're playing around with it, like everybody is- >> Yeah. >> And potentially- >> Looking at use cases- >> Ways tO integrate, yeah. >> Hundred percent. >> So are we. John, thanks for coming on theCUBE. Always great to see you, my friend. >> Great, thanks very much. >> All right, you're welcome. All right, keep it right there, theCUBE will be back live from Barcelona at the theater. SiliconANGLE's continuous coverage of MWC23. Go to siliconangle.com for all the news, theCUBE.net is where all the videos are, keep it right there. (cheerful upbeat music outro)

from the silicon angle media office in Boston Massachusetts it's the queue now here's your host David on tape hello everyone and welcome to this week's episode of the cube insights powered by ETR this week cisco CEO Chuck Robbins has invited a number of analysts and press to San Francisco for an event to talk about the future of Cisco and no doubt the role of the company in the next decade and I will be there so in this breaking analysis I thought that I'd focus on Cisco and its prospects in this era of next-generation cloud of course last week we attended AWS reinvent and you can catch all our coverage on the cube net but the key takeaways are that we're entering a new era of cloud that is heavily emphasized emphasizing getting more value out of data with machine intelligence and things like sage maker now AWS was heavily focused on this notion of transformation putting forth the strong case that enterprises have to transform not just incrementally it was a clear message that CEOs really have to lead and AWS are striking directly at the heart of what a device had Andy Jesse calls the old guard namely IBM Dell Oracle HPE and many others including of course Cisco saying that you can't just transform incremental e CEOs you have to transform whole house so today I want to look at six areas and I'm showing them here on this on this slide but the first thing I want to do is just review the overall spending climate and then what I want to do is discuss Cisco in the context of industry leadership playing on Jesse's themes and then you know we'll look at the spending momentum in the latest ETR survey for those leaders next thing I want to do is I'm going to talk about the cloud and it's impacting everyone and I want to take a look specifically at how it's impacting Cisco and how Cisco is faring in the face of competent from the public cloud which we've talked about a lot across a number of vendors we're then going to look at Cisco's business overall from a spending perspective and then I'll wrap with some some comments on what I see is opportunities for Cisco like edge I want to talk specifically about multi cloud and of course cloud in general so let's start drilling into the spending climate overall now remember the EGR data tells us that spending on balance is reverting to pre 2018 levels but it's not falling off the cliff buyers member are narrowing their experimentation on new technologies and they're placing more focused bets as part of the digital transformations we're also seeing more replacements of redundant systems that buyers were running in parallel as a hedge on their bets and that is affecting overall spending and it's somewhat compressing spending so with that as a backdrop let's look at some of the the latest data from ETR and focus on the leaders from the latest survey so what I'm showing here is data from ETRS October 2019 Syria one thousand three hundred and thirty six IT buyers who responded and I've selected market share as the metric across all sectors as you can see here in number eight now remember market share is a measure of pervasiveness and it's calculated by dividing the total vendor Mensch mentions divided by the sector total so now the remember the ETR methodology allows for multiple responses by a vendor so you can see in the y-axis there can be more than a hundred percent okay because of those multiple responders respondents now note that Microsoft Cisco Oracle AWS and IBM have the highest shared ends or mentions and you can see the pervasiveness of Microsoft and its prominence which is not surprising but Cisco Oracle and IBM generally have held from again pervasiveness standpoint pretty well as you can see the steady rise as well in AWS is market share so cisco really the bottom line there is cisco is a clear leader in this industry and it's maintaining its leadership position and you can of course on that chart you can see the others who really didn't make the top five but they're prominently you know mentioned with the shared ends that's VMware Salesforce Adobe's up there and of course Dell EMC is the you know 90 to 100 billion dollar company now let's take a look specifically at spending momentum you know what we're showing here in this chart is the exact same cut except we've changed the metric from market share to net score now remember net score is a measure of spending momentum that's calculated by essentially subtracting the percent of customers that are spending less in a given survey from those that are spending more and that's the net score and you can see the picture changes pretty dramatically AWS jumps up to the top spot with a 62% you know net score over taking Microsoft but then look at Cisco it's very strong with the 36 about 34 percent net score you know not nearly as high as AWS and Microsoft but very respectable and holding you know fairly strongly and notably ahead of IBM and Oracle which are both in the red you see that red area which signals caution now what I want to do is address the question of how is the cloud affecting Cisco's business you've seen me do this with a number of other vendors let's drill into what it means for Cisco so if you've been following these breaking analysis segments you know we've been reporting that the the pace at which the cloud is eating away at a traditional on-prem data data data center business continues now here's a quote from an IT Pro that summarizes the situation for networking in general and then we'll come back and specifically talk about Cisco he says or she says as we migrate the data centers to AWS networking costs will decline over three years this is a director of tech strategy for a large telco so the question I have is does the et et our data back this up let's take a look so what this chart shows is a cut of cloud spenders there are 818 in the latest ETR survey and the net score within those accounts specifically for Cisco so it's spenders on AWS asier and Google cloud and you can see the steady decline post 2010 for Cisco so just as I've reported for Dell EMC HPE Oracle and others you can see that the clouds steady march continues to challenge the on-prem suppliers so each of these companies has really got to figure out how to respond now in the case of Cisco it's moving from owning the network market to really participating in the public cloud and interconnecting clouds so we've seen Cisco make many acquisitions that can allow them to work with AWS for example app D which is application performance management VIP teller which is SD win clicker which is orchestration duo in cloud security and then you've seen bets on kubernetes which are going to help them span hybrid you know as well you've seen them make partnerships with the leading cloud some suppliers and I'll make some comments later on when I talk about multi cloud so let's look at how these diversification moves have impacted Cisco overall because they've not sat still you can see that in this chart what it shows is Cisco's market share across all of its businesses including analytics security telephony and of course core networking but also servers storage video conferencing and virtualization so the point is that by diversifying its business the company has expanded its Tam its total available market and as I showed you before has maintained a leadership position in the data center is measured by market share now here's a deeper sector analysis of Cisco's business by various sectors and what we're showing here is Cisco's business across a number of sectors comparing the October 18 survey with July 19 and the October 19 surveys so this is net score view and you can see across all customers that Cisco's second-half net score for these sectors which are in the green are showing strong momentum relative to a year ago so here you go Meraki which includes Cisco's wireless business its telephony business parts of its security business core Cisco Networking they're all showing strength now parts of its security portfolio like Open DNS and Sourcefire which is intrusion detection which Cisco bought about six years ago and some at Cisco's voice and video assets are showing slower momentum but Cisco's overall spending momentum is holding on pretty well all right let me talk a moment about some of Cisco's opportunities they're trying to transform into more of a software company with assets like duo app dynamics and they want to focus less on selling boxes and ports and more on licenses and subscriptions so it's also got its got to use software also to unify its many platforms so I want to talk about for a moment about multi cloud hot new area right everybody's talking about it cisco recently made some organizational moves to take its separate cloud group and better align it with Cisco's core operations in a new group that they call cloud strategy and compute now cisco competes in multi cloud with vmware IBM curves Red Hat Microsoft and Google even though they partner with Microsoft and Google so here's some ETR data that looks at key Cloud sectors including the three did I pulled out cloud computing container orchestration and container platforms so these are buyers spending on these three areas so there's 937 in the latest survey you can't see that and because I'm hiding it with the pulldown but trust me but you can see the big players with spending momentum and while cisco doesn't you know show the momentum of an azure or a red hat or even a Google it's in that multi cloud game and my my premise is that cisco is coming at this opportunity from its strengths and networking and it's got more than a fighting chance why because cisco is in my view in the position to connect multiple clouds to on-prem and convince buyers that cisco is the best partner to make networks higher performance more secure and more cost-effective than the competition now let me wrap with some critical comments and then i'll end up on an opportunity with with some comments on edge so the first thing I want to say is well Cisco is dominant in a space it's missed a number of opportunities VMware has beaten Cisco to the punch in the initial move of course to virtual machines and then the nice Sara acquisition NSX as I've shown before is clearly has strong momentum in the market and is really eating into Cisco's core business Cisco's ACI does okay but it's definitely a sore spot Francisco and this represents a crack in the companies Armour containers the move to cloud native architectures is mostly a move to public cloud so it's a replacement or a displacement more so than a head-to-head competition that hurts Cisco here is John Fourier says you have you have cloud native and if you take the T out of cloud native you have cloud naive so cisco along with others must not beat cloud naive rather it has to remain relevant in the cloud as we discussed earlier in the multi cloud discussion now Cisco they were the king of converged infrastructure if you remember with the first wave of Vblock along with the Flex pod from NetApp and it you know changed the server game and drove UCS adoption and then guys like IBM and pure jumped in Cisco really became the standard now well hyper-converged infrastructure didn't really displace Cisco Networking you know Dell VMware with it with VX rail and Nutanix as well as HPE who's in the third position are posing a challenge that's so cisco cisco they everything they really don't play in the lucrative high margin external storage business but there's some challenges there that from a tam standpoint but I don't worry so much about that because despite all the rumors over the years specifically in storage that Cisco is going to buy a storage company and I think there are better opportunities in soft where in the end the edge and as I've said before storage right now is kind of on the back burner it's not it's a very difficult market for a company like Cisco to to enter so I want to talk more about the edge because they think it's a way better opportunity for Cisco Cisco among all the legacy tech vendors and my view could really compete for the edge and the reason I say this is because Cisco is the only legacy player in my opinion that is a solid solid developer strategy and it's because of dev net dev net is the initiative to make all Cisco products programmable we talk a lot about the API economy and infrastructure of code as code and what Cisco is doing is they're taking Cisco certified engineers like CC IES and all these people that they've trained over the years huge number of IT pros and they're retraining them and teaching them how to code on Cisco products to create new use cases new workloads and new applications specifically at the edge and Cisco products are designed to be programmable so they have a developer play and I've always said the edge is going to be won by developers this is why frankly I was so excited last week at reinvent about AWS outpost and the move they're making at the edge because they're essentially bringing their stack to the edge and making it programmable IBM failed to do this with bluemix they couldn't attract developers they they had to go by Red Hat for thirty four billion dollars you know Dell MC they have VMware and they have an opportunity with pivotal but that's got to come together they currently have very little developer synergy in my view specifically with Dell Hardware at least that I can see and there seems to be little or no effort to retrain storage admins and VM admins in the same way that cisco is is doing this with CC IES HPE essentially I see them like Dallin away throwing server boxes over the fence to the edge you know versus really attracting developers to identify sort of new workload new use cases so I like Cisco strategy in this regard and it's something that we're gonna continue to watch very closely and probe this week with Chuck Robbins okay this is date Volante sounding out from this episode of the cube insights powered by ETR thanks for watching everybody and we'll see you next time

>> Live from San Francisco, it's theCUBE, covering IBM Think 2019. Brought to you by IBM. >> Hey, welcome back everyone this is theCUBE's live coverage in San Francisco, California Moscone Center for IBM Think 2019. It's the wrap up of our four days of wall-to-wall live coverage. All the publishing on Siliconangle.com. I've got the journalism team cranking it out. Dave Vellante just put up a post on Forbes, check that out. And Stu's got the team cranking on the videos. Stu and Dave, four days, team's done a great job. Tons of video, tons of content, tons of data coming through theCUBE. We're sharing that live, we're sharing it on Twitter, we're sharing it everywhere on LinkedIn. What's going on with the data? Let's synthesize, let's extract the signal from the noise, let's assess IBM's prospects in this chapter two, as Ginni says. A lot of A.I., lot of data, I mean IBM is an old company that has so much business, so many moving parts and they've been working years to kind of pivot themselves into a position to run the table on the Modern Era of computing and software. So, what do you think, Dave? >> Well, I mean, this has been a long time coming and we're here, you pointed out John, to me privately that IBM's taking a playbook similar to Microsoft in that they're cloudifying everything. But there's differences, right? There's a bigger emphasis on A.I. than when, not that Microsoft's not in A.I. they of course are, but when Microsoft cloudified itself there wasn't as much of an emphasis on A.I. Ginni Rometty said, "Well, the first chapter was only about 20%, the remaining 80% is going to be chapter two. We're going hard after that." I wrote in that post today that, in 2013, IBM had a wake-up call. They lost that deal to Amazon at the C.I.A. They had to go out and buy Softlayer because their product was deficient, their cloud product was deficient. >> And by the way it looks like they're going to lose the JEDI Contract by the D.O.D., another agency that's a 10 billion dollar contract. >> So we can talk about they're going to lose that one too. >> We can talk about is Amazon's lead extending in Cloud? And so, IBM cannot take on Amazon head-to-head in infrastructures of service period, the end. It doesn't have the volume, >> And they know that, I think. >> It doesn't have the margins, and they know that. They got to rely on it's, as a service business it's SaaS, it's data, it's data platforms, obviously A.I. and now Red Hat. The fact that IBM had to spend, or spent, 34 billion dollars on Red Hat, to me underscores the fact that it's Cloud and it's 10-year attempt to commercialize Watson, isn't enough. It needs more to be a leader in hybrid. >> And let's talk about the Red Hat acquisition because Ray Wang on theCUBE yesterday and said, "Oh, P.E., private equity prices are driving up 34 billion dollars, pretty much market in today's world." He thinks they overpaid and could have used those services. You debated that, you've heard me say that, hey I could have used that 34 billion dollars of cobbled-together stuff, but you made a comment around speed. They don't have the gestation period there to do it. So, if you take market price for Red Hat, Stu, with open shifts accelerated success since Kubernetes really accelerated its adoption. You got IBM now with a mechanism to address the legacy on premise into Cloud Modern, and you got with this Cloud Private, Stu, this really is a secret weapon for IBM and to me, what I'm pulling out of all the data is that Rob Thomas at Interpol, the CDO have a great data A.I. strategy as a group. They have a team that's one team and this Cloud Private is a secret weapon for them. I think it's going to be a very key product and not a lot of people are talking about it. >> Well John, it shouldn't be a secret weapon for IBM because of course IBM has a strong legacy in the data center. We've talked about Z this week, you talk about power, talk about all the various pieces. Red Hat absolutely can help that a lot. What we noticed is there wasn't a lot of talk about Red Hat here just because it's going through the final pieces. We expect later this year to come out, but it's about the developers. That is where Red Hat is going to be successful, where they are successful and where they should be able to help IBM leverage that going forward. The concern we have is culture. IBM says that Red Hat will be separate. There will be no layoffs, they'll keep that alone but when I wrote about the acquisition I said, we should be able to see, for this to really be a successful acquisition, we should be able to see the Red Hat culture actually influence what's happening at IBM. And to be honest when I talk to people around this show, they're like, "That's never going to happen, Stu." >> I just want to make a point about the price. Ray was saying how they overpaid and made the private equity thing. IBM's paying a hundred and ninety dollars a share. If you dial back to June of '18, Stu you and I talked about this in our offices, Red Hat was trading at one seventy five a share. So they're paying an 8 1/2% premium over that price. Yes, when they made the deal in the fall you're talking about a 60% premium. So, the premium is really single digits over what it was just a few months earlier. >> And Cisco, Google, >> It was competitive, right. >> Microsoft all could have gone after that. I think it's a great buy for IBM. >> That's what they had to pay to get it. >> And definitely it helped there. So from my stand-point, looking at the show this week, first of all I was impressed to see really that data strategy and how that's pervasive through the company and A.I. is something that everyone's talking about how it fits in. John you commented a bunch of times Ginni mentioned Kubernetes two times in her Keynote. So, they're in these communities, they're working on all these environments. The concern I have is if this is chapter two and if A.I. is one of the battlefields, Amazon's all deep into A.I. I think heavily about Google when I talk about that. When I talk to Microsoft people they're like, "Satya Nadella is Mr. A.I.", that's all they care about. >> I don't think Microsoft has a lot of meat on the A.I. bone either. >> Really? >> No look it, here's the bottom line. A.I. is a moonshot it is an aspirational marketplace. It's about machine learning and using data. A.I.'s been around for a while and whoever can take advantage of that is going to be about this low-hanging use cases of deterministic processes that you throw machine learning at no problem. Doing cognition and reasoning a whole 'nother ballgame. You got state, this is where the Cloud Native piece is important as a lynch-pin to future growth because that wave is coming. And I think it's not going to impact IBM so much now, as it is in the future, because you got developers with Red Hat and you got the enablement for Cloud growth, Modern Cloud, stuff in any Cloud. But IBM has a zillion customers Dave, they have a business, they have mission critical workloads. And you pointed out in the Forbes post that we posted and on the Silicon Angle, that I.T. Economics are changing. And that the cloud services market is growing, so IBM has pre existing, big mission critical companies that they're serving. So, you can't just throw Kubernetes at that and say lift and shift. Z's there, you got other things happening. So, to me, that is IBM's focus, they nail their bread and butter, they bring multi-cloud from the table. Throw hybrid at it with Private Cloud and they're stable. Everything else I think is window dressing in my mind, because I think you're going to see that adoption more downstream. >> Well, the other thing you gave me for the piece actually, you helped me understand that IBM with Red Hat can use Cloud Native techniques and apply them to its customer base and to really create a new breed of business developers, right? Probably not the hoodie crowd necessarily, but business developers that are driving value apps based on mission critical apps and using Cloud Native techniques. Your thoughts on that? >> The difference between Oracle and IBM is the following, Oracle has no traction in developers in Cloud Native, IBM now with Red Hat can take the Cloud Native growth and use containers and Kubernetes and these new technologies to essentially containerize legacy workloads and make them compatible with modern technologies. Which means, if you're in business or in I.T. or running a lot of big shops, you don't have to kill the old to bring in the new. That's one factor. The other factor is the model's flipped. Applications are dictating architecture. It used to be infrastructure dictates what applications can do, it's completely reversed. We've heard this time and time again from the leading platforms, the ones that are looking at the applications with data as a fabric in there will dictate resource, Whether it's one Cloud or multiple Clouds or whatever architecture that's the fundamental shift. The people who get that will win and the people who don't won't. >> And the other thing I've pointed out in that article is that Ginny kept saying it's not backend loaded, The Red Hat deal, it's not back end loaded. IBM has about a 20 billion dollar business, captive business, in outsourcing, application management, application modernization and they can just point Red Hat right at that base, bring it's services business, Stu you've made this point, it's about scaling Red Hat. Red Hat's what, about a three and a half billion dollar company? >> Yeah >> And so that really is, she was explaining the business case for the acquisition. >> Yeah absolutely, I mean we've watched IBM for years, Bluemix had a little bit of traction but really faltered after a while, that application modernization. You hear from IBM, similar to what we've heard from Cisco a few weeks ago, meet customers where they are and help them move forward. We did a nice interview this week with a UK financial services company talking about how they've modernized what they're doing. Things like I.T. ops, new ops, these environments that are helping people with that app development. 'Cause IBM does have a good application work flow. There's lots of the infrastructure companies don't have apps and that's a big strength. >> When was the last, I got a direct message from the crowd, I want to get to Stu, but I want to ask you guys a question. When was the last time you saw a real innovation and disruption in a positive way around business applications. We're talking about business applications, not a software app, that's in a created category. We're talking about blocking and tackling business applications. When have you seen any kind of large scale transition innovation. Transition and innovation at the business application level? >> Google Docs? I mean >> I mean think about it. >> Right? >> So I think this is where IBM has an opportunity. I think the data science piece is going to transform into a business app marketplace and I think that's where their value is. >> Workday? >> Service Now. >> It's a sass ification of everything. >> Salesforce? >> Service Now, features become products. Products become companies. I mean this a big debate. I mean you can win on >> But that's not, Service Now really not a business, I mean it is a business app but it's more of an I.T. app. Alright Workday I'd say is an example. Salesforce I guess. >> And look here's one of the flaws in that multi-cloud picture, is it's I'm going to take all this heterogeneous environment and I'm going to give you a multi-Cloud manager. We've seen that single pane of glass discussion my entire career and it never works. So I'm a little concerned about that. >> So Andy Jassy makes the case that multi-cloud is less secure, more complex, more expensive. It's a strong case that he makes. Now of course my argument is that it's multi-vendor. It's not really multi-cloud. >> Well here's the Silicon Valley >> So he didn't have any control over that. It's not a procurement thing, it's just the way that people go by. >> The world has changed with cloud and I'll give you a Silicon Valley example anecdote. It used to be an expression in Silicon Valley, in venture capital community if you were a start-up or entrepreneur you'd build a platform. And there was an old expression, that's a feature, not a company. Kind of a joke within the VC community and that's how they would vet deals. Oh, that's a good feature" >> "Oh it's a feature company." >> "That's a great idea." Now with Cloud as a platform and now with all the stuff that's coming to bear, horizontally scalable, all the things that IBM's rolling out, sets the table for a feature to be a company. Where you have an innovation at the business model level, you don't really need tech anymore other than to scale up build it out and that's all done for you by other people. So people who are innovating on say an idea, well let's change this little feature in HR app or, that could meet up to Workday. Or let's change this feature. Features can become companies now so I think that's my observation. >> I think it's really interesting >> It could live in the cloud marketplaces too. It's so easy to get that scale if I could plug into all those marketplaces. IBM for years has had thousands of partners in their ecosystem. Of course Amazon's Marketplace, growing like gangbusters. >> But this is what Jerry Chen said when we were at Reinvent last year and we were asking him about Amazon, will it go up the stack, will it develop applications? He said, well, look but then what we got to do is give people a platform for application developers to build those features to disrupt, to your point, the core enterprise apps. Now, can IBM get there before Amazon, who knows? I mean its. >> Alright guys let's look at the big picture, zoom out. Your thoughts on Think 2019 IBM Think, Stu what's your final thoughts? >> Yeah, final thoughts is, I think IBM first of all is coming together. Just as this show was six shows and last year it was in two locations, there's cohesion. I heard the four days of interviews, we saw a lot of different pieces. Everything from talking about augmented reality through storage and we talked about the Z, and those pervasive themes of data, A.I., Dave what do you call it, It's the innovation cocktail now in Cloud. Data A.I. in cloud, put those three together. >> Innovation sandwich, innovation cocktail. Got to have a cocktail with a sandwich. That's your big take away? Okay, my take away Dave is that the, you nailed it in your post I thought, you should go to Forbes and check out, search on IBM Think you'll find the post by me and Dave Vellante but it's really written by Dave. I think to me IBM can change the game on two fronts. I learned and I walked away with a learning this week about these business apps. To me, my walk away is there's going to be innovation at a new genre of developers. I think you're going to see IBM target, they should target these business app ties as well as with the Could Native in Red Hat. I really think highly of that acquisition. From a speed stand point, I think the culture of Red Hat, although different, will be a nice check against IBM's naturally ability to blue-wash it. Which means you don't want to lose the innovation. I think Ginni saying Kubernetes twice on stage, is a sign that she sees this path, I think the Cloud Private opportunity could be a nice lever to bring open shifts and Kubernetes into that growth. And I think A.I. is going to be one of those things where they're either going to go big or go home. I think it's going to be one of those things. >> My take, love the venue, way better than last year in terms of the logistics. I like the new Moscone, easy to get around. May next year, May 2020 is going to be better than February here. I would've liked to see Ginni sell harder. She laid out a vision, she talked about a lot of sort of of high level things. I would have liked to seen her sell the new IBM and Red Hat harder. I guess they couldn't do that because they're worried about compliance. >> Quiet Period? >> Yeah right, you know monopolistic behavior I guess. But that I'm really excited to hear that story and a harder sell on the new IBM. >> I think if they can take the Microsoft playbook of cloudifying everything going with the open source with Red Hat and then just getting the great Sass if app revenue up, they're going to, can do well. >> Alright guys, great job. Thanks for hosting this week. Lisa Martin's not here today. Want to thank Lisa Martin if you're out there watching, great time. Guys, thanks to the crew. Thanks to IBM. Thanks to all of our sponsors that make theCUBE do what we do and thanks for all of your support to the community. I'm John Furrier along with Stu Miniman. Thanks for watching. See you next time. (pulsing electronic music)

(cheerful music) >> Live from San Francisco. It's theCUBE. Covering IBM Think 2019. Brought to you by IBM. >> Welcome to theCUBE, I'm Lisa Martin. We are at day one of IBM Think 2019, I'm with Dave Vellante. Hey Dave! Hey Lisa, good to see you. The new improved Moscone. >> Exactly, and Stu Miniman, yeah. >> Shiny. >> Yeah, this is the new, it is shiny, The carpets smells new. This is the second annual IBM Think, gentleman where there's this conglomeration of five to six previous events. Doesn't really kick off yet today. I think Partner World starts today but here we are in San Francisco. Moscone North, I think south, and west they have here expecting about 25,000 people. No news yet today, Dave, so let's kind of talk about where IBM is right now with the early part of Q1 of 2019. Red Hat acquisition just approved by shareholders last month. What are your thoughts on the status of Big Blue? >> Well, I think you're right, Lisa, that the Red Hat news is the big news for IBM. We're now entering the next chapter but if you look back for the last five years IBM had to go out and pay two billion dollars for a soft layer to get into the cloud business. That was precipitated by the big, high profile loss of the CIA deal against Amazon. So that was a wake up call for IBM. So they got into the public cloud game. So that's the good news. The bad news is the public cloud's not easy when you're going up against the likes of Google and Microsoft and of course, Amazon. But the linchpin of IBM's cloud strategy is it's SAS portfolio. Over the last 20 years Steve Mills and his organization built a very large software business which they now have migrated into their cloud and so they've got that advantage much like Oracle. They're not a big, dominant cloud infrastructure as a service player but they have a platform where they can put things like Cognitive Solutions and Watson and offer those SAS services to clients. So you'll check on that but when you'll peel through the numbers IBM beat it's numbers last quarter. Stock was up. You know, when it announced the Red Hat acquisition the stock actually got crushed because when you spend 34 billion dollars on a company, you know the shareholders don't necessarily love that but we'll talk about the merits of that move. But they beat in the fourth quarter. They beat on the strength of services. So IBM remains largely a services company, about 60% plus of it's revenues comes from services. It's a somewhat lower margin business, even though IBM margins have been ticking up. As I say, you go back the last five, six years IBM Genesys did Mike's it's microelectronics business, which was a, you know, lost business. It got rid of it's x86 business which is a x86 server business, which is a low margin business. So again, like Oracle, it's focusing on high margin software and services and now we enter the era, Stu, of hybrid cloud with the Red Hat acquisition. A lot of money to pay, but it gets IBM into the next generation of multi cloud. >> Yeah, Dave, the knock I've had against IBM is in many ways they always try to be all things to all people and of course we know you can be good at some things but, you know, it's really tough to be great at everything. And, you know, you talked about cloud, Dave, you know, the SoftLayer acquisition to kind of get into public cloud but, you know, IBM is not one of the big players in public cloud. It's easy. It's Amazon and then followed by you know, Azure, Google, and let's talk Alibaba if we're talking globally. In a multi cloud world IBM has a strong play. As you said, they've got a lot of application assets, they have public cloud, they partner with a lot of the different cloud players out there and with Red Hat they get a key asset to be able to play across all of these multi cloud environments whether we're talking public cloud, private cloud, across all these environments. IBM's been pushing hard into the Kubernetes space, doing a lot with Istio. You know, where they play there, in Red Hat is a key piece of this puzzle. Red Hat running at about three billion dollars of revenue and paying 34 billion dollars but, you know, this is a linchpin as to say how does IBM stay relevant in this cloud world going forward? It's really a you know, a key moment for IBM as to what this means. A lot of discussion as to you know, it's not just the revenue piece but what will Red Hat do to the culture of IBM? IBM has a strong history in open source but you know, you got to, you have a large bench of Red Hat's strong executive team. We're going to see some of them here at the show. We're even going to have one Red Hat executive on our program here and so what will happen once this deal finally closes, which is expected later this year, probably October if you read, you know everything right. But what will it look like as to how will, you know, relatively small Red Hat impact the larger IBM going forward? >> Well, I think it's a big lever, right? I mean we were, Lisa, we were at Cisco Live in Barcelona last week kind of laying out the horses on the track for this multi cloud. Cisco doesn't own it's own public cloud. VMware and Dell don't own it's own public cloud. They both tried to get into the public cloud in the early days and IBM does own it's own public cloud as does Oracle but they're also going hard after this notion of multi cloud as is Cisco, as is VMware. So it sort of sets up the sort of Cisco, IBM Red Hat, VMware, Dell, sort of competing to get after that multi cloud revenue and then HPE fits in there somewhere. We can talk about that. >> So I saw a stat the other day that said in 2018, 80% of companies moved data or apps from public cloud. Reasons being security, control, cost, performance. So to some of the things I've read, Dave, that you've covered recently, if IBM isn't able to really go head to head against the Azures and the AWS, what is their differentiator in this new, hybrid multi cloud world? Is it being able to bring AI, Watson, Cognitive Solutions, better than their competitors in that space that you just mentioned? >> Yeah, IBM does complicate it. You know and cloud and hybrid cloud is complicated and so that's IBM's wheelhouse. And so it tends not to do commodity. So if it's complicated and sophisticated and requires a lot of services and a lot of business processing happening and things like that, IBM tends to excel. So, you know, if you do the SWOT analysis it's big opportunity is to be that multi-cloud provider for it's largest customers. And the larger customers are running, you know, transaction systems on mainframe. They're running cognitive systems on things like power. They've got a giant portfolio, at IBM that is, and they can cobble things together with their services and solve problems and that's kind of how IBM approaches the marketplace. Much different than say, Stu, Cisco or VMware. >> Yeah, Dave, you're absolutely right. You know one of the things I look at is you know, in this multi-cloud space we've see the SI's that are very important there. Companies like Accenture and KPMG and the like. IBM partners with them but IBM also has a large services business. So, you know who's going to be able to help customers get in there and figure out this rather complicated environment. So we are definitely one of the things I want to dig into this week is understand where IBM is at the Cisco Show, Dave. We've talked about their messaging was the bridge to you know what's possible. You know meet the customers where they are, show them how to reach into the future and from Cisco's standpoint, it's strong partnerships with AWS and Google at the forefront. So IBM has just one of the broadest portfolios in the industry. They absolutely play in every single piece but you know customers need good consulting as to Okay, what's going to be the fit for my business. How do I modernize, how do I go forward? And IBM's been down this trip for a number of years. >> Well the in the legacy of Ginni Rometty, in my opinion is going to be determined by the pace at which it can integrate Red Hat and use Red Hat as a lever. Ginni Rometty, when she was doing the roadshow with Jim Whitehurst kept saying it's not a backend loaded deal, and the reason it's not a backend loaded deal is because IBM is a 20 plus billion dollar outsourcing business and they're going to plug Red Hat right into that business to modernize applications. So there's a captive revenue source for IBM. In my view they have to really move fast, faster than typically IBM moves. We've been hearing about strategic initiatives and cloud, and Watson and it's been moving too slow in my opinion. The Red Hat acquisition has to move very very quickly. It's got to move at the speed of cloud and that's going to determine in my opinion-- >> So, actually, so a couple of weeks after the acquisition Red Hat had brought in an analyst to hear what was going on, and while the discussion is Red Hat will stay a distinct brand, there's going to be no lay offs were >> Yeah absolutely. >> Going to keep them separate, what they will get is IBM can really help them scale so >> Yep. Red Hat is getting into some new environments, you know that whole services organization, Red Hat doesn't have that. So IBM absolutely can plug in there and we think really accelerate, the old goal for Red Hat was okay how do we get from that three billion dollars to five billion dollars in the next couple of years. IBM thinks that they can accelerate that even faster. >> And Lisa I think the good news is IBM has always had an affinity toward open source. IBM was really the first, really to make a big investment you know they poured a billion dollars into Linux as a means of competing with Microsoft back in the day, and so they've got open source chops. So for those large IBM customers that might not want to go it alone on open source and you know Red Hat's kind of the cool kid on the block. But at the same time, you know there's some risks there. Now IBM can take that big blue blanket wrap it around it's largest customers and say okay, we've got you covered in open source, we've got the Red Hat asset, and we've got the services organization to help you modernize your application portfolio. >> One of the things too that Stu, you brought up a couple minutes ago is culture. And so looking at what, Red Hat estimates that it's got about eight million developers world wide using their technologies and this is an area that IBM had historically not been really focused on. What are some of the things that you're expecting to hear this week or see this week with respect to the developer community embracing IMB? >> Yeah and Lisa it's not like IBM hasn't been trying to get into the developer community. I remember back at some of the previous shows Edge and Pulse and the like, they would have you know Dev at and try to do a nice little piece of it but it really didn't gain as much traction as you might like. Compare and contrast that with cisco, we've been watching over the last five years the DevNet community. They've got over half a million developers on that platform. So you know, developer engagement usually requires that ground level activity where I've seen good work from IBM has been getting into that cloud native space. So absolutely seen them at the Kubernetes shows working in the container space very heavily and of course that's an area that Red Hat exceeds. So the Linux developers are absolutely there. Now you mentioned how many developers Red Hat has and in that multi cloud, cloud native space, you know Red Hat one of the leaders if not kind of the leader in that space and therefore it should help super charge what IBM is doing, give them some credibility. I'd love to see how many developers we see at this show, you know, you've been to this show Dave and you've been to this show before, it looked more enterprisey to me from the outside-- >> Well, I'm glad you brought up developers because that is the lynch pin of the Red Hat acquisition. If you look at the companies that actually have in the cloud that have a strong developer affinity obviously Microsoft does and always had AWS clearly does Google has you know it's developer community. Stu you mentioned Sisco. Sisco came at it from a networking standpoint and opened up it's network for infrastructure's code. One of the few legacy hardware companies that's done a good job there. VMware, you know not so much. Right? Not really a big developer world and IBM has tried as you pointed out. When they announced Bluemix but that really didn't take off in the developer world. Now with Red Hat IBM, it's your point eight million developers. That is a huge asset for IBM and one that as I said before it absolutely has to leverage and leverage fast. >> And what are you expectations in terms of any sort of industry deeper penetration? There's been some big cloud deals, cloud wins that IBM has made is recent history. One of them being really big in the energy sector. Are you guys kind of expecting to see any sort of industry deeper penetration as a result of what the Red Hat Acquisition will bring? >> Well thats IBM's strength. Stu you pointed out before, it's Accenture, you know Ernie Young, to a lesser extend maybe KPNG but those big SI's and IBM. When IBM bought PWC Gerstner transformed the company and it became a global leader with deep deep industry expertise. That is IBM's you know, savior frankly over these past many many years. So it can compete with virtually anybody on that front and so yes absolutely every industry is being transformed because of digital transformation. IBM understands this as well as anybody. It's a boon for services, it's a good margin business and so that's their competitive advantage. >> Yeah I mean it ties back into their services. I think back when I lived on the vendor side I learned a lot of the industry off of watching IBM. I see how many companies are talking about smarter cities. IBM had you know a long history of working In those environment's. Energy, industrial, IBM is very good at digging into the needed requirements of specific industries and driving that forward. >> So we're going to be here for four days as we mentioned, today is day one. We're going to be talking a lot about this hybrid multi-cloud world. But some of the double clicks we're going to do is talking about data protection, modern data protection, you know a lot of the statistics say that there's eighty percent of the worlds data isn't searchable yet. We all hear every event we do guys, data is the new oil. If companies can actually harness that, extract insights faster than their competition. Create new business models, new services, new products. What are your expectations about how, I hear a lot get your data AI ready. As a marketer I go, what does that mean? What are your thoughts Stu on, and we're sitting in a lot of signage here. How is IBM going to help companies get AI, Data rather AI ready and what does that actually mean? >> So IBM really educated a lot of the world and the broader world as to what some of this AI is. I mean I know we all watched many years ago when Watson was on Jeopardy and we kind of hit through the past the peak and have been trying to sort out okay well how can IBM monetize this? They're taking Watson and getting it into healthcare, they're getting it into all these other environments. So IBM is well known in the AI space. Really well known in the data space but there's a lot of competition and we're still relatively early in the sorting how this new machine learning and AI are going to fit in there. You know we spent a lot of time looking at things like RPA was kind of the gateway drug of AI if you will robotic process automation. And I'm not sure where IBM fit's into that environment. So once again IBM has always had a broad portfolio they do a lot of acquisitions in the space. So you know how can they take all those pieces, pull them together, get after the multicloud world, enable developers to be able to really leverage data even more that's possible and as you said you know more than eighty percent of data today isn't used, you know from an infrastructure stand point I'm looking at how do things like edge computing all get pulled into this environment and lot of questions still. >> IBM is going after hard problems like I said before. You don't expect IBM to be doing things like ad serving with Alexa. You know that's not IBM's game, they're not going to appropriate to sell ad's they're going to take really hard complex problems and charge a lot of money for big services engagements to transform companies. That's their game and that's a data game for sure. >> It's a data game and one of the pieces too that I'm excited to learn about this week is what they're doing about security. We all know you can throw a ton of technology at security and infrastructure but there's the people piece. So we're going to be having a lot of conversations about that as well. Alright guys looking forward to a full week with you and with John joining us at IBM Think I'm Lisa Martin for Dave Vellante and Stu Miniman. You're watching theCUBE live day one IBM Think 2019. Stick around we'll be right back with our next guest. (energetic electronic music)

Upbeat techno music >> Live, from Barcelona Spain, it's theCUBE! Covering Cisco Live Europe. Brought to you by Cisco and it's ecosystem partners. >> Hey, everyone. Welcome back to The Cube's exclusive coverage, here in Barcelona, Spain, for Cisco Live Europe 2019. I'm John Furrier. With hosts this week: Dave Vellante, Stu Miniman, here all for three days. So, we're wrapping up Cisco Live 2019, here in Europe. Guys, we're breaking it down. We had some great editorial segments, where we unpacked everything here. But, as we look back over the show, I want to get your observations and insights into, kind of what's going on with Cisco, the secret formula around why DevNet- their developer program; which also has Devnet Create, which is cloud native- is growing very rapidly. Huge resonance with the customer base in Cisco. It's created a revitalization of Cisco, as a company. And you can see that permeating throughout the organization with their branding, how the teams are organized, and they're engineering their products. Is this the future model for all infrastructure companies that don't have a cloud? And why is that successful? And then other observations. Guys, we'll start with DevNet. The very successful program, led by Susie Wee, Senior Vice President and CTO, executing flawlessly how to transform a community, without killing the old to bring in the new. Stu. >> Yeah, John, it's been fascinating to watch. We've talked about the ground effort, a lot of hard work by a small team, build a community. Last year, over 500,000. We hear they're at 560,000 people using this tool. Four and a half years ago, you know, Cisco- mostly a hardware company. It really- what I've seen over the last year or two, they were talking about software, but I've really seen deliverables here. You talk about CloudCenter Suite, you talk about the DNA Center platform; if they're a hardware company, there's a disconnect between what's going on in the DevNet zone, and what's happening in the company. But, we've seen rallying around software solutions. I've heard from the partnering system, from the customers: this isn't Cisco of a few years ago. Very fragmented, lots of lines of businesses, lots of different things. I remember back when Chambers announced, like, "oh, we've got, you know, 37 different adjacencies we're going to go into." No. Now it's: solution suites and platforms and, you know, DevNet- it is a unifying force of what they're doing. That's a great term, John. Love it. And see, that transformation of being a software company, that DevNet set some of the groundwork, and we heard the CIO of Cisco saying that, you know, security and the developer activity, are his partners in crime. Helping him, driving change, and... >> And they did a nice clever play on words: Data Centered. And that's kind of a shot across the bough of the classic data center, which shows it is a cloud world. And data is a center part of it. And, I think the API-centric economy's certainly doing it. But, Dave, I want to get your thoughts, because you asked a question to Susie Wee of DevNet- a very important question Other companies couldn't be successful with developer programs. Cisco has been. What's the secret formula? Well, I asked Amanda Whaley, who's her right-hand woman around what's going on, and she said, "well, there's no secret formula..." Guess what. There is a secret formula. They're being humble. But seems to be content- seems to be the unifying force of the community. They understood the need, they saw the future around cloud native and API's, being a very important connection tissue- connective tissue, for this cloud native world, and an upstream path for Cisco. They understood the future, knew the need, and they provided great content. The sessions and the education are open, inclusive, very education oriented. But, conversations with their peers have been key. TheCUBE's been here, talkin' to... They treat everyone the same, not the big pitches. Real authentic and genuine content that allowed people to learn and grow, and connect with others. To me, I think that is kind of- this is one of my observations. Your thoughts, Dave, on that. >> Yeah, so... First of all, there is a secret formula. And, this is the new blueprint, or the blueprint that infrastructure companies should be following. Cisco's clearly leading there. I think it's content and community. And, they're used their programmability, of their infrastructure, and they've socialized that. They've developed the technology. They say big companies can't innovate; DevNet is a real solid innovation. And it's- we witnessed all week, people coming in, training, learning; these are network engineers. They're learning new skills. They're learning how to be developers. And that is, to me, a huge innovation in business model, in technology. It's creating a flywheel for them. So, they've created- they've come up with the idea, that the network is a data platform. And it's now, also, become an application development platform. On which, they're deploying applications all over the place. Edge, we heard applications being deployed in police vehicles! And so, this is a very important trend, and from what I can tell, they're way ahead of other infrastructure companies: HP, I don't see this, they talk that game. Dell EMC; we talked about code. You know, IBM trying to make it happen with Bluemix. Oracle owns Java, and it still sort of struggles to own the development, developer marketplace. >> So, Dave, I love what you say there. I saw Jack Welch speak a number of years ago, and he's like, "eh, people always tell me all the time that big companies can't innovate." He's like, "well, maybe big companies, but what are companies made up of? Companies are made up of people, and people can innovate." And I think that's- you know, the key there is, it was very people-focused. Absolutely, content. When you talk about what were the big sessions here: oh, they're doin' Java, they're doin' kubernetes. It's like, okay, wait: is there a connection to Cisco products? Absolutely. Is it a product pitch in a product training? There's plenty of that going here! People need that. People built their careers out of Cisco. But this new career? A big question question I had coming in, is: it's a multi-cloud world, you know... Infrastructure, developer, and everything. Cisco's a piece of that. You know, how do they make sure that they get- sticking this with them, and helping them to build their career, and move forward. There's going to be some nice activity, there. And, you get a good glow, and you know, Cisco makes themselves relevant in those communities. >> The other observation that I saw, and I want to get your reactions to it, guys, is: that we saw Scale- and we talk about this all the time in theCUBE. Scale is now table stakes, to compete in this global landscape. But, complexity with multi-cloud, and these things, is there. Every major inflection point in the industry- abstraction layers and software, and/or hardware advances- certainly, Moore's Law kicks in and helps that. But, it's been software abstractions that have really moved the needle, because that's where you can have complexity, and still remove it; from an integration standpoint, from a consumption standpoint. This seems to be- Cisco's buying into this, across the companies, Stu- software. Not just hardware. They've coupled it, but they all work together. This is the magic of DevNet, the magic of API's. It's the magic of an internet operating system. Your thoughts. >> Yeah, and look- we talked to a number of the companies that were acquired by Cisco over the last few years, and I think those are helping to drive some of the change. You have, of course, APT is the big one, Duo in security; companies that were born in the cloud, and helping to move that change along the way, and John, as you said, that unifying factor of, "we're rallying," it's not just, the new Chip Stubbs standing up on the- and saying, "you know, okay, we spent millions of dollars in developing this thing, everybody go out and sell that." It's now- there's co-creation, you're seeing that evolution of that partner ecosystem. And, it's a challenging change, but Cisco is, you know, moving in the right direction. >> It starts at the top, too, Stu. And, I wanted to make a point of- we learned, also- and this is learning for me. Chuck Robbins is behind all this, okay. The CEO has identified DevNet, and said, "this is strategic to our company." All new products now, that are introduced at Cisco, will have API support and a DevNet component. This is a radical change from Cisco of the past. This means that every solution, out of the box- literally- and software, will have that in there. So, with API's and DNA Center, those are two areas to me, that I think will really be a tell sign. If Cisco can execute on the DNA Center, and bring in API's and a DevNet- a real supporting community behind every product; I think the programmable network will be a reality. >> So, help me squint through this. You know, we talk to a lot of people, we go to a lot of shows. We're gettin' the Kool-Aid injection from the DevNet crew here- but, there's real substance. We're going to challenge some of the other companies that we work with. Some of the other infrastructure companies. The IT business, it's like the NFL. It's a copycat league. So, HP is going to say, "oh, we got ATI's." EMC, Dell: they're going to say the same thing. But, what's different here... I mean, clearly, you see it in the evidence of being able to cultivate a community of developers. >> Of course. >> Is it because of the network? >> No, it's management. HP has people- I've talked to them on theCUBE- that believe in cloud native. The company just doesn't fund them properly. They've got the smallest booth at the events, they're always, you know, a partner booth. They're part of an adjunct of something else. HP and Tony O'Neary, I don't think is funding open cloud native... Or certainly the marketing people, or product people, are not funding developers. >> Well, certainly not to the degree that Cisco is, obviously. >> There's no physical signs of any kind. We go to all the shows. >> What about Dell? What about Dell EMC? >> I think Dell EMC is kind of keeping it open, but there's no coherent group. I can't, in my mind's eye, point to one group, saying, "wow, they're kickin' ass." >> They got bigger problems now. It's how you consolidate the portfolio... >> What is- Michael Dell's state of goal, is for Dell to be the leading infrastructu&re company out there. There's a big hardware component of that. Absolutely, they participate in open source, they have some developer- API's are great, and they love standards. But, you know, this is a software movement. >> Yeah. >> Infrastructure's code is where they're going. VMWare, you know, they've made some pushes and moves, in this space... >> With developers? >> Not big developers... >> But, where are the developers? They had their operators on the IT side, so- back to Dell for a second. I think Dell Boomi is one signal, I've seen some sign there. But then- and that's still relatively new, but there's no one- there's no DevNet for Dell. On VMWare... >> People Labs is someone that is helping customers learn to code, do that kind of activity. But, you know, broadly across the Dell family, I haven't seen as much. >> I think VMware has a good ecosystem. I think they have good technical people. I don't think they need a developer program, per se. I think they need more of an operator program. I think that's VMWorld. You go to VMWorld and you see a lot of the partners, and how they integrate in. >> So, who are the favorites in the developer world? Obviously, Microsoft, and MUS... >> I mean, to me, it's Amazon- as a kid in a candy store, if you're a developer, you're all over Amazon. They have great stuff, they're always introducing new candy for the kids, all the time. New services; Amazon, number one. Azure, I think- not so much, in my mind. I think it's a lot of legacy, there, with Azure. But, they are- they're puttin' up the numbers on the profit, and you know my stand on Azure. I think Azure's sandbagging the numbers. But, the growth's there, it's going to be a matter of time. I think, Azure, is on the path. And they have the legacy developer program, world class, Microsoft. Microsoft is in the Cisco kind of wheelhouse. If they can transform their existing developer community, to be cloud native, they hit a home run. >> Yeah, but, John, you were talking about IT ops, out there; Microsoft does great in that. They've got a lot of big push there. They absolutely- the DotNet developers are there. You go to the Build conference, they play. We go to CUBECon, and a lot of the developer shows, and Microsoft, strongly there... >> No, let me just clarify my point. Let me clarify my point on Microsoft. Yes, they have a pre-existing, huge, development. They've been successful by the core competancy, no doubt. Cisco had a developer community: all networking. So, I think Microsoft has that legacy win, but they have to transform, and go the next level. The question is, do they have that. So- with Azure, I'm saying... >> What about Google? You guys were at the Google Cloud Show last year, we'll be there again in April. >> Yeah, you got to put Google in the mix. No doubt, I mean, no question. And, what about Red Hat? With IBM, on the developer front? >> Yeah, look, when you talk to the developers, and all the- a lot of the training their doing, if you've got LITIC skill sets, you've got a leg up in a lot of these environments. There are a lot of developers. It's not like people at Red Hat- some, are like, "oh wait, 6here's my first hoodie, and I'm going to learn to start code." They're already there. They're in this ecosystem. Red Hat: huge part- everybody we just talked about, Red Hat has a strong piece in there. That's one of the reasons why IBM bought them, Dave, is to help ride that wave. >> That's expensive, but they got the ingredients now. >> Red Hat's- check, I love those guys. Google has a lot of developers. They contribute heavily in open source. But, in terms of a Google community, that's really the CNCF in my mind. I think they're doing great job stewarting CNCF, but there's not a lot of people- users, in the Google ecosystem, they've got tons of developers. And, that's an opportunity for Google, in my opinion. >> Well, let's bring it back to Cisco. So, are we in agreement that they've got a leg up on the other infrastructure competitors... >> Yeah, I do. >> Specifically, as it relates to developers. >> They have a huge leg up, but I think it's even bigger that that. I think that this company is going to skyrocket, if they crack the code on network programmability. They're at the early stages now, you're talking about intro to Python, they give more advanced classes... Give them 24 months, if they continue momentum on DevNet, that's the tipping point, in my mind. Two years, they could own everything, and just be a whole other level company, if they crack the code. 'Cause the network is the value. Payload, network effect, this is the new normal in today's.. >> It's a big challenger. I mean, it's really not- and, the networking companies, for years, haven't been able... The Aristas, and the Junipers, haven't been able to unseed them, as the leader. They still got 60 percent of the marketplace. >> DMWare- DMWare and Cisco. >> DMWare, alright. >> DMWare and Cisco, 'cause DMWare and Amazon, that's a lethal combination. I think that's what I'm going to watch, the frenemy action between DMWare and Cisco. I think that level of where NSX, and what Cisco's trying to do, within ten paces of that working. >> Well, and Outpost is the hybrid infrastructure. Does that eventually become a multi-cloud play? Maybe it's a few years off, but... >> Yeah, absolutely. Look, we've watched- a year ago, we were saying, "okay, Google's a strong partner to Cisco, how 'about AWO's?" Well, they're integrating with kubernetes, they're starting to do more with AWS. It's always an interesting partnership with Amazon. Cisco's got lots of products in the marketplace, they're growing in that environment, but Amazon's learning from everybody and can potentially be a threat down the road to where Cisco is. And, I'd love to see Cisco doing more in the Microsoft space, too. >> We'll be watching Cisco, over the year. We're going to continue to go deep on Cisco. We got the Cisco Live North America Show on the cal... >> San Diego. >> This year in San Diego. So, we'll see theCUBE there, for multiple days, as well. Of course, we'll be following all the traction of software define everything, as the world goes completely cyber, dark, encrypted; whatever it is, we're going to be covering it. Well, thanks for watching. I want to give a shout out to the crew. Good job, guys. Well done. Thanks for watching theCUBE here, in Barcelona. I'm Jeff Furrier with Dave Vellonte, Stu Miniman. Thanks for watching. (upbeat techno music)

(upbeat music) >> Live from Barcelona, Spain it's theCUBE, covering the Cisco Live! Europe. Brought to you by Cisco, and its ecosystem partners. >> Welcome to theCUBE, we're here in Barcelona. Welcome to theCUBE live here in Barcelona for Cisco Live! 2019. Cisco Live! Europe. I'm John Furrier with my hosts this week Stu Miniman, Dave Vellante breaking down all the action. Keynotes over. Three days of wall-to-wall coverage, guys, Cisco Live! Introducing some new innovations, Stu and Dave, around reinventing networking. Couple key themes big announcements around ACI, anywhere application-centric, infrastructure, HyperFlex and the new CloudCenter Suite where they're doubling down on Cloud, redefining the network. Stu, we've been here last year. We've been watching Cisco. Policy-based, intent-based networking, Cisco's tying it all together with new branding, The Bridge to Tomorrow, your thoughts. >> Yeah John, I actually, I like some of the new branding The Bridge to Tomorrow, I've been critical of Cisco. Cisco always said, oh well networking's everywhere and it's really important, and it's like, well okay but where's the meat? Where's the detail behind this? They've done a number of acquisitions in the space. They're making sure that they understand where they are. And they had some failures along the way. I mean, call a spade a spade, John, they are going to be a leader in multi-cloud is where they want to be, but, they had some falters along in being a public cloud. The inter-cloud message that they had, they confused the service providers, they didn't understand how they played with they hyper-scale players and now they're understanding where they sit, S.D. Wayne critically important, where they live in the data center and it's interesting we talk about the, do we talk about the data center? Or do we care where the data is centered? And of course that is not in one place but it is many places. We know customers today live in a multi-cloud word, how I get to my data how I leverage my data is critically important and the networking and management is something that is critical across all those so right, as you said, ACI and HyperFlex, the CloudCenter suite I know is an area we're going to dig into a bunch this week Because Cisco has an opportunity to play across these environments, but, Cisco has been trying for a long time to be the manager of managers in these environments, I mean, I think back to things Dave Vellante and the Wikibon team and I have done for years talking about, how do you manage this heterogeneous world and it's just, instead of multi-vendor, we're now talking multi-cloud. >> And you know what, everything is coming together, Dave, we've been covering Cisco we're looking at the timing of the positioning it's seems to be coming together, and around the re-branding, which by the way, I agree with Stu, I like it. The bridge to tomorrow, it resinates with me maybe because I'm from the Bay Area but, the bridging two worlds, a bridging on premises and cloud together in a very seamless way and an elegant way architecturally, so the branding ties in with really much a rounding out of the portfolio so a lot of story lines to follow the new branding, Chuck Robbins getting his sea legs now as Cisco goes to the next level And clearly they see multi-cloud as their positioning because this has been Cisco's core positioning for many, many years this idea of enabling other people to do innovation whether its applications and work loads now they're connecting two worlds Your thoughts on the timing and their position vis-a-vis industry. >> Well Cisco talked this morning in the keynote about another bridge on one side of the network is users and devices and the other side of the network are application and data and we've talked for years about how the network is flattening and traffic is going east-west etc. But, inter-clouding, if you will, puts increased pressure on that and that is clearly Cisco's strategy to be the best at connecting whether its on prim and public clouds and between public clouds. Cisco's got to make the case that on our networks, you're going to be higher performance and more secure. And that's certainly what they are implying. They're also making a big transition from being a hardware company to a software company. When you listen to VMware, they talk about Cisco they talk about oh they make the best hardware, the best switches and Cisco's like no. They're talking software capabilities across the network, new architectures, reinventing, coming at it from the network, which is obviously their strong point and it just really sets up an interesting competitive dynamic between Cisco, certainly VMware who's trying to do to networking and storage what it did to servers, and know you've got IBM and Red Hat coming at it from applications, and the development perspective. We're here in the DevNet zone and I think that's the other piece of the announcements that we're hearing today is developers can actually program with things like IoT, and new use cases, so pretty exciting times. >> Stu, story lines around the data center you made a comment that was kind of a play on words on the key note, data is centered, so center dash ed, center-ed, so the data center concept is moving into data being center of the value proposition. This has been interesting because if you look at what DevNet has spawned and DevNet created under Susie Wee's leadership you saw the role of API's. So if data moves around the network and that's the core competency of Cisco moving packets from point A to point B Adding automation, adding intelligence, with intent based networking and cloud enabling on the other side, you got to have access to the data, the data's got to be traversing and interoperating with multiple environments. This is now a architectural standard. Is Cisco, from a product portfolio stand point whether it's security, analytics, cloud app management, IoT, networking, does it all come together? Your thoughts? >> Yeah, so, first of all, Cisco plays in a lot of these environments. We talked not just data center, but, when you talk about branch office something Cisco has been doing for a really long time, and how do I network between all of those remote applications and my central location, and my central location might not be the data center, it might be a or multiple public clouds out there. So Cisco's been attacking this back when optimization many years ago. SD-Wan really has taken that and much more you know, super important when we talk about this multi-cloud environment and how I get that connectivity so they're there and Cisco from the ground up has gone through a lot of rebuild. So, the CloudCenter suite that we talk about, Microservice's architecture built with Kubernetes into that API economy that we're talking about which is a lot about what we talk about here in the DevNet zone. So, absolutely, Cisco has, they're known as space, they have a lot of the skills, they have a very broad platform of products out there. David Goeckeler this morning, he's just reeling off all the different areas they play to and saying, we've got like 6,000 people in the opening keynote, and he's like, I came and looked at this room, and I've got like four x the amount of engineers working on your networking security issues that were here. It's like 24,000 people it's an army, there's very few companies outside of Google, Amazon and Microsoft, that can call on that engineering strength and that's just the internal piece what we love, we talked to Susie Wee and she's like, we've got 500,000 on our community platform helping to build, IT, OT, IoT, all the network, all the security pieces so, Cisco is not new to a lot of these but, is re-focused on a lot of what they are doing. >> So the big news obviously is the ACI anywhere in hyperfex anywhere and putting the data center, connecting those two worlds and you got the cloud as well so the role of hyper-convergence is certainly key in this announcements here today. ACI application center infrastructure just code words for policy based, intent-based networking, all the stuff that Cisco's used to doing. Then when you connect to the cloud, you got data center, on premises, cloud, and then hyper-convergence at the edge. This is the core, right, they got the edge, multiple environments, you got cloud, and you got the data center, legacy environment which is evolving, Those are all coming together, Stu. This is cross-domain challenge. Is Cisco prepared? David I'd love to get your comments on this as well, to be that cross-domain vendor? Because multi-cloud truly will require data to be moving around, policies to be automated and deployed across domains. This is a huge challenge. >> Yeah, I mean, John, it is challenging, and if you look at the hyper-convergence infrastructure space, where Cisco plays with HyperFlex goes up against VMware vSAN, Nutanix and the rest there, the people that sell that and build that, are necessarily the ones that really understand multi-cloud. We've seen that space maturing for the last couple of years. Obviously Cisco's got a right to be at the table there and they're moving in that direction, but, to the data center folks, and they are data center folks that have done networking and storage and all that, are they getting trained up and and helping to help bridge to that multi-cloud environment? I think there's still a lot of work to go and I talked to the channel, when I talked to the people who are out there going to market on that. >> Well that's the big challenge, is how do you move the base, how do you get them from point A to point B without, spending a billion dollars? You heard Gordon today stand up there and say, you got to change. Now, and he admitted, anytime somebody tells me I have to change, I kind of get defensive about it. But some of the things that I. Well obviously this end-to-end architecture, they're in a position, in theory anyway to do that, what choice do they have? A couple of things that struck me is they've got a new consumption model, SaaS-based consumption model, they also announced four validated designs for OT from IoT apps. It's good to see some actually meat on that bone. You got like utility sub-stations and mining operations and fleet management, I mean, it's stuff that you would'nt traditionally think about from coming from a data center company. So they're making some moves that I think are substantive and necessary. >> Well I took some notes down I wanted to get your comments on this guys, cause, to me, this is the core news here, is that Cisco is truly trying to put that end-to-end architecture around cross-domains, you seeing their core data center business continue to be robust, that's they're bread and butter. You got the Edge that's developing nicely with IoT and Enterprise Edge and other places around campus. Then you got multi-cloud, so you got the three-legged stool. Core data center, multi-cloud, and Edge. Does this address the industries demand for apps changing, work loads being distributed, and then, management across these multiple domains or multi-cloud, because you got to manage this stuff. So cost to ownership, these are now the table stakes, your thoughts on those three areas, Stu, core data center, multi-cloud, and Edge? >> Yeah, I mean we've been talking about for the last year, the move from hardware to software is not an easy one. There are things that you need to change for product that you need to change how their field handles it, the whole. The compensation and how they support their channel, is super challenging. At VMworld last year, we really highlighted how that inter-cloud networking, what a critical piece it was. I was so excited, that the original vision of what Nicira had pre-acquisition was starting to come out there, because VMware's coming after Cisco in that manner. Cisco, not like they're trying to create high providers, they are going to live in all those worlds, but, there definitely is some conflict there and something I always look at, Cisco's got a gigantic ecosystem. They have, hundreds of thousands of certified Cisco engineers and they've got a great ecosystem here. >> And a strong channel. >> And a strong channel. Right, that go to market, partners as well as the technology partners, and they're still strong. We're going to have on this week a lot of those players here, but, that change is something that is tough to go through, and, it's this journey that they're on. >> Well, this, Dave brought up to consumption, I want to dig into the consumption piece because how people consume the cloud obviously means that they got to stand up the cloud, multi-cloud. Cisco's clearly got Azure AWS and Google Cloud. Google seems to be a strategic partner as well as Amazon, Azure, but I think Google, kind of feels like this more strategic alliance there, I'm just speculating from my opinion, but, if I'm a Cisco customer, it's pretty easy now to go multi-cloud, I don't need to a lot of things differently. The question is, how do I manage it, what's the cost, and how do I consume it? This is going to be critical. Your thoughts? >> Well, so, Cisco's claiming they're going to extract that complexity, and whatever API's and software infrastructure, infrastructure's a service that your using, they're going to make that simple, simplify that and allow you to have a, single management console. So that, I said before, they're coming at it from a networking perspective, VMware is coming at it from the traditional hypervisor and trying to elbow its way into the networking against storage space and as I said, you got other companies like IBM and Red Hat now coming at it from the application space and Kubernetes is obviously an important role there. I think personally, I think that networking is a right place, a good place to come from. The problem for customers is still going to be complexity. Because the cloud providers are going to have their own, management framework obviously, vSphere is a big player here and now you got Cisco at all, and a bunch of start-ups saying hey, ours are even better. >> Well in the IBM, Red Hat accommodation. >> Right, so I don't foresee a day where your going to have one single painted glass, we've never had in this industry, it's always been nirvana, and so, then comes down to Cisco getting its fair share. I think Cisco's in a very good position to get its fair share for the reasons that Stu just mentioned. >> Stu, so I want to get your thoughts we're in the DevNet zone, that's where theCUBE is. It's our second year at Cisco Live! We'll be at the North America show again this year, it's on the schedule, but the role of the developer, the role of infrastructure as code now is in place, actually happening within Cisco's customer base. So if your a Cisco customer, you're looking at this saying, okay, I've been running the Cisco network, I've got all the portfolios, services, what is the role of the network engineer? Is there a renaissance coming? We've said this last year, I kind of see it happening here, the network is now the computer, the network is the data. This is a great opportunity for Cisco. Your thoughts on the culture of the Cisco customer base and that vibe of infrastructure as code? >> Yeah, so, John, I used to bristle a little bit, when you said, well, we're going to turn all the network engineers and they're going to become coders, and I said, well, I know a lot of network engineers and some of them love and thrive that, but, a lot of them, they're in the CLI, they're doing their thing. If you walk around this DevNet zone, a lot of the stuff that happening isn't networking. They are builders. This reminds me of going to AWS Reinvent, taking about people here, the tools, the skills you need to have to be a builder. And absolutely, networking is a part of it, that management, orchestration, security, all the things that touch into the network, but it's not, oh how do I manage my network switch better? Which was kind of the hardware focus view, and maybe code this, but, it really is, how am I building API's, how am I leveraging things, I've got IoT demos out there and it's networking is in there, but, it's not necessarily the thing, and, so therefore, you've got this wave of developers and builders and, John, we know that's the future, you need to be a builder, how can you create faster, things like server lists, or moving in that direction where I don't need, it's less about the coding, it's more about my application, my data and my building. >> You bring up a great point, Stu, and this is something that I always, I point to when I look at who's kind of BSing the market place in terms of speeds and feeds, and announcements. When you see people actually coding and being enabled to do some creative value, you start to see that's a good signal, and here in the DevNet zone, I saw four-five demos that were writing software apps, to take advantage of the hardware, to take advantage of the network, so know the network is enabling through APIs to extend the data. This is kind of changing the the concept of how packets will move around the networks, so this is truly a tell sign, that in my opinion, of the modern infrastructure. The question is, Dave, how fast will the customers migrate to being true devops or infrastructure as code customers, writing apps, building new things, to create that value? >> Well, I would say this, that of all the sort of traditional large scale call them, whatever, legacy, enterprise, data center companies, I think Cisco is the only one that I can really point to that has kind of got developers right. I mean IBM, Bluemix, StartStop, remember the EMC Code initiative, that was kind of a joke, and so, Oracle owns Java, and it still sort of struggles with developers, so, I think Cisco got it right, and I think the reason they got it right is cause they're focused. I mean that's what I do like about Cisco's strategy and the reason why, you, know, obviously you give them high chances, it's because they're really focused on that networking piece. They're not trying to be all things to all people, even though you forecasted they're kind of heading in that direction, but they're still starting from a position of strength. >> Well, you made a good point. The success and failure of developer programs is about creating an environment where it's compatible with how they're expectations are. Microservices, containers, these abstraction layers that they're used to dealing with create value. Developers will love that. The other thing I would say is is that as developers look at what they can do, the worlds changed. It used to be the network that used to dictate what can happen to applications, now applications need to program the network. I think this was a shift we saw with DevNet Create and DevNet two years ago, where they started moving from the command line interface to more software abstractions or applications interfaces where, say hey, lets just do more with the network, so applications now require program ability. This is the shift, it's upside down from what it was when the industry started, so this new bridge has to be application-centric and to me, that's what I get out of the cloud announcement around multi-cloud. You're starting to see to see the portfolio up and down their stack, from security, they got stealthwatch tetration, that's, SaaS, analytics, app dynamics, among other things data center, HyperFlex, UCS, Nexus, all lined up. CloudCenter, container platform, on multiple clouds, IoT, Kinetic, Vedge, cloud services router, this is now a portfolio. They got the products too. >> Absolutely, John. >> Okay guys, we're going to have a great day, three days of wall-to-wall coverage kicking off here in Barcelona, stay with us for more coverage here at Cisco live, it's theCUBE. We'll be right back. (upbeat music)

>> Live from Seattle, Washington, it's theCUBE. Covering KubeCon + CloudNativeCon North America 2018. Brought to you by Red Hat, the Cloud Native Computing Foundation, and its ecosystem partners. (upbeat music) >> Hey welcome back, and we're here live with CUBE coverage here in Seattle for KubeCon + CloudNativeCon. I'm John Furrier, Stu Miniman is here, and Jason McGee. Who's an IBM fellow, CTO of IBM's Cloud platform, Kube alumni. Great to see you. Welcome back. >> Great to be here. >> I want to jump right in. You got a talk coming up, you got a show here that's doubling in size. The community is clearly resonates around Kubernetes. >> Yeah absolutely. >> Which is goodness for the industry. We covered that last year, how people started to snap in in getting it. Bringing it together, seeing visibility into value points where people can co-exist and create value. But we're now going to the next level. Cloud's certainly been validated, the hybrid cloud, on premises and public cloud. Working? >> Yeah >> Customers are seeing it, uptake is there. Where's the big thread now that's being worked on? Because, as going to the next level, it's an app market. We've also got some systems in there. Where do you see this coming together? I know you're giving a talk on this. >> Yeah I think, at the end of the day, people are trying to run applications. That's what this game has always been about. They have applications they're trying to build and run. They run their business. And I think, as a community, this group of people here has been working together to build that platform. And I think it's been actually incredible to watch the last couple of years. Everyone rallying round Kubernetes and Containers. That agreement amongst everyone happened so much faster than I thought it would. I was pretty confident two or three years ago that Kube was the right path forward, but that everyone came there has been pretty amazing. And I think what's happening now is, well what about stateless Twelve-Factor apps? What about functions? What about the rest of the stack? And how do we all come together as a community to find that going forward? >> Talk about the role of functions and as compute storage and networking that we call the holy trinity of IT. Those things have changed with Cloud, but specifically compute. I mean, I used to say, "Spin up a server in 10 seconds." Well I need now, milliseconds. So you see functions in, you know Amazon with Lambda, these things are changing the game. Now with containers and functions, a dynamic is evolving pretty interestingly. How do you see that evolving, and the impact of that piece? Because compute certainly is goodness to a lot of things. >> Sure, I think functions is interesting 'cause there's kind of two angles on it. There's functions as a business model, and functions as an architecture. And I think the architecture part, the programmable part is quite interesting. There are certain styles of applications, mostly Ven-oriented applications, where that is a really natural way to solve a problem. And I think what platforms are all about is having the platform be rich enough that for diversity workloads that you're running it's easy to consume the platform. And so, us all agreeing on functions as a programming model and getting that in the platform, and integrated with Kubernetes, and integrated with Istio, I think will enable people to build apps much more quickly. >> You see that's a good size right now? Good signals? >> Yeah. The Knative project is a great example of something new. >> Yeah Jason, I wonder if we can pull on that thread a little bit there? Because the holy grail has always been, I just want to worry about my application and all that storage and networking stuff should just work. When we went to virtualization it helped to a level, but that was just an abstraction. What's the same and what's different about when we go to something like functions, compared to what we've been doing in the past? >> Well, I think there's a couple things. First, I think IT is under this kind of, we're trying to flip the model. For my whole 20+ year career, IT has been mostly about infrastructure, and we started at infrastructure and we built our way up to apps. And what I think we've been trying to do with Kubernetes and with Knative is flip it, and start at apps and move our way down. Now Kube was a good step in that journey but it's still pretty raw, you know? You still have storage abstractions, you still have networking abstractions. What you want is for certain workloads to not worry about any of that, and functions and also Twelve-Factor systems, like Cloud Foundry, both play a role and if you fit within a paradigm we can get rid of all of that for you. And that's what developers want. And it doesn't work for everything. Not every application follows the rules. And I think Cloud Foundry has a particular opinionated view of twelve-factor stateless apps, functions has a particular opinionated view of event-orientated apps. We need those abstractions, and we need them to be done consistently with the rest of the platform, so you can kind of mix and match as you see fit. >> Istio has gotten hot too, so service batches are coming in. I know there's been some debate around how much does Kubernetes become or staying core. Last year we had big conversations around the core and let things fill in around it. Your thoughts on this trend and how people are thinking about it and what's being actually implemented? >> So my view is, I think the community has done a good job in letting different projects fill in their role, but us all agreeing on the stack. I mean container being Kubernetes, and Istio, and Knative, Prometheus. All these things are kind of slotting into their place, and I think in general we've done a good job of avoiding one mega system design. And I think CNCF has done a good job of letting a few competitors play with each other in the community, and make each other better. >> Jason, you bring up such a great point there, because one of the things when we reach this size and there are so many people here, there's the obvious comparison to, is this OpenStack? And you've just brought up one of the biggest things that I've seen is, before it was like, okay well how many different pieces are in the core and I've got the big tent and all these things, but it all needed to live together, as opposed to here, I've got all of these components and, in many ways we're trying to decompose Kubernetes and we've got all these various pieces, and they're not all dependent on each other and we don't all have to agree. There can be, from observability, for management, there's so many different ways that I can take the pieces and put them together. So, I would love your viewpoint as to what we're getting right now? And how do we not duplicate some of the sins of the past? >> Yeah, I mean, first off it's always something that a community as vibrant as this has to keep their eye on. It's like, is it all getting out of control? So far I think we've all done a good job because we've been very application oriented, and we've also been very focused on real usage. Most of the technologies we're talking about here, people are really using in production, ad-scale... There's somebody who has real earning behind that. And I think it's driven good decision-making. I think one of the, maybe, unsung things about Kubernetes is the extensibility model, that's built into Kubernetes. The loose coupling that's built into this community has been incredibly powerful. Because it's allowed new things, like Istio is a great example. We, with Google and Lyft and others, built Istio. We built it in this completely native experience inside of Kubernetes without changing anything about Kubernetes. We were able to insert it into the system in a very natural way. And I think that allows us to experiment and figure out where we need to go without it becoming this big mess. >> Scale's great, and that's a key value of the Cloud. Security is number one. What's your view on security? How's that going? What are end users experiencing? How serious is a security issue? Recently Kubernetes seemed to work, from the recovery standpoint, to automate it pretty quickly. But security is a concern. It's top of mine. You've got the security containment boundary there, the boundary within containers, you've got role of DMs. How do a new dimension... How do you view the security piece of Kubernetes? So I think it's letting us solve those problems in completely different ways. The holy grail for a long time has been get to standardized systems. And I think with Containers, we're as close as we've ever been. And I wouldn't say we're there, but we're awfully close to having a model where we've got clean separation between the application layer and the system. We can plug in security. We can do image enforcement. We can do scanning. We can do firewalling and network stuff in very different ways. Even Istio. Istio, at the end of the day, a lot of what people are interested in with Istio is the security idea. Like, I can do a cryptic communications between microservices, and that's all kind of done for me in the infrastructure underneath. So I think security is important. I think we're making it easier for developers to be successful building secure systems with platforms like we're talking about here. Because we're able to solve them in new ways. >> We've got IBM Think coming up. theCUBE will be there February, I think 15th? >> 12th to the 15th >> 12th to the 15th, in San Fransisco. What are you guys going to be talking about at IBM Think for folks that are going, or people might want to sign up. Plug for theCUBE and IBM Think there for a quick second. What's going to be there? What's the focus with an IBM... You guys got a lot of customers. What's their resonance to Kubernetes? How are they thinking about it? How are they consuming it? Will you share a little bit about what's coming up for them? >> Yeah, at IBM we're focused on helping customers make that journey to Cloud, and we're very pragmatic. We understand the complexity of the environments they have. They're building awesome new Cloud Native stuff, they have a bunch of existing middleware workloads. So we're going to be talking a lot about how we help you get there and how you handle the diversity of workloads. We're going to talk a lot about technology, about Kubernetes. We're going to do some fun stuff. We're going to do an awesome... We have a session that's all drones, flying drones demo of how Kubernetes works. Like all live, maybe somebody'll get hurt; I'm not sure. But we're going to do some awesome tech demos. >> We've heard a little bit of discussion about IoT here but not a lot about AI when it comes here. And I wondered if you might be able to help connect the dots for us? >> Yeah, so I'd say two things. AI is its whole own domain. I think the intersection with AI and a conference like this is Kubernetes is the platform for AI too. At IBM we run all of Watson on Kubernetes. We run all of our machine-learning and deep-learning systems by Kubernetes. So it is becoming the platform for AI developers as well, to be able to be successful, taking advantage of all the compute resource, custom hardware and stuff that's available in Cloud. So I think there's a strong intersection, of this being the platform for those workloads. >> So on the Cloud Native stuff, we know we've been covering you guys for a long time. You had SoftLayer in acquisition, but even before SoftLayer you had Bluemix. Bluemix was developing a lot of Cloud Native technologies. How is the result of the years of investment around Bluemix changing or evolving with the rise of Kubernetes and the rise of these new sets of microservices? Because you got operations impact, you got developer impact, you've the the simplicity model you were just talking about. How is IBM bringing that to bear? Can you share some inside commentary on what's happening? >> Over the last 2+ years, we've been building up the platform I've been describing to you in our cloud. We made a decision that Kubernetes was the foundation, both for the existing apps to modernize and for new things. And then we've been taking our serverless platform, our Cloud Foundry investment, our DevOps tools, and bringing them all together. My goal is to build that new platform. As an old web seer guy from 20 years ago, I saw the value in the industry rallying round a common platform for apps. I think we can do that again. I think we've made so much progress. And at IBM we're trying to drive that thought, both in our products and in these community interactions. >> Talk about that dynamic you mentioned... We were talking about before we came on camera here, about how I was saying it's a systems world now. People who have a different mindset seem to resonate well with Cloud. You mentioned the app server days, those blurry days. There's a renaissance of those two dimensions going on. Just share you thoughts on that. I thought you had an interesting insight. >> I think it's interesting. Cloud is absolutely a systems kind of problem. It's how do you bring hardware and networking, abstractions around compute, all these pieces together, and do it in a way that's composable. I think that's the really interesting part of Cloud, is you have a hundred things that all on their own have to have solid capability, and then you have to be able to mix and match them. And you can't do that unless you take a systems view. That security is the same, the user experience is the same, APIs are the same. And it's been actually really challenging to do that in the context of OpenSource, because every OpenSource project has its own viewpoints on how you do authentication, and authorisation, users, and getting all this stuff to work together is hard. And so I do think we have a little bit of a resurgence of people who understand how to build complete end-to-end systems. >> And then once you enable that you have some horizontally scalable capabilities, you got data and virtual specialization. >> You can specialize and you can have some common base. >> So now at the top, above that, is the app server kind of vibe that you went through. That's kind of happening now. You see that. >> Absolutely. >> And we see it for our clients and ourselves. All of IBM Cloud we've moved to run on the same platform. We run all of our services on Kubernetes. And so we've kind of used the platform ourselves to prove how it can handle this diverse set of workloads. >> This is really disruptive. I think that's a great angle. Jason, thanks for sharing that on theCUBE. We really want to get that out. Cloud is disrupting IT, open source communities, and the developer market, both horizontal scale and new kinds of application environments. It's certainly exciting. Thanks for having us here at KubeCon. Three days of wall-to-wall coverage. I'm John Furrier and Stu Miniman. And day one. Stay with us for more interviews after this short break. (upbeat music)

(upbeat techo music) >> Covering Kubecon and CloudNativeCon North America 2018 brought to you by RedHat, The Cloud Native Computing Foundation, and its ecosystem partners. (upbeat techno music) >> Okay welcome back everyone, we're live here in Seattle for KubeCon 2018, CloudNativeCon, I'm John Furrier with theCUBE coverage, three days. Our next guest is Chris Rosen who's the Program Director for Offering Management, for Kubernetes, IBM's Kubernetes Service. Chris, welcome to theCUBE thanks for joining us. >> Thank you very much, glad to be here. >> We always love covering IBM. Think is coming up this year. It's going to be in San Francisco. Want to get that out there because we're psyched it's in our backyard. It's always been in Vegas. We've been covering IBM's events for a long time. We've seen the evolution of Cloud, you know, Bluemix, SoftLayer all coming together. Kubernetes, actually the timing of Kubernetes couldn't have been better. >> Absolutely. >> With all the software investments in Bluemix, all the customers that you guys have, now with scale and choice with CNCF. Kind of a perfect storm for you guys, explain kind of what's going on, your role and how it's all kind of clicking together. >> Sure, so it is, you're exactly right it's an exciting time to be there. There's a lot of change. Everyone here at the conference, so excited there is so much new going on. About 2 1/2 years ago, IBM went all in on Kubernetes for our Cloud as well as for on-prem offerings to leverage and provide flexibility, portability, eliminating vendor lock-in, all those things that our customers asked us for and then adding capabilities on top of it. So, we are really excited to kind of grow and participate in the ecosystem. >> So, I hear a lot of people talk about Kubernetes. First of all, we love covering it, but the language around what is Kubernetes, they're even doing children's books, stories, trying to break it down. The rise of Kubernetes kind of has gone mainstream, but I hear things like the Kubernetes stack, the CNCF stack. I mean, it's not necessarily a stack per se. Could you break down, 'cause a lot of people are going to CNCF for a variety of other things. >> Right. >> With Kubernetes, at the core, describe how you talk to customers, how do you explain it. Unpack the positioning of Kubernetes at the core, and the CNCF offerings, or what do people call it? The stack, the CNCF stack? Or, how does this all break down? >> Yeah, so you're right. It's a very complex stack and that's where the complexity comes in that we're trying to eliminate for our customers is to simplify managing that stack. So, at the top of the stack, of course we've got Kubernetes for the orchestration layer. Below that, we've got the engine. We're using containerd now but we also have Prometheus, Fluentd, Calico, it's a very complex stack. And, when you think about managing that and a new version comes out from Kubernetes, how does that effect anything else in that stack? >> Chris, wonder if you can explain a little bit what IBM's doing here because some people I've heard, they've said, ah, there's like over 70 different you know, platforms with Kubernetes, oh they're all trying to sell me a Kubernetes distribution. >> Right. >> I don't believe that's the case. So, maybe you just explain what bakes into your products, what IBM bakes into the community. >> Right. >> And your role, yeah. >> Well, you're exactly right. So we're not forking and doing anything IBM-esk with Kubernetes. >> Right We have core maintainers that live out there. That's their job, is to focus upstream. We think that's very important to be agnostic and to participate in these communities. Now, what we do is, we build our solutions on top of these open source projects, adding value, simplifying the management of those solutions. So, you think about the CNCF conformance testing, IBM participates. We typically are the first public cloud to add support for a new version of Kubernetes. So we're really excited to do that, and the only way we can do that is by actively participating in the community. >> The upstream dynamic is important. Just talk about that for a second because this is, I think why one of the reasons it's been so successful is the upstream contribution is not your IBM perspective, it's just pure contribution for the benefit of the community then downstream, you guys are productizing that piece. >> Right. >> That is kind of, that is the purpose of open source. >> Exactly, exactly, and you hear time and time again at these conferences that the power of the community is so much greater than one individual company. So, let's work together as a community, build that solid foundation at the open source level and then IBM's going to add things that we think are differentiating and unique to our offering. >> What's the number one end-user conversation, problem that's being solved with the evolution of CNCF and Kubernetes at the core? Obviously, choice is one, but when specifically as you talk to customers, what is the big nead? What's the conversations like? Can you share some input into, insight into the customer equation? >> Probably the biggest request is around security, and that's a couple of fronts. One, maybe this is my first step into public cloud, so how do I ensure, in a multi-tenant world, that I am secure in isolation and all of those things. But then also, thinking about maybe I'm just starting with containers and microservices. So, this is a completely different mental paradigm in how I'm developing code, running code, and to explain to them how IBM is helping simplify that security aspect along that entire journey. >> So talk about the auto-scaling security piece, because, again, the touch points, it's interesting about Cloud, the entry point is multiple avenues for a customer could be workload, portability. It could be for a native application in the Cloud. Where's the scale come in? How do you guys see the scale picture developing? >> Right, so again, scaling comes kind of two factors. One, Pod Autoscaling from Kubernetes. So, you can define, let your application scale out when it needs to, but then there is also the Infrastructure side. So, I need to be able to set parameters to scale up when I need to and then scale back down to kind of meet my requirements as well as managing my cost. >> Well IBM Think's coming up on February 15th, just a plug for theCUBE. We'll be there, obviously register but IBM Think is a big conference. How much of Kubernetes will be at the center of IBM Think? >> Kubernetes will be a huge part at Think. We encourage everyone listening to come sign up and join us. There will be a range from hands-on for your Developer focus or your Operators. We'll have much larger business benefits for our C-level participants. So, a lot of activities, a lot of fun, a lot to learn at IBM Think 2019 in San Francisco. >> What's the biggest story here at KubeCon, CloudNative conference for the folks not here, or watching, or maybe are wait-listed in the lobby-con (Chris laughs) that's happening in Seattle? What's the biggest story? >> The biggest story is the vibrant ecosystem. When you look at the amount of people that are here, the chatter, the booths are packed, the sessions are packed, the keynotes are packed. It's great, everyone wants to share a story, learn from each other. It's a fantastic community to be a part of. >> I got to ask you the programmability piece, because, one of the things that people look for is virtual private networks, they're using VPNing, they want to take VPNs to the next level, SD-WAN, super-hot trend that's kicking back up, people want to program networks. >> Right. >> They don't want to have to actually provision networks anymore. this is DevOps but now it's also the network layer. Storage and compute looking good? >> Right. >> Network is evolving, how do you guys see that picture? Can you comment on that, it's a hot area. I just want to get your perspective. >> Yeah, definitely evolving just like the rest of the space. So, we are excited to work with various vendors here. IBM has our own point of view of what virtual private cloud means supporting, bring your own IP, private end-points, private cluster, so that way, if I only want connectivity inside my backbone network, I can configure my networks that way, creating a VPN tunnel back to my resources on-prem, and just have it completely isolated from the rest of the world. >> You see a lot of on-premises activity, Azure stack, Amazon announces this Outposts Cloud Sys supposed to be about a year away, and their whole message is latency. >> Right. >> Workloads need certain things, some of them need low-latency. >> Right. >> Some need more security. Just a, is that just a course of business now, that customers have to have these diverse sets of needs met? >> Absolutely, so IBM has two offerings, IBM Cloud Private for on-prem with multi-cloud manager that's really focused at managing in that hybrid or multi-cloud world. How do we simplify resources that are running on-prem, IBM Cloud, other Clouds, and how do we do so efficiently? So, we definitely see a lot of hybrid, hybrid architectures, whether that's on-prem to IBM Cloud, IBM Cloud to other Clouds, and latency really becomes a minimal factor. >> And what's your to do list on Kubernetes as you look at this event, obviously continuing to grow, the international piece is pretty compelling as well, growth in China, we're seeing that. What's your plans for IBM Kubernetes offering, what's the roadmap look like, what can you share some insight into what's next for you guys? >> Absolutely, so we're definitely focused on security, continues to be paramount, even though we think we are a very secure offering already, but continuing to expand on that. The private endpoints that I mentioned, the private connectivity, isolating network traffic is a huge piece of it, staying compliant and up to date with Kubernetes versions as they come out, making sure that they're scalable, performant, upgradeable, and then making those available to our users. >> IBM continuing to transform obviously the big news we saw with the RedHat acquisition, you know, obviously you've been in the Cloud for a while, everyone knows that with Bluemix, maybe not get to know as much work that went into Bluemix for instance, a lot of great stuff. You guys have built, you know, the Developer side within Cloud. IBM Think is February 15th, it's going to be in San Francisco. theCUBE will be there. Check these guys out. They're going to have a lot of workshops we're excited to see how the evolution of IBM and IBM Cloud continues. Chris coming on theCUBE, appreciate it. >> Thank you very much. >> theCUBE coverage, I'm John Furrier, Stu Miniman, stay with us for more coverage, here in Seattle, after this short break. (upbeat techno music)

>> From the SiliconANGLE Media office in Boston, Massachusetts, it's theCUBE. Now here are your hosts, Dave Vellante and Stu Miniman. >> Hi everybody, Dave Vellante here with Stu Miniman. We're here to unpack the recent acquisition that IBM announced of Red Hat. $34 billon acquisition financed with cash and debt. And Stu, let me get us started. Why would IBM spend $34 billion on Red Hat? Its largest acquisition to date of a software company had been Cognos at $5 billion. This is a massive move. IBM's Ginni Rometty called this a game changer. And essentially, my take is that they're pivoting. Their public cloud strategy was not living up to expectations. They're pivoting to hybrid cloud. Their hybrid cloud strategy was limited because they didn't really have strong developer mojo, their Bluemix PaaS layer had really failed. And so they really needed to make a big move here, and this is a big move. And so IBM's intent, and Ginni Rometty laid out the strategy, is to become number one in hybrid cloud, the undisputed leader. And so we'll talk about that. But Stu, from Red Hat's perspective, it's a company you're very close to and you've observed for a number of years, Red Hat was on a path touting a $5 billion revenue plan, what happened? Why would they capitulate? >> Yeah Dave, on the face of it, Red Hat says that IBM will help it further its mission. We just listened to Arvin Krishna from IBM talking with Paul Cormier at Red Hat, and they talked about how they were gonna keep the Red Hat brand alive. IBM has a long history with open source. As you mentioned, I've been working with Red Hat, gosh, almost 20 years now, and we all think back to two decades ago, when IBM put a billion dollars into Linux and really pushed on open source. So these are not strangers, they know each other really well. Part of me looks at these from a cynicism standpoint. Somebody on Twitter said that Red Hat is hitting it at the peak of Kubernetes hype. And therefore, they're gonna get maximum valuation for where the stock is. Red Hat has positioned itself rather well in the hybrid cloud world, really the multicloud world, when you go to AWS, when you go to the Microsoft Azure environment, you talk to Google. Open source fits into that environment and Red Hat products specifically tie into those environments. Remember last year, in Boston, there's a video of Andy Jassy talking about a partnership with Red Hat. This year, up on stage, Microsoft with Azure partnering deeply with Red Hat. So Red Hat has done a nice job of moving beyond Linux. But Linux is still at its core. There definitely is concern that the operating system is less important today than it was in the past. It was actually Red Hat's acquisition of CoreOS for about $250 million earlier this year that really put a fine point on it. CoreOS was launched to be just enough Linux to live in this kind of container and Kubernetes world. And Red Hat, of course, like we've seen often, the company that is saying, "We're going to kill you", well you go and you buy them. So Red Hat wasn't looking to kill IBM, but definitely we've seen this trend of softwares eating the world, and open sources eating software. So IBM, hopefully, is a embracing that open source ethos. I have to say, Dave, for myself, a little sad to see the news. Red Hat being the paragon of open source. The one that we always go to for winning in this space. So we hope that they will be able to keep their culture. We've had a chance, many times, to interview Jim Whitehurst, really respected CEO. One that we think should stay involved in IBM deeply for this. But if they can keep and grow the culture, then it's a win for Red Hat. But still sorting through everything, and it feels like a little bit of a capitulation that Red Hat decides to sell off rather than keep its mission of getting to five billion and beyond, and be the leading company in the space. >> Well I think it is a bit of a capitulation. Because look, Red Hat is roughly a $3 billion company, growing at 20% a year, had that vision of five billion Its stock, in June, had hit $175. So while IBM's paying a 60% premium off of its current price, it's really only about 8 or 9% higher than where Red Hat was just a few months ago. And so I think, there's an old saying on Wall Street, the first disappointment is never the last. And so I think that Red Hat was looking at a long slog. They reduced expectations, they guided lower, and they were looking at the 90-day shot clock. And this probably wasn't going to be a good 'nother couple of years for Red Hat. And they're selling at the peak of the market, or roughly the peak of the market. They probably figured, hey, the window is closing, potentially, to do this deal. Maybe not such a bad time to get out, as opposed to trying to slog it out. Your thoughts. >> Yeah, Dave, I think you're absolutely right. When you look at where Red Hat is winning, they've done great in OpenStack but there's not a lot of excitement around OpenStack. Kubernetes was talked about lots in the announcement, in the briefings, and everything like that. I was actually surprised you didn't hear as much about just the core business. You would think you would be hearing about all the companies using Red Hat Enterprise Linux around the world. That ratable model that Red Hat really has a nice base of their environment. It was talking more about the future and where Kubernetes, and cloud-native, and all of that development will go. IBM has done middling okay with developers. They have a strong history in middleware, which is where a lot of the Red Hat development activity has been heading. It was interesting to hear, on the call, it's like, oh well, what about the customers that are using IBM too say, "Oh well, if customers want that, we'll still do it." What about IBM with Cloud Foundry? Well absolutely, if customers wanna still be doing it, they'll do that. So you don't hear the typical, "Oh well, we're going to take Red Hat technology "and push it through all of IBM's channel." This is in the IBM cloud group, and that's really their focus, as it is. I feel like they're almost limiting the potential for growth for Red Hat. >> Well so IBM's gonna pay for this, as I said, it's an all cash deal. IBM's got about 14 and a half billion dollars on the balance sheet. And so they gotta take out some debt. S&P downgraded IBM's rating from an A+ to an A. And so the ratings agency is going to be watching IBM's growth. IBM said this will add 200 basis points of revenue growth over the five year CAGR. But that means we're really not gonna see that for six, seven years. And Ginni Rometty stressed this is not a backend loaded thing. We're gonna find revenue opportunities through cross-selling and go-to-market. But we have a lot of questions on this deal, Stu. And I wanna sorta get into that. So first of all, again, I think it's the right move for IBM. It's a big move for IBM. Rumors were that Cisco might have been interested. I'm not sure if Microsoft was in the mix. So IBM went for it and, as I said, didn't pay a huge premium over where their stock was back in June. Now of course, back in June, the market was kind of inflated. But nonetheless, the strategy now is to go multi-cloud. The number one in the multi-cloud world. What is that multi-cloud leadership? How are we gonna measure multi-cloud? Is IBM, now, the steward of open source for the industry? To your point earlier, you're sad, Stu, I know. >> You bring up a great point. So I think back to three years ago, with the Wikibon we put together, our true private cloud forecast. And when we built that, we said, "Okay, here's the hardware, and software, "and services in private cloud." And we said, "Well let's try to measure hybrid cloud." And we spent like, six months looking at this. And it's like, well what is hybrid cloud? I've got my public cloud pieces, and I've got my private cloud pieces. Well there's some management layers and things that go in between. Do I count things like PaaS? So do you save people like Pivotal and Red Hat's OpenShift? Are those hybrid cloud? Well but they live either here or there. They're not usually necessarily helping with the migration and moving around. I can live in multiple environments. So Linux and containers live in the public, they live in the private, they don't just fly around in the ether. So measuring hybrid cloud, I think is really tough. Does IBM plus Red Hat make them a top leader in this hybrid multi-cloud world? Absolutely, they should be mentioned a lot more. When I go to the cloud shows, the public cloud shows, IBM isn't one of the first peak companies you think about. Red Hat absolutely is in the conversation. It actually should raise the profile of Red Hat because, while Red Hat plays in a lot of the conversations, they're also not the first company that comes to mind when you talk about them. Microsoft, middle of hybrid cloud. Oracle, positioning their applications in this multi-cloud world. Of course you can't talk about cloud, any cloud, without talking about Amazon's position in the marketplace. And SAS is the real place that it plays. So IBM, one of their biggest strengths is that they have applications. Dave, you know the space really well. What does this mean vis-à-vis Oracle? >> Well let's see, so Oracle, I think, is looking at this, saying, alright. I would say IBM is Oracle's number one competitor in the enterprise. You got SAP, and Amazon obviously in cloud, et cetera, et cetera. But let me put it this way, I think Oracle is IBM's number one competitor. Whether Oracle sees it that way or not. But they're clearly similar companies, in terms of their vertical integration. I think Oracle's looking at this, saying, hey. There's no way Oracle was gonna spend $34 billion on Red Hat. And I don't think they were interested in really spending any money on the alternatives. But does this put Canonical and SUSE in play? I think Oracle's gonna look at this and sort of message to its customers, "We're already number one in our world in hybrid cloud." But I wanna come back to the deal. I'm actually optimistic on the deal, from the standpoint of, I think IBM had to make a big move like this. Because it was largely just bumping along. But I'm not buying the narrative from Jim Whitehurst that, "Well we had to do this to scale." Why couldn't they scale with partners? I just don't understand that. They're open. This is largely, to me, a services deal. This is a big boon for IBM Services business. In fact, Jim Whitehurst, and Ginni even said that today on the financial analyst call, Jim said, "Our big constraint was "services scale and the industry expertise there." So what was that constraint? Why couldn't they partner with Accenture, and Ernie Young, and PwC, and the likes of Deloitte, to scale and preserve greater independence? And I think that the reason is, IBM sees an opportunity and they're going hard after it. So how will, or will, IBM change its posture relative to some of those big services plays? >> Yeah, Dave, I think you're absolutely right there. Because Red Hat should've been able to scale there. I wonder if it's just that all of those big service system integrators, they're working really closely with the public cloud providers. And while Red Hat was a piece of it, it wasn't the big piece of it. And therefore, I'm worried on the application migration. I'm worried about the adoption of infrastructure as a service. And Red Hat might be a piece in the puzzle, but it wasn't the driver for that change, and the move, and the modernization activities that were going on. That being said, OpenShift was a great opportunity. It plays in a lot of these environments. It'll be really interesting to see. And a huge opportunity for IBM to take and accelerate that business. From a services standpoint, do you think it'll change their position with regard to the SIs? >> I don't. I think IBM's gonna try to present, preserve Red Hat as an independent company. I would love to see IBM do what EMC did years ago with VMware, and float some portion of the company, and truly have it at least be quasi-independent. With an independent operating structure, and reporting structure from the standpoint of a public company. That would really signal to the partners that IBM's serious about maintaining independence. >> Yeah now, look Dave, IBM has said they will keep the brand, they will keep the products. Of all the companies that would buy Red Hat, I'm not super worried about kinda polluting open source. It was kinda nice that Jim Whitehurst would say, if it's a Red Hat thing, it is 100% open source. And IBM plays in a lot of these environments. A friend of mine on Twitter was like, "Oh hey, IBM's coming back to OpenDaylight or things like that." Because they'd been part of Cloud Foundry, they'd been part of OpenDaylight. There's certain ones that they are part of it and then they step back. So IBM, credibly open source space, if they can let Red Hat people still do their thing. But the concern is that lots of other companies are gonna be calling up project leads, and contributors in the open source community that might've felt that Red Hat was ideal place to live, and now they might go get their paycheck somewhere else. >> There's rumors that Jim Whitehurst eventually will take over IBM. I don't see it, I just don't think Jim Whitehurst wants to run Z mainframes and Services. That doesn't make any sense to me. Ginni's getting to the age where IBM CEOs typically retire, within the next couple of years. And so I think that it's more likely they'll bring in somebody from internally. Whether it's Arvin or, more likely, Jim Kavanaugh 'cause he's got the relationship with Wall Street. Let's talk about winners and losers. It's just, again, a huge strategic move for IBM. Frankly, I see the big winners is IBM and Red Hat. Because as we described before, IBM was struggling with its execution, and Red Hat was just basically, finally hitting a wall after 60-plus quarters of growth. And so the question is, will its customers win? The big concern I have for the customers is, IBM has this nasty habit of raising prices when it does acquisitions. We've seen it a number of times. And so you keep an eye on it, if I were a Red Hat customer, I'd be locking in some attractive pricing, longterm. And I would also be calling Mark Shuttleworth, and get his take, and get that Amdahl coffee cup on my desk, as it were. Other winners and losers, your thoughts on some of the partners, and the ecosystem. >> Yeah, when I look at this and say, compare it to Microsoft buying GitHub. We're all wondering, is this a real game changer for IBM? And if they embrace the direction. It's not like Red Hat culture is going to just take over IBM. In the Q&A with IBM, they said, "Will there be influence? Absolutely. "Is this a marriage of equals? No. "We're buying Red Hat and we will be "communicating and working together on this" But you can see how this can help IBM, as to the direction. Open source and the multi-cloud world is a huge, important piece. Cisco, I think, could've made a move like this. I would've been a little bit more worried about maintaining open source purity, if it was somebody like Cisco. There's other acquisitions, you mentioned Canonical and SUSE are out there. If somebody wanted to do this, the role of the operating system is much less important than it is today. You wouldn't have seen Microsoft up on stage at Red Hat Summit this year if Windows was the driver for Microsoft going forward. The cloud companies out there, to be honest, it really cements their presence out there. I don't think AWS is sitting there saying, "Oh jeez, we need to worry." They're saying, "Well IBM's capitulated." Realizing that, "Sure they have their own cloud, "and their environment, but they're going to be "successful only when they live in, "and around, and amongst our platform of Amazon." And Azure's gonna feel the same way, and same about Google. So there's that dynamic there. >> What about VMware? >> So I think VMware absolutely is a loser here. When I went back to say one of the biggest strengths of IBM is that they have applications. When you talk about Red Hat, they're really working, not only at the infrastructure layer, but working with developers, and working in that environment. The biggest weakness of VMware, is they don't own the applications. I'm paying licenses to VMware. And in a multi-cloud world, why do I need VMware? As opposed to Red Hat and IBM, or Amazon, or Microsoft, have a much more natural affinity for the applications and the data in the future. >> And what about the arms dealers? HPE and Dell, in particular, and of course, Lenovo. Wouldn't they prefer Red Hat being independent? >> Absolutely, they would prefer that they're gonna stay independent. As long as it doesn't seem to customers that IBM is trying to twist everybody's arms, and get you on to Z, or Power, or something like that. And continues to allow partnerships with the HPEs, Dells, Lenovos of the world. I think they'll be okay. So I'd say middling to impact. But absolutely, Red Hat, as an independent, was really the Switzerland of the marketplace. >> Ginni Rometty had sited three growth areas. One was Red Hat scale and go-to-market. I think there's no question about that. IBM could help with Red Hat's go-to-market. The other growth vector was IBM's products and software on the Red Hat stack. I'm less optimistic there, because I think that it's the strength of IBM's products, in and of themselves, that are largely gonna determine that success. And then the third was Services. I think IBM Services is a huge winner here. Having the bat phone into Red Hat is a big win for IBM Services. They can now differentiate. And this is where I think it's gonna be really interesting to see the posture of Accenture and those other big guys. I think IBM can now somewhat differentiate from those guys, saying, "Well wait, "we have exclusive, or not exclusive, "but inside baseball access to Red Hat." So that's gonna be an interesting dynamic to watch. Your final thoughts here. >> Yeah, yeah, Dave, absolutely. On the product integration piece, the question would be, you're gonna have OpenAPIs. This is all gonna work with the entire ecosystem. Couldn't IBM have done more of this without having to pay $34 billion and put things together? Services, absolutely, will be the measurement as to whether this is successful or not. That's probably gonna be the line out of them in financials, that we're gonna have to look at. Because, Dave, going back to, what is hybrid, and how do we measure it? What is success for this whole acquisition down the line? Any final pieces to what we should watch and how we measure that? >> So I think that, first of all, IBM's really good with acquisitions, so keep an eye on that. I'm not so concerned about the debt. IBM's got strong free cash flow. Red Hat throws off a billion dollars a year in free cash flow. This should be an accretive acquisition. In terms of operating profits, it might take a couple of years. But certainly from a standpoint of free cash flow and revenue growth, I think it's gonna help near-term. If it doesn't, that's something that's really important to watch. And then the last thing is culture. You know a lot of people at these companies. I know a lot of people at these companies. Look, the Red Hat culture drinks the Kool-Aid of open. You know this. Do they see IBM as the steward of open, and are they gonna face a brain drain? That's why it's no coincidence that Whitehurst and Rometty were down in North Carolina today. And Arvin and Paul Cormier were in Boston today. This is where a lot of employees are for Red Hat. And they're messaging. And so that's very, very important. IBM's not foolish. So that, to me, Stu, is a huge thing, is the culture. Dave, IBM is no longer the navy suit with the red tie, and everybody buttoned down. People are concerned about like, oh, IBM's gonna give the Red Hat people a dress code. Sure, the typical IBMer is not in a graphic tee and a hoodie. But, Dave, you've seen such a transformation in IBM over the last couple of decades. >> Yeah, definitely. And I think this really does, in my view, cement, now, the legacy of Ginny Rometty, which was kinda hanging on Watson, and Cognitive, and this sort of bespoke set of capabilities, and the SoftLayer acquisition. It, now, all comes together. This is a major pivot by IBM. I think, strategically, it's the right move for IBM. And I think, if in fact, IBM can maintain Red Hat's independence and that posture, and maintain its culture and employee base, I think it does change the game for IBM. So I would say, smart move, good move. Expensive but probably worth it. >> Yeah, where else would they have put their money, Dave? >> Yeah, right. Alright, Stu, thank you very much for unpacking this announcement. And thank you for watching. We'll see you next time. (mellow electronic music)

>> Live from Orlando, Florida, it's The CUBE, covering Cisco Live 2018 brought to you by Cisco, Netapp, and the CUBE's ecosystem partners. >> Hello everyone, welcome back. This is the CUBE live in Orlando for Cisco Live 2018, exclusive coverage, I'm John Furrier, cohost of the CUBE. Stu Miniman all week for three days and we have Dave Alante flying in as well, cohost for our kickoff of day two of our three days of coverage, great Dave, good to see you Stu. Good morning, so I think the big news obviously day one in the books. Cisco Live pumping on all cylinders. The parties, we saw great concert last night at the Cohesity party celebrating their 250 million in funding, but the real big news here is Cisco's moving up the stack and the business performance. Dave, you had a chance to scour the landscape last night and yesterday, what did you find out? What's going on with Cisco's business? >> Well the business wise, I mean, this company is actually doing quite well. It's a large company, 50 billion dollars, they're growing at four percent. You don't usually see growth, we've seen how many quarters in a row as IBM, you know, revenues declined. Cisco's reversed that trend and is growing. The other thing about Cisco is it brought about 60 billion dollars from overseas on the tax holiday, which is just amazing. The company is trying to shift its model, more toward a cloud-like model. Stu, you've made the point many times Cisco, like Dell, doesn't have a cloud. So they've got to create a cloud-like model, they've got to go multi-cloud, they've got to be an arms dealer for the cloud. So as a company that's 50 billion dollars, a 200 billion dollar plus market value, which is down from where they were in the halcyon days but still it's a 4X revenue multiple and they throw off over $10 billion dollars in free cash flow a year, so this company's very, very strong and John, we were talking last night about the angle and security and basically a programmable network infrastructure. To me, the big trend is it's all about the data. As the data explodes, the network gets a lot of pressure. >> You know, Stu, I want to get your thoughts on this because we talked on security last night. Talk about companies that have to pivot. Cisco is not pivoting in any capacity. They are dealing with networks that are running the internet, right? So Chuck Robbins just said, "Look it, "we have done a lot of great things" but they're dealing with so much security threats. It's encrypted traffic, they are dealing with a ton of activity so the relevance of Cisco is on an all time high. The opportunity is to take that relevance and build on top of it, and so, we're looking for some signals, Stu. What do you when you squint through the noise and look at Cisco's relevance, obviously you see they run networks. You're moving up the stack with Kubernetes and containers and DevNet's been a great indicator there's a rise of the new normal, but they gotta actually put it together, they got a community. Where is the change happening, Stu, in your opinion? >> Yes, so John, first of all I look at, we've been tracking Cisco's moves in open source for many years. Dave Wright, Lou Tucker, folks we've had on the CUBE. They're very involved in open stack, they're deeply involved, Kubernetes, Ishdio, Diane Greene on stage. So there was that seed of growth and change, but it didn't really push far enough. Where the critique I've had for Cisco and many of the other big legacy companies, is they haven't really embraced cloud as fast as they could. It's good to see where Cisco is and where they're trying to bring their ecosystem. The exciting stuff has been right here, in the DevNet zone. How many events do we go to and companies we talk to? "Oh we need to be relevant to all "these developers out there," well, Susie and her team here, they've got a platform, they've got 500 thousand developers on it. John, you and I interviewed one little startup's netnology. A buddy of mine, actually, Jason Ellerman, worked for this other company called Network to Code. They've got this whole little incubator section here in the DevNet zone. These are hardcore networking people helping to bridge that gap between the network and the developer world. It's open APIs, it's all the things we've been talking about and that really does set the stage for Cisco to help, not only itself, but it's very large channel and partner ecosystem move further into this new, cloud native world. >> I want to get your thoughts real quick. I know we've got to get in day two but, if you look at Cisco, they've done a lot of things early. The human network, they've had telepresence. So they've hit megatrends, but they misfired on timing. The timing-- >> IOT is another >> IOT, they misfired on timing. But again, they had the network to fall back on, which is a core asset and core competency. But if you look at the timing of what they're doing right now, as Pat Gelsinger would say, "You get on the right wave" and what DevNet, to me, proves, Stu, is your point, is that Cisco's on the Cloud Native wave and they have a clear visibility for their network engineers, not to feel like they're not relevant and they have to retrain to learn how to code. What's important and we talked about it yesterday, is that network engineers are instrumental powering. And they're the tier one people. Now, with Cloud Native, there's a path where they can extend their career, not pivot, or reset, it's just becoming more powerful. So if you can be a network engineer, and then code with Cloud Native, you've got the best of both worlds, the power base extends. It's not like "I need to be retrained, my job's going away." No, no, your job is expanding. This is what DevNet has tapped into with DevNet Create, your reaction. >> Well when cloud exploded, everybody wanted infrastructure as code, and to your point, Stu, you remember when IBM launched Bluemix, like "We need developers." You know, Dell, HPE, Lenovo, these companies don't have a strong developer community, even Oracle kinda lost its way with developers. Here comes Cisco allowing Cisco engineers to do infrastructure as code, it's a huge leverage, it's an amazing-- >> Yeah Oracle should take a playbook out of what Cisco's doing, Stu, your thoughts. >> Yeah, absolutely, there's a lot of training. One of the strengths, actually, if you look at this community, it's about training, we talked about it in our open yesterday, John, when you walk in, there's this giant bookstore, people are excited, it's their career and they've been hearing for the last five years, up, you know. Automations gonna kill your job. That the machines are gonna kill your job. They're jumping in and most of them, at least, are understanding that they need to adjust what they're doing, learn, move forward, and embrace some of these options. >> Well, and it's not just, as we were talking earlier, John, it's not just learning python as a generalist, it's applying it specifically to Cisco infrastructure and actually getting stuff done, moving from command line interfaces to a much more facile development environment. Driving value through developer productivity and increasing value up a stack. >> Yeah as Diane Greene said yesterday in the keynote from Google Cloud is mind blowing experiences. I think Cisco is in a great position, they got a lot of core things going on, it's a position of strength. Can they execute, can they secure that network security, can they have that extensibility and the programmability in the network I think is core. I think DevNet's an indicator. Everything else will fall into place, in my opinion, so, day two Dave, thanks for joining us. >> My pleasure, thanks for having me. >> We'll have Dave Alante in the CUBE throughout the day, he's also gonna go out and get some stories. Wrapping it up here on the intro, day two begins. This is the CUBE, thanks for watching. Be right back with more after this short break. (techno music)

>> Narrator: Live from Boston, Massachusetts, it's theCUBE, covering ZertoCON 2018. Brought to you by Zerto. >> This is theCUBE, I'm Paul Gillin. We're here at ZertoCON 2018, Hynes Convention Center in Boston. The final day of ZertoCON, and a lot of talk about partnership at this conference, and one of Zerto's key partners is IBM. Daniel Witteveen is a vice president of resiliency services portfolio at IBM, and I guess the manager of the Zerto relationship from IBM's perspective, is that so? >> Yeah, so I have responsibility for IBM's Resiliency Portfolio. Which includes disaster recovery as a service, backup as a service, data migration services. As well as we do a lot around site and facilities design, construction, and build. So specifically around DRaaS and what you heard today going into the backup world, our backup-as-a-service offering, Zerto's been a partner of ours since 2016. >> Now DRaaS, I think of, is certainly, has been around, disaster recovery has been around for a long time. How much of that business has moved into the cloud now and become a service? >> There's still a very large segment of the population that's doing traditionally DR, but that is moving rapidly to a more automated function. Now, the challenge our customers are faced with is not all workload is cloud ready. So we have a partnership with Zerto for all that cloud-ready workload, using them, but we also combine the Zerto technology into our orchestration software, which handles the full recovery of non-cloud workload IT. So, think about multiple platforms, think about multiple clouds, think about multiple data movers and replicators. We can orchestrate that entire recovery process using Zerto for the virtual environment. >> Talking to executives here today, we don't hear a lot about recovery, we hear a lot about resilience. How ready, how many of your customers are really in that position where they're thinking resilience is never going down as opposed to recovery from a failure? >> So, the goal is to be as close to no outage as possible. But in lieu of recent cyber incidents in cyber-related attacks, the conversation for our clients has shifted to true business resilience. Right, so we have a business resilience conversation verse an IT resilience conversation. Business resilience clearly includes IT, but when you talk about a malicious cyber-related attack, which will cause disruption which'll cause outage, which'll cause data corruption, you're always-on-never-be-out-age viewpoint changes a bit. So, our clients are having a lot of discussions with us around changing the way we think about IT resilience in light of a cyber-related incident. >> Well security, the fastest growing business at IBM is security, how closely do you work with these people in that group? >> Very closely, we've combined, if you're familiar with the NIST Framework around cyber resiliency, you know that there's a lot of effort from our security services around identification and prevention. But what happens when it gets through all that and actually causes and outage, right? So we've partnered very close together on how do you recover and restore, right, using technologies from resiliency services while you try to prevent and detect for true resiliency. >> Talk about the history of the relationship. It's only been a couple years, but how did you first become aware of Zerto and why were they chosen as part of the portfolio? >> Yeah, that's a very good question. So, Zerto started relationship with IBM Cloud. I think at the time it was probably called SoftLayer or Bluemix, right? >> Paul: Yes, it Was probably. >> And that started right as a mechanism to provide DRaaS in a very simple version on IBM Cloud. And the benefits IBM Cloud provided at that time, and still do today, is true hypervisor access to Zerto. And that's been very attractive to Zerto clients because a version of Zerto on-prem is the same as in the cloud, and that's a unique capability for us. But also, another value point was that the data replication between our data centers is free to the customer, so think about the cost structure when it comes to bandwidth. If the customer's moving production in one cloud, in one data center of IBM Cloud, and wants to do recovery out of region, another IBM data center, all that data transfer is included. Right, that's an amazing value prop. But when we're having those discussions with our clients, it expanded to, well, that's nice, that answers this section of my workload. What about all this? And that's really where the relationship blossomed with our integration of orchestration to handle the full IT estate really focusing on hybrid IT. >> Of course, hybrid IT is really the sweet spot for IBM-- >> Daniel: It is. >> How does resilience fit into. The sweetest services that you're offering customers now, is this sort of a core service? Resilience, is a core service of the IBM Hybrid Solution? >> Yeah, absolutely, so within global technology services, it's one of three key plays, resiliency. And if you think of us as a very large outsourcing firm, clients are dependent on us providing these services to them, so it is very significant, as the nature of all of our conversations, any kind of managed service, the default expectation of our client is that it's resilient. >> And, would you say that the clients have understand and really internalized this idea of resilience? Or are they still not quite sure what it all means? >> I would say there's, clients vary brainly. The regulatory clients and the clients that are most potentially exposed to negative publicity as a result of a cyber attack are much more aware and in tune. I will tell you also in lieu of cyber, and it was part of the conversation on that panel yesterday, you're talking about a very different way to respond to an outage. Which is creating a lot of dialogue within our clients of what does it truly mean to be resilient. So it's driving a conversation. They used to be siloed: maybe in IT, maybe in the risk officer or maybe in the CISO. It is bringing them now altogether, and say, we've got to work much stronger together to be resilient. >> We hear a lot of talk about multi-cloud. Is it mostly talk or are you seeing customers really adopt? Are they excited about adopting multiple public clouds? >> I would probably draw a parallel to, did a client ever use one platform, right? And they do. And so clients are very in tune to want to have multiple options. It is very rare today that I go into a client that's single cloud oriented. They'll start single cloud, but they're going to want the flexibility to be multi-cloud. And we want to make sure when we orchestrate their disaster recovery, or even their backup or any of our other offerings, that that can be seamless, that they can move from one cloud to another cloud for whatever reason, maybe it's financial, maybe it's location, maybe it's capability. We want to be able to seamlessly provide that interaction. >> Now AWS and Azure are never going to play nicely together, Where does IBM fit into that matrix? Are you a Switzerland between all these public clouds? >> Well, so we have our own. >> Yes, of course. >> Within IBM Cloud, we'll talk about our strength and our size in the enterprise relative to those providers. But as a services entity, we will continue to be (mumbles). Our shareholders great to be using IBM Cloud. But certainly if a solution or a customer dictates another solution, we would be fine with that. >> Paul: What do your customers ask you about backup these days? Where is backup going? >> How can you do it for me, so I don't have to do it? >> Because it's so painful. (laughing) >> That's our probably biggest use case is customers recognize it's not a core competency. The data explosion has just, they can't handle it anymore. They're buying storage everyday. And they're going there's got to be a better way. And our conversation with customers around backup is let us be your better way. We will provide the infrastructure. We'll provide the label. We'll provide the software. We'll provide the architectural positioning. And we'll focus on providing you the business outcome that you need relative to that offer. >> Would you say the backup is rapidly going to move to the cloud or do you think on-prem backup is going to be around for a long time? >> It's a good question. Unfortunately, as it depends the answer is. For the smaller companies and the remote offices, going directly to cloud makes complete sense. When you have a high-change rate and you have a lot of storage volume, your decision will become where do I need to recover or how do I need to access that data? And maybe that's best suited on-prem. Once (mumbles) in the cloud, maybe that's suited in cloud. I think long term, they'll ultimately sit in the cloud, but there's still a massive amount of storage and customers prefer a massive amount of that to be on-prem. >> In a multi-cloud world, is resilience more difficult to ensure? Or is it easier? >> Way more complex. Way more complex, because if you think about, what 10 years ago, you had site A and site B, site A went down, you're worried about site B. Very easy. One failure case. Now our clients have not only multi-cloud, they have multiple locations, remote offices, back offices. They have multiple software-as-a-service providers. And so our view is, you have to look at the business process resiliency. If you have one system that goes down in a software-as-a-service provider, how does that impact you business process? Can it still work? And how do you make it work in the event that one of those components fail? So it's a lot more complex because you're not just thinking about A and B, you're thinking about 10 different failure scenarios, 20 different scenarios, and making sure that doesn't interrupt the business process. >> The quest for simplicity, IT always seems to become more complex. >> What's interesting is every evolution of technology, which increases redundancy, reliability, the first sense is, well, then I don't need as much resiliency, and every change of technology consolidates that risk, and therefore resiliency becomes that much more important. >> Good job security. Daniel Witteveen, thanks very much for joining us from IBM. >> Excellent, as always, I appreciate being here. Thank you. >> I'm Paul Gillin. That's it for us here at ZertoCON 2018. This is theCUBE. Thanks for watching. (upbeat music)

>> [Announcer] 18, brought to you by Red Hat >> Well, welcome back everyone. This is theCUBE's exclusive coverage here in San Francisco, California, for Red Hat Summit 2018. I am John Furrier, co-host of theCUBE with my analyst co-host this week, John Troyer, co-founder of the TechReckoning advisory services. And our next guest is Arvind Krishna, who is the Senior Vice President of Hybrid Cloud at IBM and Director of IBM Research. Welcome back to theCUBE, good to see you. >> Thanks John and John great to meet you guys here. >> You can't get confused here you've got two John's here. Great to have you on because, you guys have been doing some deals with Red Hat, obviously the leader at open storage. You guys are one of them as well contributing to Linuxes well documented in the IBM history books on your role and relationship to Linux so check, check. But you guys are doing a lot of work with cloud, in a way that, frankly, is very specific to IBM but also has a large industry impact, not like the classic cloud. So I want to tie the knot here and put that together. So first I got to ask you, take a minute to talk about why you're here with Red Hat, what's the update with IBM with Red Hat? >> Great John, thanks for giving me the time. I'm going to talk about it in two steps: One, I'm going to talk about a few common tenets between IBM and Red Hat. Then I'll go from there to the specific news. So for the context, we both believe in Linux, I think that easy to state. We both believe in containers, I think that is the next thing to state. We'll come back talk about containers because this is a world, containers are linked to Linux containers are linked to these technologies called Kubernetes. Containers are linked to how you make workloads portable across many different environments, both private and public. Then I go on from there to say, that we both believe in hybrid. Hybrid meaning that people want the ability to run their workload, where ever they want. Be it on a private cloud, be it on a public cloud. And do it without having to rewrite everything as you go across. Okay, so let's establish, those are the market needs. So then you come back and say. And IBM has a great portfolio of Middleware, names like WebSphere and DB2 and I can go on and on. And Red Hat has a great footprint of Linux, in the Enterprise. So now you say, we've got the market need of hybrid. We've got these two thing, which between them are tens of millions, maybe hundreds of millions of end points. How do you make that need get fulfilled by this? And that's what we just announced here. So we announced that IBM Middleware will run containerized on Red Hat containers, on Red Hat Enterprise Linux. In addition, we said IBM Cloud Private, which is the ability to bring all of the IBM Middleware in a sort of a cloud-friendly form. Right you click and you install it, it keep it self up, it doesn't go down, it's elastic in a set of technologies we call IBM Cloud Private, running in turn on Red Hat OpenShift Container service on Red Hat Linux. So now for the first time, if you say I want private, I want public, I want to go here, I want to go there. You have a complete certified stack, that is complete. I think I can say, we're a unique in the industry, in giving you this. >> And this is where, kind of where, the fruit comes off the tree, for you guys. Because, we've been following you guys for years, and everyone's: Where's the cloud strategy? And first of all, it's not, you don't have a cloud strategy you have cloud products. Right, so you have delivered the goods. You got the, so just to replay. The market need we all know is the hybrid cloud, multi-cloud, choice et cetera, et cetera. >> You take Red Hat's footprint, your capabilities, your combined install base, is foundational. >> [Arvind] Right >> So, nothing needs to change. There's no lift and shift, there's no rip and replace, >> you can, it's out there it's foundational. Now on top of it, is where the action is. That where you're kind of getting at, right? >> That's correct, so we can go into somebody running, let's say, a massive online banking application or they're running a reservation system. It's using technologies from us, it's using Linux underneath and today it's all a bunch of piece pods, you have a huge complex stuff it's all hard-wired and rigidly nailed down to the floor in a few places and now you can say: Hey, I'll take the application. I don't have to rewrite the application. I can containerize it, I can put it here. And that same app now begins to work but in a way that's a lot more fluid and elastic. Or my other way: I want to do a bit more work. I want to expose a bit of it up as microservices. I want to insert some IA. You can go do that. You want to fully make it microservices enabled to be able to make it into little components >> and ultimately you can do that. >> So you can take it in sort of bite size chunks and go from one to other, at the pace that you want. >> [John F.] Now that's game changing. >> Yeah, that's what I really like about this announcement. It really brings best of breed together. You know, there is a lot of talk about containers. Legacy and we've been talking about what goes where? And do you have to break everything up? Like you were just saying. But the announcement today, WebSphere, the battle tested huge enterprise scale component, DB2, those things containerized and also in a frame work like with IBM, either with IBM microservices and application development things or others right, that's a huge endorsement for OpenShift as a platform. >> Absolutely, it is and look, we would be remiss if we didn't talk a little bit. I mean we use the word containers and containerized a lot. Yes, you're right. Containers are a really, really important technology but what containers enable is much more than prior attempts such as VM's and all have done. Containers really allow you to say: Hey, I solved the security problem, I solved the patching problem, the restart problem, all those problems that lie around the operations of a typical enterprise, can get solved with containers. VM's solved a lot about isolating the infrastructure but it didn't solve, as John was saying, the top half of the stack. And that's I think the huge power here. >> Yeah, I want to just double click on that because I think the containers thing is instrumental. Because it, first of all, being in the media and loving what we do. We're kind of a new kind of media company but traditional media is been throwing IBM under the bus since saying: Wow old guard and all these things. Here's the thing, you don't have to change anything. You got containers you can essentially wrap it up and then bring a microservice architecture into it. So you can actually leverage at cloud scale. So what interests me is that you can move instantly, >> value proposition wise, pre-existing market, cloudify it, if you will, with operational capabilities. >> Right. >> This is where I like the Cloud Private. So I want to kind of go there for a second. If I have a need to take what I have at IBM, whether it is WebSphere. Now I got developers, I got installed base. I don't have to put a migration plan away. I containerize it. Thank you very much. I do some cloud native stuff but I want to make it private. My use case is very specific, maybe it's confidential, maybe it's like a government region, Whatever. I can create a cloud operations, is that right? I can cloudify it, and run it? >> Absolutely correct, so when you look at Cloud Private, to go down that path, we said Cloud Private allows you to run on your private infrastructure but I want all these abilities you just described John. I want to be able to do microservices. I want to be able to scale up and down. I want to be able to say operations happen automatically. But it gives you all that but in the private without it having to go all the way to the public. If you cared a lot about, your in a regulated industry, you went down government or confidential data. Or you say this data is so sensitive, I don't really, I am not going to take the risk of it being anywhere else. It absolutely gives you that ability to go do that and that is what brought Cloud Private to the market for and then you combine that with OpenShift and now you get the powers of both together. >> See you guys essentially have brought to the table the years of effort with Bluemix, all that good stuff going on, you can bring it in and actually run this in any industry vertical. Pretty much, right? >> Absolutely, so if you look at part what the past has been for the entire industry. It has been a lot about constructing a public cloud. Not just us, but us and our competition. And a public cloud has certain capabilities and it has certain elasticity, it has a global footprint. But it doesn't have a footprint that is in every zip code or in every town or in every city. That's not what happens to a public cloud. So we say. It's a hybrid world meaning that you're going to run some workloads on a public cloud, I'd like to run some workloads on a private and I'd like to have the ability that I don't have to pre decide which is where. And that is what the containers and microservices, the OpenShift that combination all give you to say you don't need to pre decide. You rewrite the workload onto this and then you can decide where it runs. >> Well I was having this conversation with some folks at a recent Amazon Web services conference. Well, if you go to cloud operations, then the on premise is essentially the edge. It's not necessarily. Then the definition of on premise, really doesn't even exist. >> So if you have cloud operations, in a way, what is the data center then? It's just a connected issue. >> That's right, it's the infrastructure which is set up and then, at that point, the Software Manger, at the data center, as opposed to anything else. And that's kind of been the goal that we're all been wanting. >> Sounds like this is visibly at IBM's essentially execution plan from day one. We've been seeing it and connecting the dots. Having the ability to take either pre-existing resources, foundational things like Red Hat or what not in the enterprise. Not throwing it away. Building on top of it and having a new operating model, with software, with elastic scale, horizontally scalable, Synchronous, all these good things. Enabling microservices, with Kubernetes and containers. Now for the first time, >> I can roll out new software development life cycles in a cloud native environment without forgoing legacy infrastructure and investment. >> Absolutely, and one more element. And if you want to insert some cloud service into the environment, be it in private or in public, you can go do that. For example, you want to insert a couple of AI services >> into the middle of your application you could go do that. So the environment allows you to, do what you described and these additionals. >> I want to talk about people for a second. The titles that we haven't mentioned CIO, Business Leader, Business Unit Leaders, how are they looking at >> digital transformation and business transformation in your client bases you go out and talk to them. >> Let's take a hypothetical bank. And every bank today is looking about simple questions. How do I improve my customer experience? And everybody want, when they say customer experience, really do mean digital customer experience to make it very tangible. And what they mean by that is how do I get my end customer engaged with me through an app. The app is probably in a device like this. Some smart phone, we won't say what it is, and so how do you do that? And so they say: Well, all obviously to check your balance. You obviously want to check your credit card. You want to do all those things. The same things we do today. So that application exists, there is not much point in rewriting it. You might do the UI up but it's an app that exists. Then you say but I also want to give you information that's useful to you in the context to what you're doing. I want say, you can get a 10 second loan, not a 30 day loan, but a 10 second loan. I want to make a offer to you in the middle of you browsing credit card. All those are new customergistics, where do you construct those apps? How do you mix and match it? How do you use all the capabilities along with the data you've got to go do that? And what we're trying to now say, here is a platform that you can go, do all that on. Right, that complete lifecycle you mentioned, the development lifecycle but I got to add to it >> the data lifecycle, as well as, here is the versioning, here are my AI models, all those things, built in, into one platform. >> And scales are huge, the new competitive advantage. You guys are enabling that. So I got to ask you a question on multi cloud. Obviously, as people start building out the cloud on PRIM and with Public Cloud and the things you're laying out. I can see that going on for a while, a lot of work being done there. We're seeing that Wikibon had a true Private Cloud report what I thought was truly telling. A lot of growth there, still not going away. Public Cloud's certainly grown in numbers are clear. However, the word multicloud's being kicked around I think it's more of a future stay obviously but people have multiple clouds Will have relationships with multiple clouds. No one's going to have one cloud. It's not a winner take all game. Winner take most but you know you're have multiple clouds. What does multi cloud mean to you guys in your architecture? Is that moving workloads in real time based upon spot pricing indexes or is that just co-locating on clouds and saying I got this app on this cloud, that app on that cloud, control plane it. These are architectural questions. What the hell is multicloud? >> So there's a today, then there is a tomorrow, then there is a long future state, right? So let's take today, let's take IBM. We're on Salesforce, we're on ServiceNow, we're on Workday, we're on SuccessFactors, well all of there are different clouds. We run our own public cloud, we run our own private cloud and we have Judicial Data Center. And we might have some of the other clouds also through apps that we barter we don't even know. Okay, so that's just us. I think everyone of our clients are like this. The multicloud is here today. I begin with that first, simple statement. And I need to connect the data and can connect when thing go where. The next step, I think people, nobody's going to have even one public cloud. Even amongst the big public clouds, most people are going to have two if not more That's today and tomorrow. >> Your channel partners have clouds, by the way, your Global SI's all have clouds, theCUBE is a cloud for crying out load. >> Right, so then you go into the aspirational state and that may be the one you said, where people just spot pricing. But even if I stay back from spot pricing and completely (mumbles) I make. And I'm worrying about network and I'm worrying about radio reach. If I just backup around to but I may decide I have this app, I run it on private, well, but I don't have all the infrastructures I want to burst it today and I, where do I burst it? I got to decide which public and how do I go there? >> And that's a problem of today and we're doing that and that is why I think multicloud is here now. >> Not some point in the future. >> The prime statement there is latency, managing, service level agreements between clouds and so on and so forth. >> Access control on governance, Where does my data go? Because there may be regulatory reasons to decide where the data can flow and all those things. >> Great point about the cloud. I never thought about it that way. It is a good illustration. I would also say that, I see the same arguments in the data base world. Not everyone has DB2, not everyone has Oracle, not everyone has, databases are everywhere, you have databases part of IoT devices now. So like no one makes a decision on the database. Similar with clouds, you see a similar dynamic. It's the glue layer that, interest me. As you, how do you bring them together? So holistically looking at the 20 miles stare in the future, what is the integration strategy long-term? If you look at distributed system or an operating system there has to be an architectural guiding principle for integration, your thoughts. >> This has been a world 30 years in the making. We can say networking, everyone had their own networking standard and the, let's say the '80s probably goes back to the '70s right? You had SNA, you had TCP/IP, you had NetBIO's-- >> DECnet. DECnet. You can on and on and in the end it's TCP/IP that won out as the glue. Others by the way, survived but in packets and then TCP/IP was the glue. Then you can fast forward 15 years beyond that and HTTP became the glue, we call that the internet. Then you can fast forward and you can say, now how do I make applications portable? And I will turn round and tell you that containers on Linux with Kubernetes as orchestration is that glue layer. Now in order to make it so, just like TCP/IP, it wasn't enough to say TCP/IP you needed routing tables, you needed DNS, you needed name repository, you needed all those things. Similarly, you need all those here are called the scatlog and automation, so that's the glue layer that makes all of this work >> This is important, I love this conversation because I have been ranting on theCUBE for years. You nailed it. A new stack is developing and DNS's are old and internet infrastructure, cloud infrastructure at the global scale is seeing things like network effect, okay we see blockchain in token economics, databases, multiple databases, on structure day >> a new plethora of new things are happening that are building on top of say HTTP >> [Arvind] Correct! >> And this is the new opportunity. >> This is the new platform which is emerging and it is going to enable business to operate, as you said, >> at scale, to be very digital, to be very nimble. Application life cycles aren't always going to be months, they're going to come down to days and this is what gets enabled >> So I what you to give your opinion, personal or IBM or whatever perspective because I think you nailed the glue layer on Kubernetes, Docker, this new glue layer that and you made references to, things like HTTP and TCP, which changed the industry landscape, wealth creation, new brands emerged, companies we never heard of emerged out of this and we're all using them today. We expect a new set of brands are going to emerge, new technologies are going to emerge. In your expert opinion, how gigantic is this swarm of new innovation going to be? Just, 'cause you've seen many ways before. In you view, your minds eye, what are you expecting? >> Share your insight into how big of a shift and wave is this going to be and add some color to that. >> I think that if I take a shorter and then a longer term view. in the short term, I think that we said, that this is in the order of $100 billion, that's not just our estimate, I think even Gartner has estimated about the same number. That will be the amount of opportunity for new technologies in what we've been describing. And that is I think short term. If I go longer term, I think as much as a half but at least a fourth of the complete IT market is going to shift round to these technologies. So then the winners of those that make the shift and then by conclusion, the losers are those who don't make the shift fast enough. If half the market moves, that's huge. >> It's interesting we used to look at certain segments going back years just company, oh this company's replatformizing, >> replatforming their op lift and shift and all this stuff. What you're talking about here is so game changing because the industry is replatforming >> That's correct. It's not a company. >>It's an industry! That's right. And I think the internet era of 1995, to put that point, is perhaps the easiest analogy to what is happening. >> Not the emergence of cloud, not the emergence of all that I think that was small steps. >> What we are talking about now is back to the 1995 statement >> [John] Every vertical is upgrading their stack across what from e-commerce to whatever. >> That's right. >> It's completely modernizing. >> Correct. Around cloud. >> What we call digital transformation in a sense, yes >> I'm not a big fan of the word but I understand what you mean. Great insight Arvind, thanks for coming on theCUBE and sharing. We didn't even get to some of the other good stuff. But IBM and Red Hat doing some great stuff obviously foundational, I mean, Red Hat, Tier one, first class citizen in every single enterprise and software environment you know, now OpenSource runs the world. You guys are no stranger to Linux being the first billion dollar investment going back >> so you guys have a heritage there so congratulations on the relationship. >> I mean 18 years ago, if I remember 1999. >> I love the strategy, hybrid cloud here at IBM and Red Hat. This is theCUBE, bringing all the action here in San Francisco. I am John Furrier, John Troyer. More live coverage. Stay with us, here in theCUBE. We'll be right back. (upbeat music)

brought to you by Red Hat well welcome back everyone this two cubes exclusive coverage here in San Francisco California for Red Hat summit 20:18 I'm John Ferreira co-host of the cube with my analyst co-host this week John Troy year co-founder of The Reckoning advisory services and our next guest is Arvind Krishna who's the senior vice president of hybrid cloud at IBM Reese and director of IBM Research welcome back to the cube good to see you hey John and John Wade you guys just kick it confuse get to John's here great to have you on because you guys are doing some deals with Red Hat obviously the leader at open source you guys are one of them as well contributing to Linux it's well documented the IBM has three books on your role relationship to Linux so yeah check check but you guys are doing a lot of work with cloud in a way that you know frankly is very specific to IBM but also has a large industry impact not like the classic cloud so I want to get who tie the knot here and put that together so first I got to ask you take a minute to talk about why you're here with red hat what's the update with IBM with Red Hat yeah great John thanks and thanks for giving me the time I'm going to talk about it in two steps one I'm going to talk about a few common Tenace between IBM and Red Hat and then I'll go from there to the specific news so for the context we both believe in Linux I think that's easy to state we both believe in containers I think that's the next thing to state and we'll come back and talk about containers because this is a world containers are linked to Linux containers are linked to these technologies called kubernetes containers are linked to how you make workloads portable across many different environments both private and public then I go on from there to say and we both believe in hybrid hybrid meaning that people want the ability to run their workload wherever they want beat on a private cloud beat on a public cloud and do it without having to rewrite everything as you go across okay so let's just average those are the market needs so then you come back and say an IBM as a great portfolio of middleware names like WebSphere and db2 and I can go on and on and rather has a great footprint of Linux in the enterprise so now you say we got the market need of hybrid we got these two things which between them of tens of millions maybe hundreds of millions of endpoints how do you make that need get fulfilled by this and that's what we just announced here so we announced that IBM middleware will run containerized on RedHat containers on Red Hat Enterprise Linux in addition we said IBM cloud private which is the ability to bring all of the IBM middleware in a sort of a cloud friendly form right you click and you install it keeps itself up it doesn't go down it's elastic in a set of technologies we call IBM cloud private running in turn on Red Hat open shift container service on Red Hat Linux so now for the first time if you say I want private I want public I want to go here I want to go there you have a complete certified stack that is complete I think I can say we are unique in the industry and giving you this this and this is where this is kind of where the fruit comes on the tree off the tree for you guys you know we've been good following you guys for years you know every where's the cloud strategy and first well it's not like you don't have a cloud strategy you have cloud products right so you have to deliver the goods you've got the system replays the market need we all knows the hybrid cloud multi-cloud choice cetera et cetera right you take Red Hat's footprint your capabilities your combined install base is foundational right so and nothing needs to change there's no lifting shift there's no rip and replace you can it's out there it's foundational now on top of it is where the action is that's what we're that's what were you kind of getting at right that's correct so so we can go into somebody there running let's say a massive online banking application or the running a reservation system is using technologies from Asus using Linux underneath and today it's all a bunch of piece parts you have a huge complex stuff it's all hard wired and rigidly nailed down to the floor in a few places and I can say hey I'll take the application I don't have to rewrite the application I can containerize it I can put it here and that same app now begins to work but in a way that's a lot more fluid in elastic well by the way I want to do a bit more work I want to expose a bit of it up as micro-services I want search Samia you can go do that you want to fully make it microservices enable to be able to make it as little components and digestible you can do that so you can take it in sort of bite-sized chunks and go from one to the other at the pace that you want and that's game-changing yeah that's what I really like about this announcement it really brings the best of breed together right you did you know there's a lot of talk about containers and legacy and we you know we've been talking about what goes where and do you have to break everything up like you were just saying but the the announcement today you know WebSphere the this the you know a battle-tested huge enterprise scale component db2 those things containerized and also in a framework like with IBM we either with IBM Microsoft things or others right that's um that's a huge endorsement for open shipped as a platform absolutely it is and look we would be remiss if we didn't talk a little bit I mean we use the word containers and containers a lot yes you're right containers is a really really important technology but what containers enable is much more than prior attempts such as vm's and all have done containers really allow you to say hey I saw the security problem I solved the patching problem the restart problem all those problems that lie around the operations of a typical enterprise can get solved with containers VM sold a lot about isolating the infrastructure but they didn't solve as John was saying the top half of the stack and that's I think the huge power here yeah I want to just double click on that because I think the containers thing is instrument because you know first of all being in the media and loving what we do we're kind of a new kind of media company but traditional media has been throwing IBM under the bus and saying oh you know old guard and all these things but here's the thing you don't have to change anything you could containers you can essentially wrap it up and then bring a micro-services architecture into it so you can actually leverage at cloud scale so what interests me is is that you can move instantly value proposition wise pre-existing market cloud if I if you will with operational capabilities and this is where I like the cloud private so I want to kind of go with the ever second if I have a need to take what I have an IBM when it's WebSphere now I got developers I got installed base I'd have to put a migration plan away I containerize it thank you very much I do some cloud native stuff but I want to make it private my use case is very specific maybe it's confidential maybe it's like a government region whatever I can create a cloud operations is that right I can cloud apply it and run it absolutely correct so when you look at about private to go down that path we said well private allows you to run on your private infrastructure but I want all these abilities you just described John I want to be able to do micro services I want to be able to scale up and down I want to be able to say operations happen automatically so it gives you all that but in the private without having to go all the way to the public so if you cared a lot about you're in a regulated industry because you went down government or confidential data or you say this data is so sensitive I don't really I'm not going to take the risk of it being anywhere else it absolutely gives you that ability to go do that and and that is what we brought to our private to the market for and then you combine it with open shift and now you get the powers of both together so you guys essentially have brought to the table the years of effort with bluemix all that good stuff going on you can bring any he'd actually run this in any industry vertical pretty much right absolutely so if you look at what what the past has been for the entire industry it has been a lot about constructing a public cloud not just to us but us and our competition and a public cloud has certain capabilities and it has certain elasticity it has a global footprint but it does not have a footprint that's in every zip code or in every town or in every city that song ought to happen to the public cloud so we say it's a hybrid world meaning that you're going to run some bulk loads on a public cloud and like to run some bulk loads on a private and I'd like to have the ability that I don't have to pre decide which is where and that is what the containers the micro services the open ship that combination all gives you to say you don't need to pre decide you fucker you rewrite the workload on to this and then you can decide where it runs well I was having this conversation with some folks at and recent Amazon Web Services conference to say well if you go to cloud operations then the on-prem is essentially the edge it's not necessary then the definition of on-premise really doesn't even exist so if you have cloud operations in a way what is the data center then it's just a connected tissue that's right it's the infrastructure which you set up and then at that point the software manages the data center as opposed to anything else and that's kind of being the goal that we are all being wanted it sounds like this is visibility into IBM's essentially execution plan from day one we've been seeing in connecting the dots having the ability to take either pre-existing resources foundational things like red hat or whatnot in the enterprise not throwing it away building on top of it and having a new operating model with software with elastic scale horizontally scalable synchronous all those good things enabling micro search with kubernetes and containers now for the first time I could roll out new software development life cycles in a cloud native environment without foregoing legacy infrastructure and investment absolutely and one more element and if you want to insert some public cloud services into the environment beat in private or in public you can go do that for example you want to insert a couple of AI services into your middle of your application you can go do that so the environment allows you to do what he described and these additions we're talking about people for a second though the the titles that we haven't mentioned CIO you know business leader business unit leaders how are they looking at the digital transformation and business transformation in your client base as you go out and talk to us so let's take a hypothetical back and every bank today is looking about at simple questions how do i improve my customer experience and everyone in this a customer experience really do mean digital customer experience to make it very tangible and what they mean by that is how I get my end customer engaged with me through an app the apps probably on a device like this some smartphone we won't say what it is and and so how do you do that and so they say well well you were to check your balance you obviously want to maybe look at your credit card you want to do all those things the same things we do today so that application exists there is not much point in rewriting it you might do the UI up but it's an app that exists then you say but I also want to give you information that's useful to you in the context of what you're doing I want to say you can get a 10 second not a not a 30-day load but a ten-second law I want to make it offer to you in the middle of you browsing credit cards all those are new customer this thinks are hot where do you construct those apps how do you mix and match it how do you use all the capabilities along with the data you got to go do that and what we are trying to now say here is a platform that you can go all that do all that on right to that complete lifecycle you mentioned the development lifecycle but I got to add to the the data lifecycle as well as here is the versioning here are my area models all those things built in into one platform and scales are huge the new competitive advantage you guys are enabling that so I got to ask you on the question on on multi cloud I'll see as people start building out the cloud on pram and with public cloud the things you're laying out I can see that going on for a while a lot of work being done there we seeing that wiki bond had a true private cloud before I thought was truly telling a lot of growth they're still not going away public cloud certainly has grown the numbers are clear however the word multi clouds being kicked around I think it's more of a future state obviously but people have multiple clouds will have relationships with multiple clouds no one's gonna have one Klaus not a winner-take-all game winner take most but you're gonna have multiple clouds what does multi-cloud mean to you guys in your architecture because is that moving workloads in real time based upon spot pricing indexes or is that just co-locating on clouds and saying I got this SAP on that cloud that app on that cloud control plane did these are architectural questions it's the thing hell is multi cloud so these are today and then there is a tomorrow and then there is a long future state right so let's take today let's check IBM we're on Salesforce we're on service now we're on workday we're on SuccessFactors well all these are different clouds we run our own public cloud we run our own private cloud and we have traditional data center and we might have some of the other clouds also through apps that we bought that we don't even know okay so let's just toss I think every one of our clients is like this so multi cloud is here today I begin with that first simple statement and I need to connect the data and it comes connect when things go away the next step I think people nobody's gonna have only one even public cloud I think the big public clouds most people are gonna have to if not more that's today and tomorrow your channel partners have clouds by the way your global s lies all have clouds there's a cloud for crying out loud right so then you go into the aspirational state and that may be the one he said where people do spot pricing but even if I stay back from spot pricing and completely dynamic and of worrying about network and I'm worrying about video reach I just back up on to but I may decide it I have this app I run it on private well but I don't have all the infrastructures I want to bust it today and I've very robust it to I got to decide which public and how do I go there and that's a problem of today and we're doing that and that is why I think multi-cloud is here now not some pointed problem the problem statement there is latency managing you know service level agreements between clouds and so on and so forth governance where does my data go because there may be regulate regulate through reasons to decide where the data can flow and all the great point about the cloud I never thought about that way it's a good good illustration I would also say that I see the same argument of database world not everyone has db2 that everyone has Oracle number one has databases are everywhere you have databases part of IOT devices now so like no one makes a decision on the database similar was proud you're seeing a similar dynamic it's the glue layer that to me interest me as you how do you bring them together so holistically looking at the 20 mile stare in the future what is the integration strategy long term if you look at a distributed system or an operating system there has to be an architectural guiding principle for absolute integration you know well that's 30 years now in the making so we can say networking everybody had their own networking standards and the let's say the 80s though it probably goes back to the 70s right yeah an SN a tcp/ip you had NetBIOS TechNet deck that go on and on and in the end is tcp/ip that one out as the glue others by the way survived but in pockets and then tcp/ip was the glue then you can fast forward 15 years beyond that an HTTP became the glue we call that the internet then you can fast forward you can say now how to make applications portable and I would turn around and tell you that containers on linux with kubernetes as orchestration is that glue layer now in order to make it so just like in tcp/ip it wasn't enough to say tcp/ip you needed routing tables you needed DNS you needed name repositories you needed all those things similarly you need all those here I've called those catalogs and automation so that's the glue layer that makes all of this work this is important I love this conversation because I've been ranting on this in the queue for years you're nailed it a new stack is development DNS this is olden Internet infrastructure cloud infrastructure at the global scale is seeing things like Network effect okay we see blockchain in token economics like databases multiple database on structured data a new plethora of new things are happening that are building on top of say HTTP correct and this is the new opportunity this is the new the new platform which is emerging and it's going to enable businesses to operate you said at scale to be very digital to be very nimble application life cycles are not always going to be months they're gonna come down to days and this is what gets enabled so I want you to give your opinion personal or IBM or whatever perspective because I think you nailed the glue layer on cue and a stalker and these this new glue layer that and you made reference system things like HTTP and TCP which changed the industry landscape wealth creation new up new new brands emerged companies we've never heard of emerged out of this and we're all using them today we expect a new set of brands are gonna emerge new technologies and emerge in your expert opinion how gigantic is this swarm of new innovation gonna be just because you've seen many ways before in your view your mind's eye what are you expecting wouldn't share your your insight into how big of a shift and wave is this is going to be and add some color to that I think that if I take a take a shorter and then a longer term view in the short term I think that we said that this is on the order of 100 billion dollars that's not just our estimate I think even Gartner estimated about the same number that'll be the amount of opportunity for new technologies in what we've been describing and that is I think short term if I go longer term I think as much as 1/2 but at least 1/4 of the complete ID market is going to shift onto these technologies so then the winners are those that make the shift and then bye-bye clusion the losers of those who don't make this shift faster Afghan and stop the market moves that's that's he was interesting we used to like look at certain segments going back years oh this companies reap platform Ising we platforming they're their operative lift and shift and all this stuff what you're talking about here is so game-changing because the industries Reap lat forming that's a company that's it's an industry that's right any and I think the the the Internet era of 1995 to put that point it's perhaps the easiest analogy to what is happening not the not the emergence of cloud not the emergence of all that I think that was small steps what we're talking about now is back to the 1995 statement every vertical is upgrading their stack across the board from e-commerce to whatever that's right it's completely modernizing correct around cloud what we call digital transformation in a sense yes what not a big fan of the word but I lied I understand what you mean great insight our thanks for coming on the Kuban Sharon because we even get to some of the other good stuff but IBM and Red Hat doing some great stuff obviously foundational I mean Red Hat Tier one first-class citizen in every single enterprise and software environment you know now saw open source runs the world you guys you guys are no stranger to Linux being the first billion dollar investment going back so you guys have a heritage there so congratulations on the relationships that go around about ninety nine nine yeah and and I love the strategy hybrid cloud here at IBM and right at this the cube bring you all the action here in San Francisco I'm John for John Troy you're more live covers stay with us here in the cube Willie right back

>> Announcer: Live from Las Vegas, (electronic music) it's theCUBE. Covering IBM Think 2018. Brought to you by IBM. >> We're back at IBM Think 2018. This is theCUBE, the leader in live tech coverage. My name is Dave Vellante, and this is day two of our wall-to-wall coverage of IBM Think. We've been doing IBM shows for years. This is the big, consolidated show, 30 to 40 thousand people, too many people to count. Cameron Clayton is here. He is a GM of Watson Content and IoT Platform at IBM. Thanks for coming on. >> Thanks very much for having me. >> So quite a show, right? Standing room only! >> A large, large show. >> Standing room only and also great announcements. >> So tell us about your announcements. >> Yeah, so we got to couple of things we're really, really excited about. The team's been working really hard on for the last few months. One is a way to train Watson to make Watson even smarter than it already is out of the box. And so, we've been building data kits by vertical industry. So for financial services, for travel and transportation, for the hospitality industry, for health care and for government, on how do you give Watson a high machine IQ right out of the gate as opposed to having to train it in your area of industry. And so, once again, we're really focused on making Watson the AI system for Enterprise, and this is another step on that journey to make Watson really, really smart. >> It's really prioritizing it in a way that's much easier to consume. >> Much easier to consume, and if you think about it, there's a lot of jargon in each industry, right? To be an expert in industry, you got to know a lot of jargon, understand the context of that. An AI system doesn't know that unless it's taught that. And so we are teaching Watson that. And then how to apply it successfully in each of those industries. So it's a pretty material leap forward in how we're training Watson. >> So it hits the content component >> Cameron: Hits the content. >> And then industries you're knocking down? Where are you starting? >> Yeah, so we're starting with financial services. We're launching in travel and transportation and in hospitality. So we're basically, this is a pretty fun one, I love food. But basically Watson went out and scanned the entire internet and collected all the recipes that it could find on the internet and trained itself on food. And so, you can ask it now questions about food, what restaurants, about really specific things. If you're a vegan you can find out what's available near you. If you're gluten intolerant, you can find out things on the menu like that. But then there's other things, like in the travel and transportation industry. Virtual agents for travel agents, they can ask questions of Watson, and it can ask very specific, very deep things, very much like a human would. And so you can say a simple thing like, "Where should I stay in New York?" And a human would respond, "Well, are you a member of any hotel rewards program?" Normal AI chatbot wouldn't. It would just say, "These are the lists of the 4,000 hotels in New York." Watson will actually ask human-like questions to give you the best answer possible. But all that requires training, and that's what were built in with these Watson content data kits, and we're really excited about 'em. >> So I'll come back to that. But so if I take that example of Watson Chef, there's this discussion on AI for the enterprise versus AI for consumers. >> Right. Are you crossing over? That was kind of a consumer-y application. >> Cameron: Yeah. >> Is that just an example? >> It's just an example. No, it's very much about AI for the enterprise, right? And so the four priority industries that we're focused on, first is financial services, sort of the sweet spot for IBM. The second is supporting our government clients to make sure that Watson is trained in the language and nuisances the of government. The third is Watson health, so the health care industry, both the regulation and the language itself. So everything from pharmacology, et cetera. And then the fourth is travel and transportation. So it's very much about making Watson the smartest AI system for enterprise. That's absolutely its focus. >> What's the IoT angle in your title? >> Yeah, so-- >> What's going on there? >> I run the IoT platform for IBM, and so The Weather Company, which is how I joined IBM, which I also run, really is one of the largest IoT platforms in the world, which was actually a big part of the acquisition case for acquiring The Weather Company. We're now bringing the ability to ingest 35 to 40 billion data requests every day with The Weather Company platform to the IoT platform. We've combined those things together. So we can ingest data and content at a scale unlike pretty much anyone else in the world, sort of second only to Google in terms of the scale of data and content we can ingest. And we use that data to help train Watson on one hand, and on the other hand, to support our clients in multiple industries around the world. >> Yeah, I remember when IBM did that acquisition, Bob Picciano told me, "Well, you got to understand. "This is an IoT play as much as it is a data science play." So how has that evolved, come together, with IBM's core? >> Yeah, so I think in a couple of ways. One is, it's taken the way the company was mostly a domestic US business. IBM, in the last couple of years, has globalized that business in a very material way. A great example is in aviation, where we have the top 30 US operators. Now we have hundreds of operators all around the world helping them make decisions every day. At its core, this IoT platform that started with the way the company is now much larger than that, has grown into a decision platform, right? We make recommendations for people to make decisions. Mostly that's with Watson and AI, but sometimes it's just with machine learning and more traditional methods. >> So you got some other stuff going on. >> We were talking off camera >> We do. >> about this real-time closed captioning. I was showing you our video clipper tool. You said, "Hey-- >> Yeah! >> "We have something very similar." We're going to maybe talk and see if we can't-- >> Yeah, that'll be great. >> collaborate. I can't wait to try that out. So talk more about what you're doing with real-time closed captioning. It's a mandate, >> That's right. >> for broadcasters and other folks like YouTube. >> That's right. . How are you helping them? >> Yeah, so, as you mention, closed captioning is a regulated space for broadcasters, both local and national. It's a cost center for them, right? They have to do it, and it takes time, people, effort, and energy. We're automating that and we're doing it in a real-time way, so in true real time. So as we're speaking, Watson is listening. It's recording and it's annotating everything that goes on in the video clip. And then it's also breaking it up into essentially a highlight reel, right? And so you can ask questions. Hey, show me the highlights of the US Open or the Masters Golf Tournament. And it'll automatically select the very best clips that came from that tournament based on sentiment analysis, tone of voice, trending key words that were showing in social media, and surface those clips up, typically to a human editor who will then process them. It basically automates a system that today requires human intervention to deliver and makes it completely seamless by being in real-time. >> So Watson will analyze social data, Twitter data, take the fire hose and say, "OK, based on the Olympics," or whatever it was, "this is what was hot." >> Cameron: That's right. >> Curling was off the charts hot. >> (laughs) Curling is always hot in Olympics. >> Hashtag curling. >> Right. >> OK, cool. >> That's right. >> And this is a product that's out on the market today? >> It's a product that's launching here at Think and is being tested by multiple clients right now and is a really great accuracy, quality scores, 95% plus accuracy. But most importantly, it's no human intervention. So no person has to do anything, and it meets all of the regulatory requirements. For digital content creators, which are the fastest growing part of the video ecosystem, people like yourself and others, are also using it to automatically meta tag all their clips. So not only does it do sentiment analysis of the clips and the content itself using the closed captioning, but it's also going out and measuring social media key words and hashtags that are trending and looking for those key words in the closed captioning and clipping that out and surfacing it to make it easier. >> And I consume that as a monthly service kind of thing? >> Exactly, exactly, yep. >> How 'about GDPR? That's hot topic these days. Can you help me with my GDPR problem? 'Cause the clocks ticking on my defines, kicking in. >> Clocks ticking on GDPR. If you haven't started on GDPR yet, you're in some trouble. >> You're way late. >> You're way late, but you better call IBM pretty quickly, and we'll parachute in and try and help. >> How can you help? >> So I think we can help in multiple ways. So one is, obviously, our services group with GBS. We're doing thousands of engagements trying to help people with GDPR. I think, secondly, is we've got a big effort with our consumer weather business to be ready for GDPR. We have 250 million users of our weather app around the world, and they'll have to be compliant here pretty quickly. And so, we've got that all set up, ready to go. And then, these data kits also learn the regulations, right? So you can ask questions of Watson about GDPR and your specific use cases as a customer, and we'll show you how to apply the regulations of GDPR to your business. >> So earlier on, you talked about these data kits. I mean, in my head I was thinking SDK. >> Cameron: Right. So how does that all work? >> Yeah, so you can, you basically on a SAS basis, you essentially rent these data kits, everything from a general knowledge kit to a industry specific kit for financial services, to a sub-industry like wealth management within financial services. And you basically can rent each of those pieces. Within the government category, we have a GDPR capability, along with other regulatory capabilities within the data kits. >> OK, so how does that work? I sort of train my internal system? >> It's super easy. You, basically, go to Bluemix, and you can just use it as a subscription out of Bluemix is the fastest, easiest way to do it. Secondly, you can talk to any of your IBM associates about how you use data kits with Watson. It's always used in conjunction with Watson services themselves, is how you basically deploy our products. >> Let's say I got data all over the place in my organization, it's siloed out, and I'm freaking out because I've got personal data on an individual here and one over her and one over here. What do I do? I point my corpus of data at Watson, and it helps me extract from itities, dedupe, surface? >> The first step in all of our engagements is to listen and understand exactly where all the data is, and everyone's on a journey, right? From on prem to hybrid to some public cloud and everything in between. >> Dave: And they don't know where it all is. >> And they don't know where it all is. And so, step one is for us to go in and listen. We have a rule in our group, two ears and one mouth, use them proportionally. And so we go in and we try to listen, find out, map out sort of a architecture of where our client's data is. And then understand what problem they're really trying to solve because, often times, there's lots of good ideas, but there's only a couple of problems that really matter to that client to solve. Right now, GDPR is certainly one of those problems. But whether it's revenue or efficiency, we can help, but we really need to understand what the problem set is first. And so we have an engineering team that goes in and does sort of architectural work and listens upfront. And then we go into a sort of solutioning mode to solve problems. >> One of the question's we often ask on theCUBE is, how far can we take machine intelligence? How far should we take machine intelligence? What are the things that machines can do that humans can't? How is that changing? How will they complement each other? How will they compete? You must think about that a lot in your role. You're augmenting, sometimes replacing a lot of human tasks. But what are your thoughts on those big picture questions? >> Yes, I think we've, as a company, work really, really hard to make sure that we are always augmenting people wherever possible. We fundamentally believe that every job is going to be changed by AI, but we believe that humans are really good at creativity, at curiosity, and at risk management. We don't really think about us being good at risk management, but from when we're born, just learning to walk is a risk management exercise, right? Look at any toddler wobbling, learning to walk, you sort of realize it's a risk management exercise. AI systems have to learn all these things. And so surfacing and recommending decisions is what we believe Watson and AI is best equipped to do, and then have a person actually make the final call. >> Great. All right, Cameron, hey, thanks very much for coming on theCUBE. >> You're welcome. >> It was really a pleasure meeting you. >> Absolutely, likewise. >> And look forward to the follow up. >> Absolutely, we'll follow up. >> Excited to see that. All right, keep it right there everybody. We'll be back with our next guest right after this short break. You're watching the show theCUBE live from IBM Think 2018. We'll be right back. (electronic music)

>> Announcer: Live from Las Vegas, it's theCube, covering IBM Think 2018. Brought to you by IBM. >> Welcome back to Las Vegas, everybody. We're here at the Mandalay Bay. This is theCube. And we have two days, sorry, three days of live wall-to-wall coverage of IBM Think 2018. My name is Dave Vellante. I'm here with my co-host Peter Burris. Steve Robinson is here; he's the general manager of client technical engagement for IBM, and he's joined by Bala Rajaramen, who's an IBM fellow, expert in Hybrid Cloud. (microphone feedback) Gentlemen, welcome to theCube. >> Oh, good, thanks for having us. Always a pleasure. >> Thank you. >> You're very welcome. So, Steve, let's start with you. >> Sure. >> We were talking off camera about some of the work that we've been doing in what we call true private cloud. You talked about some of the work you've done with BCG, your own internal work. What are you seeing in terms of private cloud and the resurgence of private cloud? >> You know, it's kind of fascinating. You know, over the past, probably two years, we started to see this kind of next definition of private cloud coming about, where most firms had spent a lot of effort on virtualizing their data center, building up these beautiful VMware firms, etc., and then this next level is, how can I start to do more cloud capability back behind the firewall? This notion of CaaS, container as a service, started showing up in RFPs. People wanted to say, hey, can Kubernetes come back as well, could I use private cloud as a parking lot for certain workloads, and could it possibly be the basis for doing true multi-cloud down the road where some of these environments may start landing both on private, multinode private, and even on public as well. So it's been a real resurgence from our side. >> So we made the observation several years ago with our research team that CIOs are realizing they couldn't just put their business into the public cloud. >> Right, right. >> Rather, they wanted the cloud experience and they wanted to bring that experience to their data wherever that lives. >> Exactly. >> So, Bala, what technical challenges does that bring and how do you guys solve them? >> Yeah, it's interesting because, I mean, when you look at cloud, it's about what makes something a cloud. And I think the two things that CIOs are struggling with, which is why public cloud was an attractor initially, was that easy self-service. I can get to things quickly from the business perspective, and I can manage it very consistently because everything works the same. And I think what Steve alluded to was when you bring the cloud to you, it's not just bringing the capability, but it's bringing the experience. And can people get to it easily? Can businesses be competitive in that environment? Can the operations guy manage that environment like they would manage something at a cloud scale? And that, essentially, was the challenges we had to solve, not just in moving things, but in moving all the right pieces around it so that it was a cloud, yeah. >> So, we talked with you about the whole concept is the cloud experience where the data warrants it. And as you said, it's not just bringing technology in, it's also bringing the entire operating model-- >> That's right. >> Of how the cloud works. IBM is a big company, has always been its first customer. What has IBM been learning as you become more of a cloud-first company, or a cloud-oriented company, and how are you bringing that to your customers? >> Well, definitely I think the key thing we've been doing has been in a, you know, spirit of transformation for the past three years, as well. One of the things we picked up critically when we started the private cloud effort is there's a dimension of having to fit in with what an enterprise has already. They've got a strong system management process in place, they've got ticketing, they've got their plasmas up on the hall showing the up time of their applications. The biggest challenge was when they were moving to public cloud, they were kind of giving that to the public cloud vendors and they were losing visibility in that as well. So part of this, we had to respect them to be able to allow them to see their applications, to be able to fit into their existing environments, and be able to fit into the process. We can't leave that system management team behind. >> And just to add to that, I think when you look at the evolution of things like microservices, you're breaking something that was intrinsically a whole and manageable as a whole, into a bunch of individual pieces. That challenge has always existed when you move from mainframes to distributed, because the management challenge more than anything else. You could build applications quickly, but it's really hard to manage them with microservices across multiple clouds, it's a fascinating exercise. So I think our learnings, to your point, was we have to think about it in a different way. Think about from an app-centric way, not from an infrastructure-centric way. And I think that's critical. >> I want to build on that for a second because Judy talked this morning, and we certainly would agree with the concept of your data as an asset. Are we really thinking apps-centric longer term, or data-centric longer term, and apps-centric is more how do we affect the transition because that's where the value proposition is today? >> Right, and that's where your assets are, right? >> Right. >> And your data becomes an integral part, an entangled part of it. As you split your applications, you're also looking at splitting your data, and how do you manage that? How do you manage where the data is placed? Manage where applications are placed? I think the true cloud value, going back to your question, is how does this multi-cloud universe around placement of data, placement of applications, security models, availability models, how does it all come together? And I think that's the biggest challenge, and I think we are doing some interesting work to address this. >> We almost view it always as kind of two planes at the same time. Where do we optimize the application based off of the performance characteristics, you know, how much compute do we need around it, you know if it's a very sophisticated investment banking, let's get that closer. We've even been running private cloud back on the mainframe, Kubernetes clusters back on the mainframe. But then the whole data story now with regulatory, with GDRP, etc., gives you another layer of complexity. So we almost have to look at what's the app doing, and then what's the data doing at the same time? >> You've kind of called it cloud your way. >> Yeah, right. (laughs) >> You used that statement a while back. And so we could define cloud a lot of different ways. We're talking about our data, you talked about some of your studies, and you show them, actually, the private cloud and the public cloud infrastructure's comparable in size. >> It's pretty close. Pretty close. >> We show private cloud smaller but growing twice as fast, so, okay. >> But we also call it two-prong cloud. >> Yeah, so we maybe have a different definition, but let's talk about the customer definition. >> Of course, yeah. >> A cloud is in the eye of the beholder-- >> Beholder, right, right, right. >> Beholder's the customer. So to me, it's about the business impact. Are they seeing an impact on agility? Is it changing their operating model? Because if it is, then it's going to have a bottom line impact, and if it's not, it's just a lift and shift on prem. What are you seeing in terms of the customers? >> Well, I think it's interesting, though, you used the term lift and shift. That's one of these, I call it an urban myth of cloud. Nothing is a lift and shift. >> Dave: Right. >> I think part of the challenge for us is could we bring some cloud attributes back behind, and what would that do for you? I know Bala mentioned self service. We, you know, some degree of horizontal scalability. We'll never have ultimate scalability like we have in the public cloud, but we can spin up multiple instances and start to manage pieces in a different way. The other area that we looked at that we had never thought about when we did our Bluemix local product, etc., could this be a path also for their middleware coming forward at the same time? Could we take this opportunity to start to containerize WebSphere, MQ, DB2, so that more workloads could move towards the cloud without having to have them be fully replaced and change up all the dependency chains, etc. So that's been a key thing, to pull the gravity of that middleware forward, while you kind of have it back on premise, as well. >> Yeah, absolutely. I think, going back to the lift and shift point, right, I mean, I think the traditional disadvantage of a lift and shift was you're moving your bad with your good, right? >> Right, right. >> And I think what this gives us in approach is how do you actually decouple that? Your applications are your crown jewels. You have invested a lot of effort over many years. What held you back was the processes you put around it that slowed you down. So being able to, to Steve's point, when you bring WebSphere, for example, onto a cloud platform, you minimize the risk, you enhance the value of building your application or moving your applications as is. That's a valuable lift and shift. But what you're not lifting and shifting is all of your processes, all the bureaucracy, all of the more traditional ways of doing things, and that combination, I think, is really the, to pick on your definition, is a true private cloud because it brings a customer-perceived value of, and a customer-perceived values risk. It is cost, and how do you optimize that? You're minimizing the risk, you're giving them a new operating model, a new self-service model, that takes away the bad and keeps the good. And I think that is, to me personally, I think that's a very exciting thing. >> Well one of the things that people always talk about when they talk about cloud is they talk about elasticity. >> Steve: Right. >> Great idea. But we like to talk about plasticity. >> Steve: Yes. >> Which is a different definition. Elasticity is same workload and scale, plasticity is the ability to consume, bring up, new workloads, do a better job of patches and updates. >> Steve: You got it. >> What do you think about that notion? At what point in time does the industry start to focus more on the fact that you can use cloud to fit your business differently? To snap your business into place differently, as a consequence of these services? >> That's a great insight, and it's one that I think most people just don't realize out of the gate that even bringing some of these cloud capabilities and also some of these more advanced container orchestration capabilities to all of their workloads gives them a lot more flexibility. We use a term pet versus cattle. You know, where in the old days, I would stand up, middleware stack, etc., and I would do everything to make sure that thing stood up, it was never impacted, etc. With some of the orchestration that we find in Kubernetes, I can stand up six versions of those. If one ends up getting knocked down, who cares? I can just automatically launch another one right back up. It changes the way how I manage that environment. It gives you more flexibility. It gives you more dynamic capability as to where I actually put individual pieces, even with my own infrastructure as well. So I think this could open a whole new era of how I manage. The plasticity; I like that idea as well. >> Yeah, that's a great word because I think when we started this discussion, I did not define cloud as being elastic for very much the same reason because from a business perspective, elasticity is a lower down function, or more of a second-order function. Being able to consume it easily, not be worried about how it's deployed-- >> It's a value proposition with a cloud guy's term. >> That's right, that's right. >> Exactly. And so plasticity's a much better word because that is a business impacting statement, which is, all to the point, which is I can deploy it. I can remove it. I'm not locked into particular things. I can evolve it very quickly. I think you're absolutely right and I think it's different. >> So speaking of the cloud guys, I got to ask you. So if the cloud guys were here, the public cloud pure plays wheel, they would say, oh, IBM, and we get this all the time with our true private cloud, that's old-guard thinking. >> Sure. >> Okay, so what we're doing is changing the world, what they're doing is trying to put a little, you know, lipstick on virtualization. How would you respond? >> If you look at the workloads that a typical enterprise, now, trust me, if I was building greenfield applications or doing a brand-new start-up with my BC money, etc., boom, if I had the chance, I would put it on public and run right away. A lot of flexibility, etc., with that. But the enterprises that we've worked with, I tend to say that most of the ones where we come in and we evaluate large number of workloads, you know, we just did one with a bank. We evaluated 900 different workloads. 15% met their regulatory and their risk policy and could move to the public cloud. That leaves 85% that are either going to stay in their legacy state, or are not going to start taking advantage of some of the cloud concepts we have. So, yeah, you've got to come back behind. And I think if you look at the public vendors, they're trying desperately to either send hard drives down or send appliances down. They understand they're going to have to extend down so that they can bring more workloads the right direction here. >> Of course. >> Now, we're advising our clients to focus on what's their value proposition, what activities are most important, what data's required to perform those activities. >> Steve: We say right cloud for the right workload. >> Yeah, and the question with data is latency, regulatory, and IP protection. Does that resonate with you guys? >> Yeah, that resonates very well. And I think, to me, we are trying to impose a strategy on a current state of the universe. So I think we are arguing whether public cloud is the right answer, or private cloud is the right answer, based on how we perceive private and public today. I think it's, in the next 10 years, you're not going to be able to tell the distinction. I mean, it's going to be more like a central office model where you have the core switches, you're going to have distributed switches. That is the cloud. And who manages what, how you delegate it, multiple providers, cross-provider billing, it's going to become a fabric. Then I can't tell the difference between what's public and what's private. I mean, I have the boundaries well-defined. And so, I think I view that as the eventual strategy, and I think we are now predicting a future that we are just guessing. >> Does that suggest, Bala, then, that the capabilities of the on-prem services are going to be substantially similar to what you see in the public? Do you guys benchmark yourselves against your IBM cloud brethren and have a little healthy internal competition, or? >> No, it is contextual. So if you take something very complex like weather, where it is gathering data from a whole bunch of sources, it makes almost no sense to have something that's local. But if you look at some of the other services, even things like machine learning and so on and so forth, there are some that make perfect sense on a cloud. There's things that make sense on closer to the data, on premise. But what's going to be more interesting is how they work together. And over time, you're going to see the programming model evolve to eliminate the distinction between what is private and what's public. And you're going to see an operational model evolve with the right delegation and controls that wipes out the distinction. In 10 years, I think we are not going to be having this discussion of private versus public. It is going to be a cloud with private components, with public components, and the ability for, from a business perspective, for a client to manage it in the right way. >> So things like, sorry, Peter, things like functional programming models will be pervasive. >> That's correct. >> And it will be up to the client to choose which, where their data is, essentially, is going to dictate what they use and what-- >> Well, and I think-- >> The business requires. >> We envision today where it's almost done on a dynamic basis, you know, where you're really to the point where I may have a load that's based on CPU, etc., running predominantly in the private cloud. Then we have a bursting scenario, actually be able to pick that container up and dynamically move it up to public as need be. As my risk and compliance rules begin to change, I could dynamically say, the same application, these three we're running here today, let me do a distributed, distribution of those as well. Not heavy lifting. >> Really quickly, so we're going to focus more on how you get value out of your data where the infrastructure's not the issue, and even the applications are less of an issue. One quick question though. >> Steve: Yeah? >> So we talk about, we talk about self-service, we talk about rolling updates, we talk about new maintenance styles, all associated with the cloud. What about metering? What about pay as you go? At what point in time does pay as you go start to really hit private cloud options? >> Sure, sure. >> I think it'll hit it sooner than later, but I think what's going to be interesting is the economics of it. >> Yeah. >> I think there's a supposition that pay as you go is a better model from an economic perspective. Not always. It depends on the duty cycle of your workloads. We are seeing movement where, when the workload is variable, that pay as you go model is, is a better fit. When things get where you can actually understand the application, optimize the application, optimize the infrastructure behind the application, a different model which is-- >> But doesn't it make sense to give the customer options? >> Yes, it does. >> Of course you do. But I think we always talk about clouded option and cloud transformation. There's both a technical piece and there's a cultural piece as well. I had Forrester on stage with me yesterday, and I said, "What is the one thing that "enterprises have to get right with cloud in 2018?" He said, "Procurement." And I can recall a CIO asking me one time if I could sell him compute by the nanosecond. I said, "Can you buy compute by the nanosecond?" And he said, "Touche." (all laughing) They are used to buying in big blocks in certain circumstances. They're used to the enterprise license in certain instances. So that's going to have to show as much change as, you know, we could do fine-grain billing today. Does it match, and does it fit the need? >> All right, we've got to go, but Steve, I want to give you the last word. We really didn't talk much about Cloud Private, which is your sort of branding and your offering. Maybe you could give us a little commercial on that? >> Sure. Yeah, we launched this last year, early November. We did IBM Cloud Private. So what we did is we took a core Kubernetes base, we extended it with some other compute models, you'll see Cloud Foundry in there, you'll see VM's in there as well. We took our middleware, we did a full containerization of it so you'll see a lot of rich stack of our middlewares, and then you see this automation layer's on top of it, our processes, etc., to kind of help you manage that overall environment. It's gone gangbusters. In just two months we had over 150 of our large enterprise clients. We got some of the great ones here with Hertz, MRN, etc., and getting great value out of it already. So we're very positive. Getting a lot of great press off of it, and we got a sales team extremely excited about it as well. >> Okay, Steve, Bala, great discussion as always. Really appreciate you guys coming on theCube. >> Oh, always great. >> Have a good rest of Think. >> Well, thank you again. >> Thank you, guys. >> We appreciate theCube. >> All right, keep it right there, everybody. We'll be back with our next guest right after this short break. You're watching theCube live from IBM Think 2018. Be right back. (electronic music)

>> Narrator: Live from New York, it's theCUBE. Covering machine learning everywhere. Build your ladder to AI. Brought to you by IBM. >> Welcome back to IBM's Machine Learning Everywhere. Build your ladder to AI, along with Dave Vellante, John Walls here, wrapping up here in New York City. Just about done with the programming here in Midtown. Dave, let's just take a step back. We've heard a lot, seen a lot, talked to a lot of folks today. First off, tell me, AI. We've heard some optimistic outlooks, some, I wouldn't say pessimistic, but some folks saying, "Eh, hold off." Not as daunting as some might think. So just your take on the artificial intelligence conversation we've heard so far today. >> I think generally, John, that people don't realize what's coming. I think the industry, in general, our industry, technology industry, the consumers of technology, the businesses that are out there, they're steeped in the past, that's what they know. They know what they've done, they know the history and they're looking at that as past equals prologue. Everybody knows that's not the case, but I think it's hard for people to envision what's coming, and what the potential of AI is. Having said that, Jennifer Shin is a near-term pessimist on the potential for AI, and rightly so. There are a lot of implementation challenges. But as we said at the open, I'm very convinced that we are now entering a new era. The Hadoop big data industry is going to pale in comparison to what we're seeing. And we're already seeing very clear glimpses of it. The obvious things are Airbnb and Uber, and the disruptions that are going on with Netflix and over-the-top programming, and how Google has changed advertising, and how Amazon is changing and has changed retail. But what you can see, and again, the best examples are Apple getting into financial services, moving into healthcare, trying to solve that problem. Amazon buying a grocer. The rumor that I heard about Amazon potentially buying Nordstrom, which my wife said is a horrible idea. (John laughs) But think about the fact that they can do that is a function of, that they are a digital-first company. Are built around data, and they can take those data models and they can apply it to different places. Who would have thought, for example, that Alexa would be so successful? That Siri is not so great? >> Alexa's become our best friend. >> And it came out of the blue. And it seems like Google has a pretty competitive piece there, but I can almost guarantee that doing this with our thumbs is not the way in which we're going to communicate in the future. It's going to be some kind of natural language interface that's going to rely on artificial intelligence and machine learning and the like. And so, I think it's hard for people to envision what's coming, other than fast forward where machines take over the world and Stephen Hawking and Elon Musk say, "Hey, we should be concerned." Maybe they're right, not in the next 10 years. >> You mentioned Jennifer, we were talking about her and the influencer panel, and we've heard from others as well, it's a combination of human intelligence and artificial intelligence. That combination's more powerful than just artificial intelligence, and so, there is a human component to this. So, for those who might be on the edge of their seat a little bit, or looking at this from a slightly more concerning perspective, maybe not the case. Maybe not necessary, is what you're thinking. >> I guess at the end of the day, the question is, "Is the world going to be a better place with all this AI? "Are we going to be more prosperous, more productive, "healthier, safer on the roads?" I am an optimist, I come down on the side of yes. I would not want to go back to the days where I didn't have GPS. That's worth it to me. >> Can you imagine, right? If you did that now, you go back five years, just five years from where we are now, back to where we were. Waze was nowhere, right? >> All the downside of these things, I feel is offset by that. And I do think it's incumbent upon the industry to try to deal with the problem, especially with young people, the blue light problem. >> John: The addictive issue. >> That's right. But I feel like those downsides are manageable, and the upsides are of enough value that society is going to continue to move forward. And I do think that humans and machines are going to continue to coexist, at least in the near- to mid- reasonable long-term. But the question is, "What can machines "do that humans can't do?" And "What can humans do that machines can't do?" And the answer to that changes every year. It's like I said earlier, not too long ago, machines couldn't climb stairs. They can now, robots can climb stairs. Can they negotiate? Can they identify cats? Who would've imagined that all these cats on the Internet would've led to facial recognition technology. It's improving very, very rapidly. So, I guess my point is that that is changing very rapidly, and there's no question it's going to have an impact on society and an impact on jobs, and all those other negative things that people talk about. To me, the key is, how do we embrace that and turn it into an opportunity? And it's about education, it's about creativity, it's about having multi-talented disciplines that you can tap. So we talked about this earlier, not just being an expert in marketing, but being an expert in marketing with digital as an understanding in your toolbox. So it's that two-tool star that I think is going to emerge. And maybe it's more than two tools. So that's how I see it shaping up. And the last thing is disruption, we talked a lot about disruption. I don't think there's any industry that's safe. Colin was saying, "Well, certain industries "that are highly regulated-" In some respects, I can see those taking longer. But I see those as the most ripe for disruption. Financial services, healthcare. Can't we solve the HIPAA challenge? We can't get access to our own healthcare information. Well, things like artificial intelligence and blockchain, we were talking off-camera about blockchain, those things, I think, can help solve the challenge of, maybe I can carry around my health profile, my medical records. I don't have access to them, it's hard to get them. So can things like artificial intelligence improve our lives? I think there's no question about it. >> What about, on the other side of the coin, if you will, the misuse concerns? There are a lot of great applications. There are a lot of great services. As you pointed out, a lot of positive, a lot of upside here. But as opportunities become available and technology develops, that you run the risk of somebody crossing the line for nefarious means. And there's a lot more at stake now because there's a lot more of us out there, if you will. So, how do you balance that? >> There's no question that's going to happen. And it has to be managed. But even if you could stop it, I would say you shouldn't because the benefits are going to outweigh the risks. And again, the question we asked the panelists, "How far can we take machines? "How far can we go?" That's question number one, number two is, "How far should we go?" We're not even close to the "should we go" yet. We're still on the, "How far can we go?" Jennifer was pointing out, I can't get my password reset 'cause I got to call somebody. That problem will be solved. >> So, you're saying it's more of a practical consideration now than an ethical one, right now? >> Right now. Moreso, and there's certainly still ethical considerations, don't get me wrong, but I see light at the end of the privacy tunnel, I see artificial intelligence as, well, analytics is helping us solve credit card fraud and things of that nature. Autonomous vehicles are just fascinating, right? Both culturally, we talked about that, you know, we learned how to drive a stick shift. (both laugh) It's a funny story you told me. >> Not going to worry about that anymore, right? >> But it was an exciting time in our lives, so there's a cultural downside of that. I don't know what the highway death toll number is, but it's enormous. If cell phones caused that many deaths, we wouldn't be using them. So that's a problem that I think things like artificial intelligence and machine intelligence can solve. And then the other big thing that we talked about is, I see a huge gap between traditional companies and these born-in-the-cloud, born-data-oriented companies. We talked about the top five companies by market cap. Microsoft, Amazon, Facebook, Alphabet, which is Google, who am I missing? >> John: Apple. >> Apple, right. And those are pretty much very much data companies. Apple's got the data from the phones, Google, we know where they get their data, et cetera, et cetera. Traditional companies, however, their data resides in silos. Jennifer talked about this, Craig, as well as Colin. Data resides in silos, it's hard to get to. It's a very human-driven business and the data is bolted on. With the companies that we just talked about, it's a data-driven business, and the humans have expertise to exploit that data, which is very important. So there's a giant skills gap in existing companies. There's data silos. The other thing we touched on this is, where does innovation come from? Innovation drives value drives disruption. So the innovation comes from data. He or she who has the best data wins. It comes from artificial intelligence, and the ability to apply artificial intelligence and machine learning. And I think something that we take for granted a lot, but it's cloud economics. And it's more than just, and somebody, one of the folks mentioned this on the interview, it's more than just putting stuff in the cloud. It's certainly managed services, that's part of it. But it's also economies of scale. It's marginal economics that are essentially zero. It's speed, it's low latency. It's, and again, global scale. You combine those things, data, artificial intelligence, and cloud economics, that's where the innovation is going to come from. And if you think about what Uber's done, what Airbnb have done, where Waze came from, they were picking and choosing from the best digital services out there, and then developing their own software from this, what I say my colleague Dave Misheloff calls this matrix. And, just to repeat, that matrix is, the vertical matrix is industries. The horizontal matrix are technology platforms, cloud, data, mobile, social, security, et cetera. They're building companies on top of that matrix. So, it's how you leverage the matrix is going to determine your future. Whether or not you get disrupted, whether your the disruptor or the disruptee. It's not just about, we talked about this at the open. Cloud, SaaS, mobile, social, big data. They're kind of yesterday's news. It's now new artificial intelligence, machine intelligence, deep learning, machine learning, cognitive. We're still trying to figure out the parlance. You could feel the changes coming. I think this matrix idea is very powerful, and how that gets leveraged in organizations ultimately will determine the levels of disruption. But every single industry is at risk. Because every single industry is going digital, digital allows you to traverse industries. We've said it many times today. Amazon went from bookseller to content producer to grocer- >> John: To grocer now, right? >> To maybe high-end retailer. Content company, Apple with Apple Pay and companies getting into healthcare, trying to solve healthcare problems. The future of warfare, you live in the Beltway. The future of warfare and cybersecurity are just coming together. One of the biggest issues I think we face as a country is we have fake news, we're seeing the weaponization of social media, as James Scott said on theCUBE. So, all these things are coming together that I think are going to make the last 10 years look tame. >> Let's just switch over to the currency of AI, data. And we've talked to, Sam Lightstone today was talking about the database querying that they've developed with the Plex product. Some fascinating capabilities now that make it a lot richer, a lot more meaningful, a lot more relevant. And that seems to be, really, an integral step to making that stuff come alive and really making it applicable to improving your business. Because they've come up with some fantastic new ways to squeeze data that's relevant out, and get it out to the user. >> Well, if you think about what I was saying earlier about data as a foundational core and human expertise around it, versus what most companies are, is human expertise with data bolted on or data in silos. What was interesting about Queryplex, I think they called it, is it essentially virtualizes the data. Well, what does that mean? That means i can have data in place, but I can have access to that data, I can democratize that data, make it accessible to people so that they can become data-driven, data is the core. Now, what I don't know, and I don't know enough, just heard about it today, I missed that announcement, I think they announced it a year ago. He mentioned DB2, he mentioned Netezza. Most of the world is not on DB2 and Netezza even though IBM customers are. I think they can get to Hadoop data stores and other data stores, I just don't know how wide that goes, what the standards look like. He joked about the standards as, the great thing about standards is- >> There are a lot of 'em. (laughs) >> There's always another one you can pick if this one fails. And he's right about that. So, that was very interesting. And so, this is again, the question, can traditional companies close that machine learning, machine intelligence, AI gap? Close being, close the gap that the big five have created. And even the small guys, small guys like Uber and Airbnb, and so forth, but even those guys are getting disrupted. The Airbnbs and the Ubers, right? Again, blockchain comes in and you say, "Why do I need a trusted third party called Uber? "Why can't I do this on the blockchain?" I predict you're going to see even those guys get disrupted. And I'll say something else, it's hard to imagine that a Google or a Facebook can be unseated. But I feel like we may be entering an era where this is their peak. Could be wrong, I'm an Apple customer. I don't know, I'm not as enthralled as I used to be. They got trillions in the bank. But is it possible that opensource and blockchain and the citizen developer, the weekend and nighttime developers, can actually attack that engine of growth for the last 10 years, 20 years, and really break that monopoly? The Internet has basically become an oligopoly where five companies, six companies, whatever, 10 companies kind of control things. Is it possible that opensource software, AI, cryptography, all this activity could challenge the status quo? Being in this business as long as I have, things never stay the same. Leaders come, leaders go. >> I just want to say, never say never. You don't know. >> So, it brings it back to IBM, which is interesting to me. It was funny, I was asking Rob Thomas a question about disruption, and I think he misinterpreted it. I think he was thinking that I was saying, "Hey, you're going to get disrupted by all these little guys." IBM's been getting disrupted for years. They know how to reinvent. A lot of people criticize IBM, how many quarters they haven't had growth, blah, blah, blah, but IBM's made some big, big bets on the future. People criticizing Watson, but it's going to be really interesting to see how all this investment that IBM has made is going to pay off. They were early on. People in the Valley like to say, "Well, the Facebooks, and even Amazon, "Google, they got the best AI. "IBM is not there with them." But think about what IBM is trying to do versus what Google is doing. They're very consumer-oriented, solving consumer problems. Consumers have really led the consumerization of IT, that's true, but none of those guys are trying to solve cancer. So IBM is talking about some big, hairy, audacious goals. And I'm not as pessimistic as some others you've seen in the trade press, it's popular to do. So, bringing it back to IBM, I saw IBM as trying to disrupt itself. The challenge IBM has, is it's got a lot of legacy software products that have purchased over the years. And it's got to figure out how to get through those. So, things like Queryplex allow them to create abstraction layers. Things like Bluemix allow them to bring together their hundreds and hundreds and hundreds of SaaS applications. That takes time, but I do see IBM making some big investments to disrupt themselves. They've got a huge analytics business. We've been covering them for quite some time now. They're a leader, if not the leader, in that business. So, their challenge is, "Okay, how do we now "apply all these technologies to help "our customers create innovation?" What I like about the IBM story is they're not out saying, "We're going to go disrupt industries." Silicon Valley has a bifurcated disruption agenda. On the one hand, they're trying to, cloud, and SaaS, and mobile, and social, very disruptive technologies. On the other hand, is Silicon Valley going to disrupt financial services, healthcare, government, education? I think they have plans to do so. Are they going to be able to execute that dual disruption agenda? Or are the consumers of AI and the doers of AI going to be the ones who actually do the disrupting? We'll see, I mean, Uber's obviously disrupted taxis, Silicon Valley company. Is that too much to ask Silicon Valley to do? That's going to be interesting to see. So, my point is, IBM is not trying to disrupt its customers' businesses, and it can point to Amazon trying to do that. Rather, it's saying, "We're going to enable you." So it could be really interesting to see what happens. You're down in DC, Jeff Bezos spent a lot of time there at the Washington Post. >> We just want the headquarters, that's all we want. We just want the headquarters. >> Well, to the point, if you've got such a growing company monopoly, maybe you should set up an HQ2 in DC. >> Three of the 20, right, for a DC base? >> Yeah, he was saying the other day that, maybe we should think about enhancing, he didn't call it social security, but the government, essentially, helping people plan for retirement and the like. I heard that and said, "Whoa, is he basically "telling us he's going to put us all out of jobs?" (both laugh) So, that, if I'm a customer of Amazon's, I'm kind of scary. So, one of the things they should absolutely do is spin out AWS, I think that helps solve that problem. But, back to IBM, Ginni Rometty was very clear at the World of Watson conference, the inaugural one, that we are not out trying to compete with our customers. I would think that resonates to a lot of people. >> Well, to be continued, right? Next month, back with IBM again? Right, three days? >> Yeah, I think third week in March. Monday, Tuesday, Wednesday, theCUBE's going to be there. Next week we're in the Bahamas. This week, actually. >> Not as a group taking vacation. Actually a working expedition. >> No, it's that blockchain conference. Actually, it's this week, what am I saying next week? >> Although I'm happy to volunteer to grip on that shoot, by the way. >> Flying out tomorrow, it's happening fast. >> Well, enjoyed this, always good to spend time with you. And good to spend time with you as well. So, you've been watching theCUBE, machine learning everywhere. Build your ladder to AI. Brought to you by IBM. Have a good one. (techno music)

>> Live from Boston, Massachusetts, it's The Cube! Covering IBM Chief Data Officer Summit, brought to you by IBM. >> Welcome back to The Cube's live coverage of IBM's Chief Data Strategy Summit, I'm your host Rebecca Knight, along with my cohost Dave Vellante. We have a big panel today, these are our social influencers. Starting at the top, we have Christopher Penn, VP Marketing of Shift Communications, then Tripp Braden, Executive Coach and Growth Strategist at Strategic Performance Partners, Mike Tamir, Chief Data Science Officer at TACT, Bob Hayes, President of Business Over Broadway. Thanks so much for joining us. >> Thank you. >> So we're talking about data as a way to engage customers, a way to engage employees. What business functions would you say stand to benefit the most from using data? >> I'll take a whack at that. I don't know if it's the biggest function, but I think the customer experience and customer success. How do you use data to help predict what customers will do, and how do you then use that information to kind of personalize that experience for them and drive up recommendations, retention, upselling, things like that. >> So it's really the customer experience that you're focusing on? >> Yes, and I just released a study. I found that analytical-leading companies tend to use analytics to understand their customers more than say analytical laggards. So those kind of companies who can actually get value from data, they focus their efforts around improving customer loyalty by just gaining a deeper understanding about their customers. >> Chris, you want to jump in here with- >> I was just going to say, as many of us said, we have three things we really care about as business people, right? We want to save money, save time, or make money. So any function that meets those qualifications, is a functional benefit from data. >> I think there's also another interesting dimension to this, when you start to look at the leadership team in the company, now having the ability to anticipate the future. I mean now, we are no longer just looking at static data. We are now looking at anticipatory capability and seeing around corners, so that the person comes to the team, they're bringing something completely different than the team has had in the past. This whole competency of being able to anticipate the future and then take from that, where you take your organization in the future. >> So follow up on that, Tripp, does data now finally trump gut feel? Remember the HBR article of 10, 15 years ago, can't beat gut feel? Is that, we hit a new era now? >> Well, I think we're moving into an era where we have both. I think it's no longer an either or, we have intuition or we have data. Now we have both. The organizations who can leverage both at the same time and develop that capability and earn the trust of the other members by doing that. I see the Chief Data Officer really being a catalyst for organizational change. >> So Dr. Tamir I wonder if I could ask you a question? Maybe the whole panel, but so we've all followed the big data trend and the meme, AI, deep learning, machine learning, same wine, new bottle, or is there something substantive behind it? >> So certainly our capabilities are growing, our capabilities in machine learning, and I think that's part of why now there's this new branding of AI. AI is not what your mother might have thought AI is. It's not robots and cylons and that sort of thing that are going to be able to think intelligently. They just did intelligence tests on the different, like Siri and Alexa, quote AIs from different companies, and they scored horribly. They scored much worse than my, much worse than my very intelligent seven-year old. And that's not a comment on the deficiencies in Alexa or in Siri. It's a comment on these are not actually artificial intelligences. These are just tools that apply machine learning strategically. >> So you are all thinking about data and how it is going to change the future and one of the things you said, Tripp, is that we can now see the future. Talk to me about some of the most exciting things that you're seeing that companies do that are anticipating what customers want. >> Okay, so for example, in the customer success space, a lot of Sass businesses have a monthly subscription, so they're very worried about customer churn. So companies are now leveraging all the user behavior to understand which customers are likely to leave next month, and if they know that, they can reach out to them with maybe some retention campaigns, or even use that data to find out who's most likely to buy more from you in the next month, and then market to those in effective ways. So don't just do a blast for everybody, focus on particular customers, their needs, and try to service them or market to them in a way that resonates with them that increases retention, upselling, and recommendations. >> So they've already seen certain behaviors that show a customer is maybe not going to re-up? >> Exactly, so you just, you throw this data in a machine learning, right. You find the predictors of your outcome that interest you, and then using that information, you say oh, maybe predictors A, B, and C, are the ones that actually drive loyalty behaviors, then you can use that information to segment your customers and market to them appropriately. It's pretty cool stuff. >> February 18th, 2018. >> Okay. >> So we did a study recently just for fun of when people search for the term "Outlook, out of office." Yeah, and you really only search for that term for one reason, you're going on vacation, and you want to figure out how to turn the feature on. So we did a five-year data poll of people, of the search times for that and then inverted it, so when do people search least for that term. That's when they're in the office, and it's the week of February 18th, 2018, will be that time when people like, yep, I'm at the office, I got to work. And knowing that, prediction and data give us specificity, like yeah, we know the first quarter is busy, we know between memorial Day and Labor Day is not as busy in the B to B world. But as a marketer, we need to put specificity, data and predictive analytics gives us specificity. We know what week to send our email campaigns, what week to turn our ad budgets all the way to full, and so on and so forth. If someone's looking for The Cube, when will they be doing that, you know, going forward? That's the power of this stuff, is that specificity. >> They know what we're going to search for before we search for it. (laughter) >> I'd like to know where I'm going to be next week. Why that date? >> That's the date that people least search for the term, "Outlook, out of office." >> Okay. >> So, they're not looking for that feature, which logically means they're in the office. >> Or they're on vacation. (laughter) Right, I'm just saying. >> That brings up a good point on not just, what you're predicting for interactions right now, but also anticipating the trends. So Bob brought up a good point about figuring out when people are churning. There's a flip side to that, which is how do you get your customers to be more engaged? And now we have really an explosion in reinforcement learning in particular, which is a tool for figuring out, not just how to interact with you right now as a one off, statically. But how do I interact with you over time, this week, next week, the week after that? And using reinforcement learning, you can actually do that. This is the the sort-of technique that they used to beat Alpha-Go or to beat humans with Alpha-Go. Machine-learning algorithms, supervised learning, works well when you get that immediate feedback, but if you're playing a game, you don't get that feedback that you're going to win 300 turns from now, right now. You have to create more advanced value functions and ways of anticipating where things are going, this move, so that you see things are on track for winning in 20, 30, 40 moves, down the road. And it's the same thing when you're dealing with customer engagement. You want to, you can make a decision, I'm going to give this customer a coupon that's going to make them spend 50 cents more today, or you can make decisions algorithmically that are going to give them a 50 cent discount this week, next week, and the week after that, that are going to make them become a coffee drinker for life, or customer for life. >> It's about finding those customers for life. >> IBM uses the term cognitive business. We go to these conferences, everybody talks about digital transformation. At the end of the day it's all about how you use data. So my question is, if you think about the bell curve of organizations that you work with, how do they, what's the shape of that curve, part one. And then part two is, where do you see IBM on that curve? >> Well I think a lot of my clients make a living predicting the future, they're insurance companies and financial services. That's where the CDO currently resides and they get a lot of benefit. But one of things we're all talking about, but talking around, is that human element. So now, how do we take the human element and incorporate this into the structure of how we make our decisions? And how do we take this information, and how do we learn to trust that? The one thing I hear from most of the executives I talk to, when they talk about how data is being used in their organizations is the lack of trust. Now, when you have that, and you start to look at the trends that we're dealing with, and we call them data points verses calling them people, now you have a problem, because people become very, almost analytically challenged, right? So how do we get people to start saying, okay, let's look at this from the point of view of, it's not an either or solution in the world we live in today. Cognitive organizations are not going to happen tomorrow morning, even the most progressive organizations are probably five years away from really deploying them completely. But the organizations who take a little bit of an edge, so five, ten percent edge out of there, they now have a really, a different advantage in their markets. And that's what we're talking about, hyper-critical thinking skills. I mean, when you start to say, how do I think like Warren Buffet, how do I start to look and make these kinds of decisions analytically? How do I recreate an artificial intelligence when machine-learning practice, and program that's going to provide that solution for people. And that's where I think organizations that are forward-leaning now are looking and saying, how do I get my people to use these capabilities and ultimately trust the data that they're told. >> So I forget who said it, but it was early on in the big data movement, somebody said that we're further away from a single version of the truth than ever, and it's just going to get worse. So as a data scientist, what say you? >> I'm not familiar with the truth quote, but I think it's very relevant, well very relevant to where we are today. There's almost an arms race of, you hear all the time about automating, putting out fake news, putting out misinformation, and how that can be done using all the technology that we have at our disposal for disbursing that information. The only way that that's going to get solved is also with algorithmic solutions with creating algorithms that are going to be able to detect, is this news, is this something that is trying to attack my emotions and convince me just based on fear, or is this an article that's trying to present actual facts to me and you can do that with machine-learning algorithms. Now we have the technology to do that, algorithmically. >> Better algos than like and share. >> From a technological perspective, to your question about where IBM is, IBM has a ton of stuff that I call AI as a service, essentially where if you're a developer on Bluemix, for example, you can plug in to the different components of Watson at literally pennies per usage, to say I want to do sentiment analysis, I want to do tone analysis, I want personality insights, about this piece, who wrote this piece of content. And to Dr. Tamir's point, this is stuff that, we need these tools to do things like, fingerprint this piece of text. Did the supposed author actually write this? You can tell that, so of all the four magi, we call it, the Microsoft, Amazon, Google, IBM, getting on board, and adding that five or ten percent edge that Tripp was talking about, is easiest with IBM Bluemix. >> Great. >> Well, one of the other parts of this is you start to talk about what we're doing and you start to look at the players that are doing this. They are all organizations that I would not call classical technology organizations. They were 10 years ago, look at a Microsoft. But you look at the leadership of Microsoft today, and they're much more about figuring out what the formula is for success for business, and that's the other place I think we're seeing a transformation occurring, and the early adopters, is they have gone through the first generation, and the pain, you know, of having to have these kinds of things, and now they're moving to that second generation, where they're looking for the gain. And they're looking for people who can bring them capability and have the conversation, and discuss them in ways that they can see the landscape. I mean part of this is if you get caught in the bits and bites, you miss the landscape that you should be seeing in the market, and that's why I think there's a tremendous opportunity for us to really look at multiple markets of the same data. I mean, imagine looking and here's what I see, everyone in this group would have a different opinion in what they're seeing, but now we have the ability to see it five different ways and share that with our executive team and what we're seeing, so we can make better decisions. >> I wonder if we could have a frank conversation, an honest conversation about the data and the data ownership. You heard IBM this morning, saying hey we're going to protect your data, but I'd love you guys, as independents to weigh in. You got this data, you guys are involved with your clients, building models, the data trains the model. I got to believe that that model gets used at a lot of different places, within an industry, like insurance or across retail, whatever it is. So I'm afraid that my data is, my IP is going to seep across the industry. Should I not be worried about that? I wonder if you guys could weigh in. >> Well if you work with a particular vendor, sometimes vendors have a stipulation that we will not share your models with other clients, so you just got to stick to that. But in terms of science, I mean you build a model, right? You want to generalize that to other businesses. >> Right! >> (drowned out by others talking) So maybe if you could work somehow with your existing clients, say here, this is what we want to do, we just want to elevate the waters for everybody, right? So everybody wins when all boats rise, right? So if you can kind of convince your clients that we just want to help the world be better, and function better, make employees happier, customers happier, let's take that approach and just use models in a, that may be generalized to other situations and use them. If if you don't, then you just don't. >> Right, that's your choice. >> It's a choice, it's a choice you have to make. >> As long as you're transparent about it. >> I'm not super worried, I mean, you, Dave, Tripp, and I are all dressed similarly, right? We have the model of shirt and tie so, if I put on your clothes, we wouldn't, but if I were to put on your clothes, it would not be, even though it's the same model, it's just not going to be the same outcome. It's going to look really bad, right, so. Yes, companies can share the models and the general flows and stuff, but there's so much, if a company's doing machine learning well, there's so much feature engineering that's unique to that company that trying to apply that somewhere else, is just going to blow up. >> Yeah, but we could switch ties, like Tripp has got a really cool tie, I'd be using that tie on July 4th. >> This is turning into a different kind of panel (laughter) Chris, Tripp, Mike, and Bob, thanks so much for joining us. This has been a really fun and interesting panel. >> Thank you very much. Thank you. >> Thanks you guys. >> We will have more from the IBM Summit in Boston just after this. (techno music)