>> Live from San Francisco, it's theCUBE! Covering, Red Hat Summit 2018. Brought to you by Red Hat. >> Hey, welcome back everyone. We're here live in San Francisco for Red Hat Summit 2018, I'm John Furrier, my co-host John Troyer. Next guest is CUBE alumni, been on so many times. I can't remember. I think you're a VIP CUBE alumni, Doug Balog, general manager, IBM Storage Client Success and IBM's partners executive leading the Red Hat relationship. Welcome back to theCUBE, great to see you. >> It's always great to be on it again. I think that's a new category you just invented, a VIP alumni, as to something. >> On theCUBE.net site we actually have badges for CUBE VIPs that says VIP. Great to see you. Again, we have a little history. Your role at IBM, you've been there for a lot of time. You've seen their history. Power's been your wheelhouse, you built that from scratch. An open community with the Power Systems at IBM, but you launched OpenPOWER, an open consortium, very much open source model. And you know that's very successful, congratulations on that. >> Thank you. >> Now your role with Red Hat, you're the lead executive. You're the guy to call with any problems, or anything, opportunities. What's going on? Give us the update. >> Yeah, so I think it was mentioned by Matt on stage today where we're actually celebrating 20 years of partnering together with Red Hat. I think a lot of folks take pause at that not realizing how far back this relationship goes. Hate to say I was there in 1998 when we struck this agreement. I think at that time a lot of folks inside IBM were scratching their heads saying, who's Red Hat, and what is Linux, and why are we doing this? At the end of the day, we have had a longstanding belief in open collaboration, drives innovation, drives value to clients. That was the fundamental reason we jumped in when it was just an operating system discussion back in the early 2000s. We brought that across at that time. Our Intel server base, then our mainframe, and then in 2013 our Power platform. We brought our software along as well back then too. Running on that operating system. Then it became a virtualization discussion and brought Rev onto the platforms, our software supported that. Now here with some exciting announcements today around the partnership around cloud with a common container strategy. Which I think for enterprise clients will help build a larger ecosystem, give clients choice of how they want to bring that value to clients. So it's been a long, deep relationship and one that I think the two companies are more aligned than not in many ways. >> And you guys are humble, I'll say. And you guys were a catalyst moment. Linux, the Linux coming together at that time became an industry standard literally overnight, because the industry rallied around it. You guys supported it with a big contribution and since then. But that was back in the day, that was when it was tier two citizen in the world. Now open source is tier one, it's powering everything you see and open source software and storage and networking, software-defined data center, now CloudScale, this is a big deal. >> It's a big deal. >> For the world. Now, the cloud story's interesting to me. So you got the Red Hat powering a lot of the enterprise. Hybrid cloud's number one thing on the agenda, multi-cloud's kind of being discussed, but that's with the end in mind. Hybrid cloud is a number one work area, which essentially cloudifying, creating cloud operations for the enterprise. How is this partnership with Red Hat impact IBM's customers and what's in it for the Red Hat customers? >> I think as, and I know you just had Arvin on here a moment ago. It was literally just about six months ago, that Arvin and I and Paul Cormier and Jim Whitehurst sat down and said, you know what, I think the next big thing for us to partner around is containers. There is so much advantage for speed of software deployment, this hybrid cloud structure you talked about and the fact that, listen, I think we're much more mature in the industry talking about cloud. There were moments a year or two ago where the answer was everything's going to the public cloud, on-prem's dead. I think it's a much more mature conversation now in terms of the role of hybrid. Which means clients are still going to have plenty of their data. Especially if they're a regulated industry. That data's going to stay on-prem, but that still doesn't mean there are parts of their infrastructure, parts of their applications that they're going to want to run on a public cloud, like the IBM cloud. So that ability to have a common container approach, a common container management structure, like IBM cloud private, with OpenShift as the partner, I think it brings tremendous freedom of choice to clients, so where they run what with a common development platform. >> It's interesting, the definition's changed, and we're always squinting through the noise, but the bottom line is if everything's cloudified if you will, using that word, on-prem and public cloud doesn't really make a difference where you locate it because it's cloud operations and Wikibon had the True Private Cloud rapport which basically stated that True Private Cloud is essentially on-premise activity, just operating in a cloud framework meaning same code bases, more operational dashboard. Especially cloud operations not traditional IT. So I think there is the distinction, so it's still on-prem. >> Still on-prem. >> But now you've got the edge of the network as well. Software Base2, so you've got IoT Edge, public cloud, hybrid, all coming together. >> You know we used to, when the world was just on-prem for the most part, we used to talk about different architectures being fit for purpose. What's the right workload to run what kind of applications. I was just up with a large financial institution in your neck of the woods on Friday and we were having this fit for purpose conversation around the cloud based on what kind of workload it is, how sensitive is the data, is it redacted of your and my names and social security numbers, right? All that stuff that's important. Where should that cloud workload run? What cloud should it run in? Or should it run on-prem or across both? So listen, a lot of what's old is always new, but of course it keeps evolving here now to this world of multi-cloud and hybrid cloud as you said. >> What's going on with customers at IBM? Tell us what's happening in your world. Obviously the industry's replatforming as the entire business. It's not just companies. It's an entire infrastructure's changing. You call it cloud infrastructure, data insfrastructure, AI, you're doing the Power stuff being successful. It's a global rearchitecture. >> That's right. >> This is not a one company. >> No. >> This is a complete standard. >> Everybody's transforming and I don't think there's ever an end to transformation. I think transformation is a train ride you decide to get on and you better get on, and you're going to stay on it once you get on. There's milestones along the way that demonstrate progress. But there's no resting anymore in terms of being comfortable in today's world. So transformation is going on forever. In the systems business we're constantly transforming. We brought out a new mainframe last year, we call it the z14. And now recently kind of a sum of our little skinny Zs, the ZR1s. Which are really designed for the modern data center because they fit in a standard, an industry standard rack. So we're bringing that robust security to not only our traditional Z clients, but to brand new Z clients, running Linux by the way. >> Arvin nailed it in his description and then I think this is true. You've got TCP/IP, HTTP, these are seminal moments and now you've got this glue layer with containers and say Kubernetes. This is going to change how software's being built and software being run, and how businesses will be running. So that's an industry wide dynamic shift over. At the infrastructure level. Instrumentation, and all the software behind it. Okay, that's happening. We're agreeing with that and totally agree with that. Now the impact to the customer. What do they have to do? Because they have to now adapt to this new world. Which means they got to put the legacy in. Plugging into the legacy they have to have microservices. So what does that software-defined infrastructure look like for the customer? You've seen the systems side through storage. What does software-defined mean in this new architecture? >> It certainly, part of the objective of ICP, IBM Cloud Private, was to create that on-prem cloud experience. Because again, so many clients were looking for not just having their traditional IT, which they're going to continue to have, but continue to modernize. But also move to a new environment that was much more self-service, all the things and the benefits of the public cloud, but still being careful around their data in many ways, and their core applications. So they're transforming and modernizing from legacy IT to on-prem IT, and then branching out with the fit for purpose discussion to the multi-cloud, to the hybrid cloud world. >> I love that that in the fit for purpose you can it that in so many parts of the stack. We, I think open source, one of its characteristics is it develops in public. And 20 years ago the question was, not is it fit for purpose, but when is Linux going to be ready? When's it going to be ready? Is it going to be ready? I think that answer is pretty clear now, and I think the same thing has been going through with containers and with Kubernetes. On theCUBE you're tracking Kubernetes, the growth of Kubernetes. Is this a real moment where IBM says, okay now, Kubernetes and OpenShift is now ready for the enterprise? >> Absolutely. Absolutely. If I think about kind of big moments in IT that provide a ubiquitous access to developers, you had, we talked about Linux as an operating environment, once all the platforms, the different architectures ran Linux, the ability for application portability while still bringing out the value of the platform, became very much true. Java, from an application programming model was another one. If you wrote in Java, you had the ability then to move that Java workload around without recompilation in many cases, to different architectures getting the value out of where you chose. Containers are the next one. So now we're containerizing workload. And again you have sort of freedom of choice of where you run it. And if you run it in this cloud or that cloud. Or this system or that system. You get different values out of it. >> And we're not just containerizing microservices. Now we're talking about containerizing WebSphere. >> WebSphere and databases and message queuing, and kind of that robust runtime that somebody in the audience joked, gosh I haven't seen those queues in a long time. Not that they haven't been there, they've always been there. But again, this is back to how do you take what you have from a legacy IT and modernize it for this cloud era? Much more than cloud washing. This is really transforming the IT. >> It preserves the adjustment. The bottom line, if I'm a CIO or I'm an executive looking at this market, I say okay, I've got a purchase decision I've made in the past, and I have a stall base of stuff and my choice used to be I've got to replace that, hire new people, move everything over, to now your approach is a little bit different. Great, just containerize it. And then when you're ready, you deal with it on its lifecycle. So you don't really have, so it's an ROI thing and it's also preservation of preexisting conditions. >> Now the other big, of course, client transformation going on is there's not a single client on the planet who's not trying to figure out artificial intelligence and what it means to their business to bring more insights around their clients into their workflows. So that's why in addition to Watson and all the work we do around Watson, of course in our cloud, we've gone down to the system level with our Power platform and really optimized Power9 with flash storage attached to it as the best combination of a platform for this AI era. In fact, I was sharing just before we went live here, is actually a big announce day for our systems business too. We're announcing new models of our AI platform, what we call the AC922 now with six GPUs with our partnership with NVIDIA. We've got new Linux systems, kind of the fall on with Power9, that I started back, they're much better by the way, that I started back in 2013. So here we are at the Linux Summit, we've got a common cloud partnership being announced at the same time we're announcing all the way down to the metal, systems and chips that are optimized to run the Linux and open source platforms. >> The thing that I like about those environments, the level of granularity is getting down to the point where you can have your applications or down to the level, to a service level, and manage it on that based on PowerAI would be a great example of what people can tap into. >> It actually it connects it all together, right? I mean PowerAI, which again, new content there. We've just announced PowerAI on Power9 and on Red Hat for the first time. Back to new news here at the Summit. It'll be containerized later this year. So now you've got PowerAI in a container on IBM Cloud Private, running on OpenShift optimized for Power9. Starts to make your brain hurt a little bit. But that's closer to the level of the thoughtfulness of our strategy and how all the pieces work together from the software and the applications down to the systems and the chip. >> You guys do a good job keeping in the open, too. I really like how that went with Power, certainly great stuff. PowerAI for the folks watching, check it out it's from IBM. Interesting product. I think it's got a lot of capability. Your perspective as an industry participant. You've seen many waves. What's this wave like in your opinion? There's so much going on with this new infrastructure. How do you talk about it when someone says hey Doug, what's going on? All this stuff. You've got blockchain over here. You've got this going on over there. >> I think that, at least from a systems perspective, the way think about it, myself and my peers think about it is, we've gone through so many generations where it was more manufacturing process driven innovation. How do you pack more on a chip? How do you pack more on a chip? How do you pack more on a chip? And it was kind of all about that. We're now in an era where homogeneity is no longer going to cut it. You're going to really need a number of GPUs, a number of processors, different kind of architectures, to fit the kind of workload that's coming so fast at us these days. You really don't have time to step back and say, let me replumb my old data center with that next one chip. It's going to be a diversity of infrastructure. >> Its hard to provision. You need it available immediately. >> So this wave we're in really is about bringing that diversity, that heterogeneity back into the data center, and bringing that value though, back in a simplified deployment way, 'cause heterogeneity means complexity in some ways. And that's where the layering of software packages like PowerAI, like software-defined storage, like ICP and OpenShift with our partnership with Red Hat kind of help bring that diversity and bring it back to a common level of application development. That's kind of the end goal. Common application development, the platform brings out the value. The app doesn't have to worry about it, but you've got that diversity of choice underneath. >> Great, Doug, great stuff. Great to have you on theCUBE. Just to end the segment, briefly summarize for people watching, what's this relationship with Red Hat all about? Obviously you have history, but what's the value? Talk about it right now. What's the impact to the customer watching? The relationship that's announced today with the private cloud initiative with Red Hat. >> I think if we summarize the relationship without getting into the technology, it really is about bringing innovation to enterprise clients. At the end of the day that's what Red Hat's focused on, that's what we're focused on, and that's what we're focused on together. They have great minds in the industry, we have great minds in the industry. The power of those minds coming together to create some of the innovation that we just talked about here in this segment, I mean it's mind blowing for what it means to enterprise clients to help them propel themselves forward and transform. That's what it means. >> These are the kind of partnerships we're going to see now that people are rallying behind Kubernetes and containers and this new software-defined infrastructure that's going on. We expect more of it. Right? We'll see more? >> Absolutely, software-defined is the name of the game these days. Not that there isn't value in the systems by the way. It's got to run someplace. >> They're under the hood. >> They're under the hood. >> Programmable. >> And they're differentiated for sure. >> Yeah infrastructure as code, you still need servers to run this stuff on. >> It does matter. It does matter a lot. >> Doug, great to see you. >> Good to see you as always, John. John, good to see you. >> Absolutely. >> theCUBE bringing all the action here, here in San Francisco. Live coverage, I'm John Furrier, John Troyer, day one, we'll be right back with more after this short break. (electronic music)

>> Narrator: Live, from Las Vegas, it's theCUBE. Covering IBM Think, 2018. Brought to you by IBM >> Hello everyone, welcome back to theCUBE, we are here on the floor at IBM Think 2018 in theCUBE studios, live coverage from IBM Think. I'm John Furrier, the host of theCUBE, and we're here with Stefanie Chiras, who is the Vice President of Offering Management IBM Cognitive Systems, that's Power Systems, a variety of other great stuff, real technology performance happening with Power, it's been a good strategic bet for IBM. Stefanie, great to see you again, thanks for coming back on theCUBE. >> Absolutely, I love to be on, John, thank you for inviting me. >> When we we had a brief (mumbles) Bob Picciano, who's heading up Power and that group, one of the things we learned is there's a lot of stuff going on that's really going to be impacting the performance of things. Just take a minute to explain what you guys are offering in this area. Where does it fit into the IBM portfolio? What's the customer use cases? Where does that offering fit in? >> Yeah, absolutely. So I think here at Think it's been a great chance for us to see how we have really transformed. You know, we have been known in the market for AIX and IBMI. We continue to drive value in that space. We just GA'd on, yesterday, our new systems, based Power9 Processor chip for AIX and IBMI in Linux. So that remains a strong strategic push. Enterprise Linux. We transformed in 2014 to embrace Linux wholeheartedly, so we really are going after now the Linux base. SAP HANA has been an incredible workload where over a thousand customers run in SAP HANA. And boy we are going after this cognitive and AI space with our performance and our acceleration capabilities, particularly around GPUs, so things like unique differentiation in our NVLink is driving our capabilities with some great announcements here that we've had in the last couple of days. >> Jamie Thomas was on earlier, and she and I were talking about some of the things around really the software stack and the hardware kind of coming together. Can you just break that out? Because I know Power, we've been covering it, Doug Balog's been on many times. A lot of great growth right out of the gate. Ecosystem formed right around it. What else has happened? And separate out where the hardware innovation is and technology and what's software and how the ecosystem and people are adopting it. Can you just take us through that? >> Yeah, absolutely. And actually I think it's an interesting question because the ecosystem actually has happened on both sides of the fence, with both the hardware side and the software side, so OpenPOWER has grown dramatically on the hardware side. We just released our Power9 processor chip, so here is our new baby. This is the Power9. >> Hold it up. >> So this is our Power9 here, 8 billion transistors, 14 miles of wiring and 17 layers of metal, I mean it's a technology wonder. >> The props are getting so small we can't even show on the camera. (laughing) >> This is the Moore's Law piece that Jenny was talking about in her keynote. >> That's exactly it. But what we have really done strategically is changed what gets delivered from the CPU to more what gets delivered at a system level, and so our IO capabilities. First chip to market, delivering the first systems to market with PCIe Gen 4. So able to connect to other things much faster. We have NVLink 2.0, which provides nearly 10x the bandwidth to transport data between this chip and a GPU. So Jensen was onstage yesterday from NVIDIA. He held up his chip proudly as well. The capabilities that are coming out from being able to transport data between the power CPU and the GPU is unbelievable. >> Talk about the relationship with NVIDIA for a second, 'cause that's also, NVIDIA stocks up a lot of (mumbles) the bitcoin mining graphics card, but this is, again, one use case, NVIDIA's been doing very well, they're doing really well in IOT, self-driving cars, where data performance is critical. How do you guys play in that? What's the relationship with NVIDIA? >> Yeah, so it has been a great partnership with NVIDIA. When we launched in 2013, right at the end of 2013 we launched OpenPOWER, NVIDIA was one of the five founding members with us, Google, Mellanox, and Tyan. So they clearly wanted to change the game at the systems value level. We launched into that with we went and jointly bid with NVIDIA and Mellanox, we jointly bid for the Department of Energy when we co-named it Coral. But that came to culmination at the end of last year when we delivered the Summit and Sierra supercomputers to Oak Ridge and Lawrence Livermore. We did that with innovation from both us and NVIDIA, and that's what's driving things like this capability. And now we bring in software that exploits it. So that NVLink connection between the CPU and the GPU, we deliver software called PowerAI, we've optimized the frameworks to take advantage of that data transport between that CPU and GPU so it makes it consumable. With all of these things it's not just about the technology, it's about is it easy to consume at the software level? So great announcement yesterday with the capabilities to do logistic regression. Unbelievable, taking the ability to do advertising analytics, taking it from 70 minutes to 1 and 1/2. >> I mean we're going to geek out here. But let's go under the hood for a second. This is a really kind of a high end systems product, at the kind of performance levels. Where does that connect to the go to market? Who's the buyer of it? Is it OEMs? Is it integrators? Is it new hardware devices? How do I get involved and who's the target customer? And what kind of developers are you reaching? Can you just take us through that who's buying this product? >> So this is no longer relegated to the elite set. What we did, and I think this is amazing, when we delivered the Summit and Sierra, right? Huge cluster of these nodes. We took that same node, we pulled it into our product line as the AC922, and we delivered a 4 GPU air-cooled version to market. On December 22nd we GA'd, of last year. And we sold to over 40 independent clients by the end of 2017, so that's a short runway. And most of it, honestly, is all driven around AI. The AI adoption, and it's a cross enterprise. Our goal is really to make sure that the enterprises who are looking at AI now with their developer are ready to take it into production. We offer support for the frameworks on the system so they know that when they do development on this infrastructure, they can take it to production later. So it's very much driven toward taking AI to the enterprise, and it's all over. It's insurance, it's financial services sector. It's those kinds of enterprise that are using AI. >> So IO sensitive, right? So IOT not a target or maybe? >> So you know when we talk out to edge it's a little bit different, right? So the IOT today for us is driving a lot of data, that's coming in, and then you know at different levels-- >> There's not a lot of (mumbles) power needed at the edge. >> There is not, there is not. And it kind of scales in. We are seeing, I would say, kind of progression of that compute moving out closer. Whether or not it's on, it doesn't all come home necessarily anymore. >> Compute is being pushed to where the data is. >> Stefanie: Absolutely right. >> That's head room for you guys. Not a priority now because there's not an intense (mumbles) compute can solve that. >> Stefanie: That's right. >> All right, so where does the Cloud fit into it? You guys powering IBMs Cloud? >> So IBM Cloud has been a great announcement this year as well. So you've seen the focus here around AI and Cloud. So we announced that HANA will come on Power into the Cloud, specializing in large memory sets, so 24 terabyte memory sets. For clients that's huge to be able to exploit that-- >> Is IBM Cloud using Power or not? >> That will be in IBM Cloud. So go to IBM Cloud, be able to deploy an SAP certified HANA on Power deployment for large memory installs, which is great. We also announced PowerAI access, on Power9 technology in IBM Cloud. So we definitely are partnering both with IMB Cloud as well as with the analytics pieces. Data Science Experience available on Power. And I think it's very important, what you said earlier, John, about you want to bring the capabilities to where the data is. So things like a lot of clients are doing AI on prem where we can offer a solution. You can augment that with capabilities like Watson, right? Off prem. You can also do dev ops now with AI in the IBM Cloud. So it really becomes both a deployment model, but the client needs to be able to choose how they want to do it. >> And the data can come from multiple sources. There's always going to be latencies. So what about blockchain? I want to get to blockchain. Are you guys doing anything in the blockchain ecosystem? Obviously one complaint we've been hearing, obviously, is some of these cryptocurrency chains like Ethereum, has performance issues, they got projects coming out. A lot of open source in there. Is Power even puttin' their toe in the water with blockchain? >> We have put our toe in the water. Blockchain runs on Power. From an IBM portfolio perspective-- >> IBM blockchain runs on Power or blockchain, or other blockchains? >> Like Hyperledger. Like Hyperledger will run. So open source, blockchain will run on Power, but if you look at the IBM portfolio, the security capabilities in Z14 that that brings and pulling that into IBM Cloud, our focus is really to be able to deliver that level of security. So we lead with system Z in that space, and Z has been incredible with blockchain. >> Z is pretty expensive to purchase, though. >> But now you can purchase it in the Cloud through IBM Cloud, which is great. >> Awesome, this is the benefit of the Cloud. Sounds like soft layer is moving towards more of a Z mainframe, Power, backend? >> I think the IBM Cloud is broadening the capabilities that it has, because the workloads demand different things. Blockchain demands security. Now you can get that in the Cloud through Z. AI demands incredible compute strength with GPU acceleration, Power is great for that. And now a client doesn't have to choose. They can use the Cloud and get the best infrastructure for the workload they want, and IBM Cloud runs it. >> You guys have been busy. >> We've been busy. (laughing) >> Bob Picciano's been bunkered in. You guys have been crankin' out... love to do a deeper dive on this, Stefanie, and so we'd love to follow up with you guys, and we told Bob we would dig into that, too. Question I have for you now is, how do you talk about this group that you're building together? You know, the names are all internal IBM names, Power... Is it like a group? Do you guys call yourself like the modern infrastructure group? Is it like, what is it called, if you had to explain it to outside IBM, AIs easy, I know what AI team does. You're kind of doing AI. You're enabling AI. Are you a modern infrastructure? What is the pillar are you under? >> Yeah, so we sit under IBM systems, and we are definitely systems proud, right? Everything runs on infrastructure somewhere. And then within that three spaces you certainly have Z storage, and we empower, since we've set our sites on AI and cognitive workloads, internally we're called IBM Cognitive Systems. And I think that's really two things, both a focus on the workloads and differentiation we want to bring to clients, but also the fact that it's not just about the hardware, we're now doing software with things like PowerAI software, optimized for our hardware. There's magic that happens when the software and the hardware are co-optimized. >> Well if you look, I mean systems proud, I love that conversation because you look at the systems revolution that I grew up in, the computer science generation of the 80s, that was the open movement, BSD, pre-Linux, and then now everything about the Cloud and what's going on with AI and what I call the innovation sandwich with data in the middle and blockchain and AI as bread. >> Stefanie: Yep. >> You have all the perfect elements of automation, you know, Cloud. That's all going to be powered by a system. >> Absolutely. >> Especially operating systems skills are super imprtant. >> Super important. Super important. >> This is the foundational elements. >> Absolutely, and I think your point on open, that has really come in and changed how quickly this innovation is happening, but completely agree, right? And we'll see more fit for purpose types of things, as you mentioned. More fit for purpose. Where the infrastructure and the OS are driving huge value at a workload level, and that's what the client needs. >> You know, what dev ops proved with the Cloud movement was you can have programmable infrastructure. And what we're seeing with blockchain and decentralized web and AI, is that the real value, intellectual property, is going to be the business logic. That is going to be dealing with now a whole 'nother layer of programmability. It used to be the other way around. The technology determined >> That's right. >> the core decision, so the risk was technology purchase. Now that this risk is business model decision, how do you code your business? >> And it's very challenging for any business because the efficiency happens when those decisions get made jointly together. That's when real business efficiency. If you make one decision on one side of the line or the other side of the line only, you're losing efficiency that can be driven. >> And open is big because you have consensus algorithms, you got regulatory issues, the more data you're exposed to, and more horsepower that you have, this is the future, perfect storm. >> Perfect storm. >> Stefanie, thanks for coming on theCUBE, >> It's exciting. >> Great to see you. >> Oh my pleasure John, great to see you. >> You're awesome. Systems proud here in theCUBE, we're sharing all the systems data here at IBM Think. I'm John Furrier, more live coverage after this short break. All right.

>> Announcer: Live from Las Vegas it's theCUBE covering VM World 2017, brought to you by VMWare and its ecosystem partners. (upbeat techno music) >> Hey, welcome back to day two of VM World 2017 theCUBE's continuing coverage, I am Lisa Martin with my co-host Dave Vellante and we have a kind of a cute mafia going on here. We have Eric Herzog the CMO of IBM Storage back with us, and we also have Steve Kenniston, another CUBE alumni, Global Spectrum Software Distance Development Executive at IBM, welcome guys! >> Thank you. >> Thank you, great to be here. >> So lots of stuff going on, IBM Storage business health, first question, Steve, to you, what's going on there, tell us about that. >> Steve: What's going on in IBM Storage? >> Yes. >> All kinds of great things. I mean, first of all, I think we were walking the show floor just talking about how VMWare, VM World use to be a storage show and then it wasn't for a long time. Now you're walking around there, you see all kinds of storage. Now IBM, really stepping up its game. We've got two booths. We're talking all about not just, you know, the technologies, cognitive, IOT, that sort of thing but also where do those bits and bytes live? That's your, that's your assets. You got to store that information someplace and then you got to protect that information. We got all we're showcasing all kinds of solutions on the show floor including Versus Stack and that sort of thing where you you know make your copies of your data, store your data, reissue your data, protect your data, it's a great show. >> Lisa: Go ahead. >> Please. So I ever want to get into it, right, I mean, we've watched, this is our eighth year doing theCUBE at VM World, and doing theCUBE in general, but to see the evolution of this ecosystem in this community, you're right, it was storage world, and part of the reason was, and you know this well Eric, it was such a problem, you know. And all the APIs that VMWare released to really solve that storage problem, Flash obviously has changed the game a little bit but I want to talk about data protection if you're my backup specifically. Steve you and I have talked over the years about the ascendancy of VMWare coincided with a reduction in the physical capacity that was allocated to things like the applications like Backup. That was a real problem so the industry had their re-architect its backup and then companies like VM exploded on the scene, simplicity was a theme, and now we're seeing a sort of a similar scene change around cloud. So what's your perspective on that sort of journey in the evolution of data protection and where we are today, especially in the context of cloud? >> Yeah, I think there's been a couple, a couple big trends. I think you talked about it correctly, Dave, from the standpoint of when you think about your data protection capacity being four X at a minimum greater than your primary storage capacity, the next thing you start understanding is now with a growth in data, I need to be able to leverage and use that data. The number one thing, the number one driver to putting data in the cloud is data protection, right? And then it's now how can I reuse that data that's in the cloud and you look at things like AWS and that sort of thing the ability to spin up applications, and now what I need to do is I need to connect to with the data to be able to run those applications and if I'm going to do a test development environment if I'm going to run an analytics report or I'm going to do something, I want to connect to my data. So we have solutions that help you promote that data into the cloud, leverage that data, take advantage of that data and it it's just continually growing and continually shifting. >> So you guys are really leaning in to to VM World this year, got a big presence. What's going on there? You know, one would think, okay you know VMWare it's you know clearly grabbing a big piece of the market. You got them doing more storage. What's going on Eric, is it just, "Hey, we're a good partner." "Hey we're not going to let them you know elbow us out." "We're going to be competitive with the evil machine company." What's the dynamic in the VMWare ecosystem with you guys? >> Well I think the big thing for us is IBM has had a powerful partnership with VMWare since day one. Way back when IBM use to have an Intel Server Division everything was worked with VMWare, been a VMR partner, years and years ago on the server world as that division transferred away to Lenovo the storage division became front and center so all kinds of integration with our all Flash arrays our Versus Stack which you do jointly with Cisco and VMWare providing a conversion for structured solution, the products that Steve's team just brought out Spectrum Protect Plus installs in 30 minutes, recovers instantly off of a VM, can handle multiple VMs, can recover VMs or files, can be used to back up hundreds and thousands of virtual machines if that's what you've got in your infrastructure. So, the world has gone virtual and cloud. IBM is there with virtual and cloud. You need to move data out to IBM cloud, or exams on our azure Spectrum Protect Plus, Spectrum Scale, Spectrum Virtualize all members of our software family, and the arrays that they ship on all can transparently move data to a cloud; move it back and forth at the blink of an eye. With VMWare you need that same sort of level of integration we've had it on the array side we've now brought that out with Spectrum Protect Plus to make sure that backups are, in fact Spectrum Protect Plus is so easily, even me with my masters degree in Chinese history can back up and protect my data in a VMWare environment. So it's designed to be used by the VMWare admin or the app owner, not by the backup guy or the storage admin. Not that they won't love it too, but it's designed for the guys who don't know much about storage. >> I'll tell you Dave I saw it, I watched him get a demo and then I watched him turn around and present it, it was impressive. (laughing) >> I want to ask you a quick question. Long time partners IBM and VMWare as you as you've just said. You were an EMC guy that's where I first met you, from a marketing and a positioning perspective what have you guys done in the last year since the combination has completed to continue to differentiate the IBM VMWare strengths as now VMWare's part of Dell EMC. >> So I think the key thing is VMWare always has been the switch under the storage business. When I was at EMC, we owned 81 percent of the company and you walked into Palo Alto and Pat Gelsinger who I used to work for at EMC is now the CEO of VMWare you walk into the data center and there's IBM arrays, EMC arrays, HP arrays, Dell arrays and then app arrays. And a bunch of all small guys so the good thing is they've always been the switch under the storage industry, IBM because of it's old history and the server industry has always had tight integration with them, and we've just made sure we've done. I think they key difference we've done is it's all about the data. CEO, CIO they hate talking about storage. It's all about the data and that's what we're doing. Spectrum Protect Plus is all about keeping the data safe protected, and as Steve talked about using it in the cloud using real data sets for test and dev for dev opps, that's unique. Not everyone's doing that we're one of the few guys that do that. It's all about the data and you sell the storage as a foundation of that data. >> Well I mean IBM's always been good about not selling speeds and feeds, but selling at the boardroom level, the C level I mean you're IBM. That's your brand. Having said that, there's a lot of knife fights going on tactically in the business and you guys are knife fighters I know you both you're both startup guys, you're not afraid to get you know down and dirty. So Steve, how do you address the skepticism that somebody might have and say, "Alright, you know I hear you, this all sounds great but, you know I need simplicity." You guys you talk simplicity your Chinese History background, but I'm still skeptical. What can you tell me, proof points share with us to convince us that you really are from a from a simplicity standpoint competitive with the pack? >> I think, I think you seen a pretty big transformation over the last 18 months with what the some of the stuff that we've done with the software portfolio. So, a lot of folks can talk a good game about a software defined strategy. The fact that we put the entire Spectrum suite now under one portfolio now things are starting to really gel and come together. We done things like interesting skunkworks project with Spectrum Protect Plus and now we even had business partners in our booth who are backup architects talking about the solution who sell everybody else's solution on the floor saying, "This is, the I can't believe it, "I can't believe this is IBM. "They're putting together solutions that "are just unbelievably easy to use." They need that and I think you're exactly right, Dave. It used to be where you have a lot of technical technicians in the field and people wanted to architect things and put things together. Those days are gone, right? Now what you're finding is the younger generation coming in they're iPhone type people they want click simplicity just want to use it that sort of thing. We've started to recognize that and we've had to build that into our product. We were, we are a humbler IBM now. We are listening to our business partners. We are asking them what do we need to be doing to help you be successful in the field, not just from a product set, but also a selling you know, a selling motion. The Spectrum suite all the products under one thing now working and they're operating together, the ability to buy them more easily, the ability to leverage them use them, put it in a sandbox, test it out, not get charged for it, okay I like it, now I want to deploy it. We've really made it a lot easier to consume technology in a much easier way, right, software defined, and we're making the products easier to use. >> How've you been able to achieve that transformation is it cultural, is it somebody came down and said you thou shalt simplify and I mean you've been there a couple years now. >> Yeah so I think, I think the real thing is IBM has brought into the division a bunch of people from outside the division. So Ed Walsh our general manager who's going to be on shortly five startups. Steve, five startups. Me, seven startups. Our new VP of Offering Manager in the Solutions said not only Net Up, four startups. Our new VP of North American sales, HDS, three startups. So we've brought in a bunch of guys who A, use to work at the big competition, EMC, Net Up, Hitachi, et cetera. And we've also brought in a bunch of people who are startup guys who are used to turning on dime, it's all about ease of use, it's all about simplicity, it's all about automation. So between the infusion of this intellectual capital from a number of us who've been outside the company, particularly in the startup world, and the incredible technical depth of IBM storage teams and our test teams and all the other teams that we leverage, we've just sort of pointed them in the direction like it needs to be installed in 30 minutes. Well guess what, they knew how to do that 30 years ago. They just never did because they were, you know stuck in the IBM silo if you will, and now the big model we have at IBM is outside in, not inside out, outside in. And the engineering teams have responded to that and made things that are easy to use, incredibly automated, work with everyone's gear not just ours. There're other guys that sell storage software. But other than in the protection space all the other guys, it only works with EMC or it only works with Net Up or it only works HP. Our software works with everyone's stuff including every one of our major competitors, and we're fine with that. So that's come from this infusion and combination of the incredible technical depth and DNA of IBM with a bunch of group of people about 10 of us who've all for come from either A, from the big competitors, but also from a bunch of startups. And we've just merged that over the last two years into something that's fortunate and incredibly powerful. We are now the number one storage software company in the world, and in overall storage, both systems and software, we're number two. >> Dave: So where's that data, is that IDC data? >> Yeah, that's the IDC data. >> And what are they what are they, when they count that what are they counting? Are they sort of eliminating any hardware you know, associated with that or? >> Well no, storage systems would be external systems our all Flash arrays, our Ver, that's all the systems side. Software's purely software only, so. >> Dave: No appliances >> Yeah, yeah, yeah. >> Dave: The value of those licenses associated with that >> Well as our CFO pointed out, so if you take a look at our track record of last at the beginning of this year, we grew seven percent in Q1, one of the only storage companies to grow certainly of the majors, we grew eight percent in Q2, again one of the only storage companies to grow of the major players, and as our CFO pointed out in his call in Q2, over 40 percent of the division's revenue is storage software, not full system, just stand alone software particularly with the strength of the suite and all the things we're doing you know, to make it easy to use install in 30 minutes and have a mastery in Chinese History be able to protect his data and never lose it. And that's what we want to be able to do. >> Okay so that's a licensed model, and is it a, is it a, is it a ratable model is it a sort of a perpetual model, what is it? >> We've got both depending on the solution. We have cloud engagement models, we can consume it in the cloud. We got some guys are traditionalists, gimme an ELA, you know Enterprise License Agreement. So we, we're the pasta guys. We have the best pasta in the world. Do you want red sauce, white sauce, or pesto? Dave I said that because you're part Italian, I'm half Italian on my mother's side. >> I like Italian. >> So we have the best pasta, whatever the right sauce is for you we deliver the best pasta on the planet, in our case the best storage software on the planet. >> You heard, you heard Michael up there on stage today, "Don't worry about it." He was invoking his best Italian, I have an affinity for that. So, so Steve, this is your second stint at IBM, Ed's second stint, I'm very intrigued that Doug Balog is now moved over this is a little inside baseball here, but running sales again. >> Steve: Right. >> So that's unique, actually, to see have a guy who use to run storage, leave, go be the general manager of the Power Systems division, in OpenPOWER, then come back, to drive storage sales. So, you're seeing, it's like a little gravity action. Guys sort of coming back in, what's going on from your perspective? >> Well I I think, I think Eric said it best. We've done an outside in. We've been bringing a lot of people in and I think that the development team and I wanted to to to bounce off of what Eric had said was they always knew how to do it, it's just they they needed to see and understand the motivation behind why they wanted to do it or why they needed to do it. And now they're seeing these people come in and talk about in a very, you know caring way that this is how the world is changing, and they believe it, and they know how to do it and they're getting excited. So now there's a lot more what what people might think, "Oh I'm just going to go develop my code and go home," and whatever they're not; they're excited. They want to build new products. They want to make these things interoperate together. They're, they're passionate about hearing from the customer, they're passionate about tell me what I can do to make it better. And all of those things when one group hears something that's going on to make something better they want to do the same thing, right. So it's it's really, it's breathing good energy into the storage division, I think. >> So question for you guys on that front you talked about Eric, we don't leave it at storage anymore, right? C levels don't care about that. But you've just talked about two very strong quarters in storage revenue perspective. What's driving that what's or what's dragging that? Is it data protection? What are some of the other business level drivers that are bringing that storage sale along? >> So for us it's been a couple things. So when you look at just the pure product perspective the growth has been around our all Flash arrays. We have a broad portfolio; we have very cost effective stuff we have stuff for the mainframe we have super high performance stuff we have stuff for big data analytic workloads. So again there isn't one Flash, you know there's a couple startups that started with one Flash and that's all they had. We think it's the right Flash tool for the right job. It's all about data, applications, workloads and use case. Big data analytics is not the same as your Oracle database to do your ERP system or your logistics system if you're someone like a Walmart. You need a different type of Flash for that. We tune everything to that. So Flash has been a growth engine for us, the other's been software defined storage. The fact that we suited it up, we have the broadest software portfolio in the industry. We have Block, we have File, we have Object, we have Backup, we have Archive. We've got Management Plane. We've got that and by packaging it into a suite, I hate to say we stole it from the old Microsoft Office, but we did. And for the in-user base it's up to a 40 percent discount. I'm old enough to remember the days of the computer store I think Dave might've gone to a computer store once or twice too. And there it was: Microsoft Office at eye level for $999. Excel, Powerpoint and Word above it at $499. Which would you buy? So we've got the Spectrum suite up to a 40 percent savings, and we let the users use all of the software for free in their dev environments at no charge and it's not a timeout version, it's not a lite version, it is a full version of the software. So you get to try a full thing out for free and then at the suite level you save up to 40 percent. What's not to like? >> And I think, I just wanted to compliment that too. I think to also answer the question is one of the things we've done so we've talked about development really growing, getting excited, wanting to build things. The other thing that's also happening is that is at the field level, we've stopped talking speeds and feeds like directly, right, so it has become this, this higher level conversation and now IBMers who go and sell things like cognitive and IOT and that sort of thing, they're now wanting to bring us in, because we're not talking about the feeds and speeds and screwing up like how they like to sell. We're talking about, Jenny will come out and say data is your is your most valuable asset in your company. And we say, okay, I got to store those bits and bytes some place, right? We provide that mechanism. We provide it in a multitude of different ways. And we want to compliment what they're doing. So now when I put presentations together to help the sales field, I talk about storage in a way that is more, how does it help cognitive? How does it help IOT? How does it help test and dev? And and by the way there's a suite, it's storing it, it's using it, it's protecting it. It's all of those things and now it's complimenting their selling motion. >> Well your both of the passion and the energy coming from both of you is very palpable. So thank you for sticking around, Eric, and Steve for coming back to theCUBE and sharing all the exciting things that are going on at IBM. That energy is definitely electric. So wish you guys the best of luck in the next day or so of the show and again, thank you for spending some time with us this afternoon. >> Thanks for having us. >> Thanks for having us. >> Absolutely, and for my co-host Dave Vellante, I'm Lisa Martin, you're watching theCUBE's live continuing coverage of the Emerald 2017 day two. Stick around, we'll be right back. (techno music)