>>from around the globe. It's the >>cube with digital >>coverage of IBM >>Think 2020 >>one brought to you by IBM. Welcome back to the cubes coverage of IBM Think 2021 john for your host of the cube we're here. Howard Belleville is the head of hybrid cloud platform for IBM been in the industry for many, many decades as a practitioner heading up organizations now at IBM heading up the hybrid cloud. Howard, great to have you on the cube. >>Pleased to be here, john thank you for your time. Can >>you tell us a little about the digital transformation trends that you've seen in the past year as they have clearly shook the industry? Certainly Covid no one would have predicted provisioning VPN access or remote access for all the employees. I'm sure that wasn't on anyone's radar but many more other disruptions and opportunities for accelerating these new what are now obvious benefits. Can you take your time to explain what you're seeing? >>Yeah, sure. So there's been a huge amount of acceleration of digital transformation. So VPN projects, as you mentioned, the people working from home projects that in the past were taking many, many years to work through then got done literally in weeks, um and they're very complex when you get under the skin of them. Um and companies therefore saw confidence in that and start to look at broader digital transformations um and you can kind of think about in terms of the successes and their failures or the lessons learned from them. So when it's done right, what I've observed from companies that have been it right, they've done it from a business process perspective, they looked at their business processes that they want to transform as opposed to just the independent technology, um but the companies that have been around for a while, I've also been understood that legacy is a problem. So God created the Earth in seven of the world in seven days, but that's because he didn't have any legacy to deal with. So as companies have taken the confidence for the smaller projects to work through, they found in these larger ones where they've got legacy environments to work through. Digital transformation is still very important, but it's not as straightforward as they thought it might be. >>You know, one of the things that's coming out of the hybrid cloud um, discussion is a couple of things. One is everyone now agrees that this is the standard and multi cloud soon around the corner. Um, Hybrid clouds and operating model. Um, and it's a new kind of operating system with with the ability to use kubernetes and containers and microservices and other service message to to integrate legacy. This is huge. What's the biggest pain points that you're seeing from an adoption standpoint that our blockers from clients, What's getting in the way of the obvious now path with hybrid cloud? >>Well actually the first and foremost the position that IBM is created by kind of calling out hybrid cloud where companies will be on premise and off premise because the legacy IFC IOS around the world, the huge sigh of relief and having sat in their seats, I often thought I must be the dumbest person in the room because I don't understand this full on public cloud model because I can't see the benefits to my shareholders that that would deliver. I could see it to the pure play cloud service providers but not to to myself. So talking to C I O S I think thank heavens for that were no longer seen as a Luddite when we're explaining that we'll be on premise and off premise and it'll be heterogeneous environments were operating with within the simple way to think about the blockers and actually done a nice job yourself, john in terms of explaining this is cloud, is is simply another resource tool that you use to run your applications or your data sets on and in the past you had nicely curated environment within it was in your own environment, but there are benefits that you can get by using more innocent technologies like cloud, particularly around developed productivity. But in chapter one of cloud with a pure flare cloud providers, it was kind of a carbuncle that you kind of put onto the side of your organization, which then became very difficult. This kind of Frankenstein's monster of piece parts to put together from an IT operations and cyber security perspective. >>Okay, so you talk about this Franken cloud model before, I've heard heard that come from you. What is this about? You just referenced it there. What is the Franken cloud? >>Yeah, that's the simple way to think about it is um, in the old world, when you run all of your applications, your data sets, your developers in your own data sensors, you would create a curated model that would allow you to very strongly from an architectural perspective, lots of different legacy environments. But the actual architecture put around it would be clean and the operational environment will be clean and the actual Cyprus security controls, you put on a third party capability, whether that's a cloud service provider or a software as a service provider. And you had a world of complexity where you have no control over those environments and you're certainly not driving the architectural standards. So you're putting together these peace parts in the same way as dr Frankenstein put together the monster he created and ultimately, that will turn upon you. It will create technical operational issues that will create economic issues and it absolutely will create cybersecurity issues. So the important thing to think about on these digital transformations is the architecture in a hybrid context is one that will work for you with a multi cloud environment, whether that's from a software as a service provider or from the cloud service >>provider. It's interesting you bring up these other turning on you kind of the Franken cloud. I get that. But let's bring that up to the positive a client customer might say, hey, you know, I did a great job of moving into the public cloud. I brought some stuff on hybrid. Oh my God, look at the push some new stuff and then I pushed new new code and then things breaks. They call this day to operations. Or as you guys are referring to a I ops. These are opportunities. So how does the company get their arms around that? Because that's gonna be the next progression. Okay. I'm operating on distributed basis. Alright, great. I got an edge data center, whatever. But now I'm pushing code all the time. I don't want it to break. >>Yeah, I mean most of my comments are based upon the experiences and the mistakes that I've made in my career. So that element that you talked about there that day to operations, not only are we going through an inflection point in terms of the technologies that are used and the architecture is at a technical level, you have to put together the silicon that you think about. You're going to really think about the carbon, the people and the operating model that you have because a lot of the actual manual work you did previously will be done in a in an automated fashion. So an Ai fashion. So any transformation program needs to look at the actual transformation of the skills of the people you have working for you and they shouldn't feel fearful that it's a place where they actually won't have a role. They just won't have a role with the current skill sets they've got. But there are adjacent skill sets that you can have that they can actually be trained into or get an assignment where they get the experience to operate in that fashion. >>I'd love to get the comment on the edge with this system on a chip soc as it's called As more and more capabilities are going to be at the edge. But I want to stay on this quick cloud thing on Franken cloud because you know, one of the things that I see with the positives of cloud is is that okay? Can be more agile. But then I get worried that if I'm going too fast, I might break something. I get fired. I got all this compliance, don't get sued or you know, there's all kinds of regulations now and compliance around distributed clouds globally. So what's your take on that? What specific challenges do these companies face when they're either in regulated industries or don't want to go too fast? I gotta, I gotta watch that day to make sure it's not gonna be misused. >>Yeah. So the, so the philosophy that we have at IBM is different to Chapter one and the pure player cloud providers, which is, we believe if you build the actual compliance controls in from the outset and have them as a standard of consumption for all customers, they can actually accelerate their adoption of cloud so they can actually get to the benefits of cloud productivity innovation far more quickly. And that's been evidenced by Chapter one where all large institutions in multiple year programs spend tens of millions of dollars and are building the compliance controls themselves. You don't do that with IBM, you get that out of the box for the entire industry. We keep that fresh and current and vibrant going forward. So there's non functional requirements and no longer a consideration for you and you can then focus your energy, your developers in terms of the actual points of innovation, on the functional capabilities that you can provide. >>I want to get your reaction to something and you comment if you don't mind. I mean, there's been a big trend of data clouds built on other people's clouds and you've got the needs of special specialty and industries or vertical needs. Do you see the need or you see a path for specialty clouds or vertical clouds? Specifically as these? The A. I. And data can be relative to these verticals but you want at the same time horizontal scalability for data plane or data access. What's your take on specialty clouds? >>That's at the heart of the thesis. And the idea that we have here at IBM, which is there is a need for specialty clouds of particular industries and their their workloads. And really it's kind of people look back in the very near future. That's a that's an evident thing because again in the old world when it was in your own data center, you would have build types for specific types of applications and the processes that are supported and the risk posture of that and then the associated data sets. Um so the capabilities that we built within our global availability zones is for the large enterprises and that's an area that's obviously being heritage and then it's not just the software level, it's the hardware it runs on. So IBM provides the hardware from a mainframe power X 86. So for all those kind of form factors and an operating system level, obviously through Lennox in terms of the capabilities that we have so we can meet all of that stack but build them specifically for the applications and the data sets for the industries that we serve and the capabilities necessary. >>That's great stuff. I want to take your take shift gears to cybersecurity. I mean every time you look at the headline of a breach, solar winds had more implications than anyone could imagine. You do you hire more firefighters to put out the fire? Do you make fire resistant materials? I mean, there's optimization balance. What do you think is the best way to prevent cyber breaches going forward? What's your take on this? I'm sure you have >>a person, the world world of cyber security, it's all of the above and them anymore because you've got to put checks and balances in terms of every capability having kind of come from an environment where my old bank was named after the country it was in and therefore Nation state to take great delight in terms of trying to breach the area. So all of those controls are necessary um as you, as you put them in the other element to think about on digital supply chains is again, if you actually have your supply chain on a cloud that has the compliance controls built in, they benefit and inherit that as well. Whereas if you don't, you got to actually ensure that they are actually attesting to the controls. The cloud that we built here at IBM gives you continuous monitoring to sure that those software as a service providers are actually adhering to the controls you want in real time. That is a massive game changer. In terms of the, the logging information we can provide to customers to ensure that their digital supply chain does not become compromised >>real quick. While I've got you here as cyber standards become around hybrid. Uh, the early responses were specialized on AWS as your google and they pick one to have a backup cloud and build your teams around that your developer teams. Does that shift with hybrid? How does seesaws change with hybrid? >>Yeah. So, the benefit in terms of the entry to IBM has in the cloud space, which is probably in terms of the current variants, two years old is that we're not dealing with legacy. Um so we're kind of learning from the mistakes of these older cloud providers that have got a wealth of legacy and their environments, both at the actual hardware level, but also the code base level, some more so than others in terms of the issues they have with their code base um and therefore with the ai ops and the actual cyber security tools that we put employers were building upon, the bad experiences they've had, but also other intelligence that we get in terms of threat vectors as they come through, john >>howard. In the last question to end the segment, you've led a lot of digital transformation initiatives through your career. What have you found has been the best practice as that applies now as companies are coming out of covid, they wanna have a growth strategy. You want to make sure the foundations in place, that's solid that they can build upon. What's your, what's your lessons to learn, What's your best practice advice. >>So you've got to deal with the difficult problems first that sometimes a fundamental to get to pierce. So controls appears to be a fairly mundane topic. But unless you can deal with the controls, you can't actually get the accelerated pierce. And when you do these transformations, you have to bring your people along with you at the same time as your transfer transforming the technology. So you need the silicon to be allied with the carbon and then you get people are actually change Hungary as opposed to change resistant. >>Howard bravo. Thanks for coming on the cube head of hybrid cloud platforms at IBM. Thanks for joining us today. >>You're welcome. Thank you, john. >>Okay. I'm John Free with the Cube for IBM think 2021 coverage. Thanks for watching. Mhm Yeah.

(electronic dance music) (Intel Jingle) (ethereal electronic dance music) ♪ Okay ♪ (upbeat techno dance music) ♪ Oh oh oh oh ♪ ♪ Oh oh oh oh ♪ ♪ Oh oh oh oh oh ♪ ♪ Oh oh oh oh ♪ ♪ Oh oh oh oh oh ♪ ♪ Take it back take it back ♪ ♪ Take it back ♪ ♪ Take it back take it back ♪ ♪ Take it back ♪ ♪ Take it back take it back ♪ ♪ Yeah everybody get loose yeah ♪ ♪ Yeah ♪ ♪ Ye-yeah yeah ♪ ♪ Yeah yeah ♪ ♪ Everybody everybody yeah ♪ ♪ Whoo whoo ♪ ♪ Whoo whoo ♪ ♪ Whoo yeah ♪ ♪ Everybody get loose whoo ♪ ♪ Whoo ♪ ♪ Whoo ♪ ♪ Whoo ♪ >> As a courtesy to the presenters and those around you, please silence all mobile devices, thank you. (electronic dance music) ♪ Everybody get loose ♪ ♪ Whoo ♪ ♪ Whoo ♪ ♪ Whoo ♪ ♪ Whoo ♪ ♪ Whoo ♪ ♪ Whoo ♪ ♪ Whoo ♪ ♪ Whoo ♪ (upbeat salsa music) ♪ Ha ha ha ♪ ♪ Ah ♪ ♪ Ha ha ha ♪ ♪ So happy ♪ ♪ Whoo whoo ♪ (female singer scatting) >> Ladies and gentlemen, please take your seats. Our program will begin momentarily. ♪ Hey ♪ (female singer scatting) (male singer scatting) ♪ Hey ♪ ♪ Whoo ♪ (female singer scatting) (electronic dance music) ♪ All hands are in don't go ♪ ♪ Red all hands are in don't go ♪ ♪ Red red red red ♪ ♪ All hands are in don't go ♪ ♪ Red all hands are in don't go ♪ ♪ Red red red red ♪ ♪ All hands are in don't go ♪ ♪ Red all hands are in don't go ♪ ♪ All hands are in don't go ♪ ♪ Red all hands are in don't go ♪ ♪ Red red red red ♪ ♪ Red don't go ♪ ♪ All hands are in don't go ♪ ♪ In don't go ♪ ♪ Oh red go ♪ ♪ All hands are in don't go ♪ ♪ Red all hands are in don't go ♪ ♪ All hands are in don't go ♪ ♪ Red all hands are in don't go ♪ ♪ Red red red red ♪ ♪ All hands are red don't go ♪ ♪ All hands are in red red red red ♪ ♪ All hands are in don't go ♪ ♪ All hands are in red go ♪ >> Ladies and gentlemen, there are available seats. Towards house left, house left there are available seats. If you are please standing, we ask that you please take an available seat. We will begin momentarily, thank you. ♪ Let go ♪ ♪ All hands are in don't go ♪ ♪ Red all hands are in don't go ♪ ♪ All hands are in don't go ♪ ♪ Red all hands are in don't go ♪ (upbeat electronic dance music) ♪ Just make me ♪ ♪ Just make me ♪ ♪ Just make me ♪ ♪ Just make me ♪ ♪ Just make me ♪ ♪ I live ♪ ♪ Just make me ♪ ♪ Just make me ♪ ♪ Hey ♪ ♪ Yeah ♪ ♪ Oh ♪ ♪ Ah ♪ ♪ Ah ah ah ah ah ah ♪ ♪ Just make me ♪ ♪ Just make me ♪ (bouncy techno music) >> Ladies and gentlemen, once again we ask that you please take the available seats to your left, house left, there are many available seats. If you are standing, please make your way there. The program will begin momentarily, thank you. Good morning! This is Lenovo Transform 2.0! (keyboard clicks) >> Progress. Why do we always talk about it in the future? When will it finally get here? We don't progress when it's ready for us. We need it when we're ready, and we're ready now. Our hospitals and their patients need it now, our businesses and their customers need it now, our cities and their citizens need it now. To deliver intelligent transformation, we need to build it into the products and solutions we make every day. At Lenovo, we're designing the systems to fight disease, power businesses, and help you reach more customers, end-to-end security solutions to protect your data and your companies reputation. We're making IT departments more agile and cost efficient. We're revolutionizing how kids learn with VR. We're designing smart devices and software that transform the way you collaborate, because technology shouldn't just power industries, it should power people. While everybody else is talking about tomorrow, we'll keep building today, because the progress we need can't wait for the future. >> Please welcome to the stage Lenovo's Rod Lappen! (electronic dance music) (audience applauding) >> Alright. Good morning everyone! >> Good morning. >> Ooh, that was pretty good actually, I'll give it one more shot. Good morning everyone! >> Good morning! >> Oh, that's much better! Hope everyone's had a great morning. Welcome very much to the second Lenovo Transform event here in New York. I think when I got up just now on the steps I realized there's probably one thing in common all of us have in this room including myself which is, absolutely no one has a clue what I'm going to say today. So, I'm hoping very much that we get through this thing very quickly and crisply. I love this town, love New York, and you're going to hear us talk a little bit about New York as we get through here, but just before we get started I'm going to ask anyone who's standing up the back, there are plenty of seats down here, and down here on the right hand side, I think he called it house left is the professional way of calling it, but these steps to my right, your left, get up here, let's get you all seated down so that you can actually sit down during the keynote session for us. Last year we had our very first Lenovo Transform. We had about 400 people. It was here in New York, fantastic event, today, over 1,000 people. We have over 62 different technology demonstrations and about 15 breakout sessions, which I'll talk you through a little bit later on as well, so it's a much bigger event. Next year we're definitely going to be shooting for over 2,000 people as Lenovo really transforms and starts to address a lot of the technology that our commercial customers are really looking for. We were however hampered last year by a storm, I don't know if those of you who were with us last year will remember, we had a storm on the evening before Transform last year in New York, and obviously the day that it actually occurred, and we had lots of logistics. Our media people from AMIA were coming in. They took the, the plane was circling around New York for a long time, and Kamran Amini, our General Manager of our Data Center Infrastructure Group, probably one of our largest groups in the Lenovo DCG business, took 17 hours to get from Raleigh, North Carolina to New York, 17 hours, I think it takes seven or eight hours to drive. Took him 17 hours by plane to get here. And then of course this year, we have Florence. And so, obviously the hurricane Florence down there in the Carolinas right now, we tried to help, but still Kamran has made it today. Unfortunately, very tragically, we were hoping he wouldn't, but he's here today to do a big presentation a little bit later on as well. However, I do want to say, obviously, Florence is a very serious tragedy and we have to take it very serious. We got, our headquarters is in Raleigh, North Carolina. While it looks like the hurricane is just missing it's heading a little bit southeast, all of our thoughts and prayers and well wishes are obviously with everyone in the Carolinas on behalf of Lenovo, everyone at our headquarters, everyone throughout the Carolinas, we want to make sure everyone stays safe and out of harm's way. We have a great mixture today in the crowd of all customers, partners, industry analysts, media, as well as our financial analysts from all around the world. There's over 30 countries represented here and people who are here to listen to both YY, Kirk, and Christian Teismann speak today. And so, it's going to be a really really exciting day, and I really appreciate everyone coming in from all around the world. So, a big round of applause for everyone whose come in. (audience applauding) We have a great agenda for you today, and it starts obviously a very consistent format which worked very successful for us last year, and that's obviously our keynote. You'll hear from YY, our CEO, talk a little bit about the vision he has in the industry and how he sees Lenovo's turned the corner and really driving some great strategy to address our customer's needs. Kirk Skaugen, our Executive Vice President of DCG, will be up talking about how we've transformed the DCG business and once again are hitting record growth ratios for our DCG business. And then you'll hear from Christian Teismann, our SVP and General Manager for our commercial business, get up and talk about everything that's going on in our IDG business. There's really exciting stuff going on there and obviously ThinkPad being the cornerstone of that I'm sure he's going to talk to us about a couple surprises in that space as well. Then we've got some great breakout sessions, I mentioned before, 15 breakout sessions, so while this keynote section goes until about 11:30, once we get through that, please go over and explore, and have a look at all of the breakout sessions. We have all of our subject matter experts from both our PC, NBG, and our DCG businesses out to showcase what we're doing as an organization to better address your needs. And then obviously we have the technology pieces that I've also spoken about, 62 different technology displays there arranged from everything IoT, 5G, NFV, everything that's really cool and hot in the industry right now is going to be on display up there, and I really encourage all of you to get up there. So, I'm going to have a quick video to show you from some of the setup yesterday on a couple of the 62 technology displays we've got on up on stage. Okay let's go, so we've got a demonstrations to show you today, one of the greats one here is the one we've done with NC State, a high-performance computing artificial intelligence demonstration of fresh produce. It's about modeling the population growth of the planet, and how we're going to supply water and food as we go forward. Whoo. Oh, that is not an apple. Okay. (woman laughs) Second one over here is really, hey Jonas, how are you? Is really around virtual reality, and how we look at one of the most amazing sites we've got, as an install on our high-performance computing practice here globally. And you can see, obviously, that this is the Barcelona supercomputer, and, where else in New York can you get access to being able to see something like that so easily? Only here at Lenovo Transform. Whoo, okay. (audience applauding) So there's two examples of some of the technology. We're really encouraging everyone in the room after the keynote to flow into that space and really get engaged, and interact with a lot of the technology we've got up there. It seems I need to also do something about my fashion, I've just realized I've worn a vest two days in a row, so I've got to work on that as well. Alright so listen, the last thing on the agenda, we've gone through the breakout sessions and the demo, tonight at four o'clock, there's about 400 of you registered to be on the cruise boat with us, the doors will open behind me. the boat is literally at the pier right behind us. You need to make sure you're on the boat for 4:00 p.m. this evening. Outside of that, I want everyone to have a great time today, really enjoy the experience, make it as experiential as you possibly can, get out there and really get in and touch the technology. There's some really cool AI displays up there for us all to get involved in as well. So ladies and gentlemen, without further adieu, it gives me great pleasure to introduce to you a lover of tennis, as some of you would've heard last year at Lenovo Transform, as well as a lover of technology, Lenovo, and of course, New York City. I am obviously very pleasured to introduce to you Yang Yuanqing, our CEO, as we like to call him, YY. (audience applauding) (upbeat funky music) >> Good morning, everyone. >> Good morning. >> Thank you Rod for that introduction. Welcome to New York City. So, this is the second year in a row we host our Transform event here, because New York is indeed one of the most transformative cities in the world. Last year on this stage, I spoke about the Fourth Industrial Revolution, and our vision around the intelligent transformation, how it would fundamentally change the nature of business and the customer relationships. And why preparing for this transformation is the key for the future of our company. And in the last year I can assure you, we were being very busy doing just that, from searching and bringing global talents around the world to the way we think about every product and every investment we make. I was here in New York just a month ago to announce our fiscal year Q1 earnings, which was a good day for us. I think now the world believes it when we say Lenovo has truly turned the corner to a new phase of growth and a new phase of acceleration in executing the transformation strategy. That's clear to me is that the last few years of a purposeful disruption at Lenovo have led us to a point where we can now claim leadership of the coming intelligent transformation. People often asked me, what is the intelligent transformation? I was saying this way. This is the unlimited potential of the Fourth Industrial Revolution driven by artificial intelligence being realized, ordering a pizza through our speaker, and locking the door with a look, letting your car drive itself back to your home. This indeed reflect the power of AI, but it just the surface of it. The true impact of AI will not only make our homes smarter and offices more efficient, but we are also completely transformed every value chip in every industry. However, to realize these amazing possibilities, we will need a structure built around the key components, and one that touches every part of all our lives. First of all, explosions in new technology always lead to new structures. This has happened many times before. In the early 20th century, thousands of companies provided a telephone service. City streets across the US looked like this, and now bundles of a microscopic fiber running from city to city bring the world closer together. Here's what a driving was like in the US, up until 1950s. Good luck finding your way. (audience laughs) And today, millions of vehicles are organized and routed daily, making the world more efficient. Structure is vital, from fiber cables and the interstate highways, to our cells bounded together to create humans. Thankfully the structure for intelligent transformation has emerged, and it is just as revolutionary. What does this new structure look like? We believe there are three key building blocks, data, computing power, and algorithms. Ever wondered what is it behind intelligent transformation? What is fueling this miracle of human possibility? Data. As the Internet becomes ubiquitous, not only PCs, mobile phones, have come online and been generating data. Today it is the cameras in this room, the climate controls in our offices, or the smart displays in our kitchens at home. The number of smart devices worldwide will reach over 20 billion in 2020, more than double the number in 2017. These devices and the sensors are connected and generating massive amount of data. By 2020, the amount of data generated will be 57 times more than all the grains of sand on Earth. This data will not only make devices smarter, but will also fuel the intelligence of our homes, offices, and entire industries. Then we need engines to turn the fuel into power, and the engine is actually the computing power. Last but not least the advanced algorithms combined with Big Data technology and industry know how will form vertical industrial intelligence and produce valuable insights for every value chain in every industry. When these three building blocks all come together, it will change the world. At Lenovo, we have each of these elements of intelligent transformations in a single place. We have built our business around the new structure of intelligent transformation, especially with mobile and the data center now firmly part of our business. I'm often asked why did you acquire these businesses? Why has a Lenovo gone into so many fields? People ask the same questions of the companies that become the leaders of the information technology revolution, or the third industrial transformation. They were the companies that saw the future and what the future required, and I believe Lenovo is the company today. From largest portfolio of devices in the world, leadership in the data center field, to the algorithm-powered intelligent vertical solutions, and not to mention the strong partnership Lenovo has built over decades. We are the only company that can unify all these essential assets and deliver end to end solutions. Let's look at each part. We now understand the important importance data plays as fuel in intelligent transformation. Hundreds of billions of devices and smart IoTs in the world are generating better and powering the intelligence. Who makes these devices in large volume and variety? Who puts these devices into people's home, offices, manufacturing lines, and in their hands? Lenovo definitely has the front row seats here. We are number one in PCs and tablets. We also produces smart phones, smart speakers, smart displays. AR/VR headsets, as well as commercial IoTs. All of these smart devices, or smart IoTs are linked to each other and to the cloud. In fact, we have more than 20 manufacturing facilities in China, US, Brazil, Japan, India, Mexico, Germany, and more, producing various devices around the clock. We actually make four devices every second, and 37 motherboards every minute. So, this factory located in my hometown, Hu-fi, China, is actually the largest laptop factory in the world, with more than three million square feet. So, this is as big as 42 soccer fields. Our scale and the larger portfolio of devices gives us access to massive amount of data, which very few companies can say. So, why is the ability to scale so critical? Let's look again at our example from before. The early days of telephone, dozens of service providers but only a few companies could survive consolidation and become the leader. The same was true for the third Industrial Revolution. Only a few companies could scale, only a few could survive to lead. Now the building blocks of the next revolution are locking into place. The (mumbles) will go to those who can operate at the scale. So, who could foresee the total integration of cloud, network, and the device, need to deliver intelligent transformation. Lenovo is that company. We are ready to scale. Next, our computing power. Computing power is provided in two ways. On one hand, the modern supercomputers are providing the brute force to quickly analyze the massive data like never before. On the other hand the cloud computing data centers with the server storage networking capabilities, and any computing IoT's, gateways, and miniservers are making computing available everywhere. Did you know, Lenovo is number one provider of super computers worldwide? 170 of the top 500 supercomputers, run on Lenovo. We hold 89 World Records in key workloads. We are number one in x86 server reliability for five years running, according to ITIC. a respected provider of industry research. We are also the fastest growing provider of hyperscale public cloud, hyper-converged and aggressively growing in edge computing. cur-ges target, we are expand on this point soon. And finally to run these individual nodes into our symphony, we must transform the data and utilize the computing power with advanced algorithms. Manufactured, industry maintenance, healthcare, education, retail, and more, so many industries are on the edge of intelligent transformation to improve efficiency and provide the better products and services. We are creating advanced algorithms and the big data tools combined with industry know-how to provide intelligent vertical solutions for several industries. In fact, we studied at Lenovo first. Our IT and research teams partnered with our global supply chain to develop an AI that improved our demand forecasting accuracy. Beyond managing our own supply chain we have offered our deep learning supply focused solution to other manufacturing companies to improve their efficiency. In the best case, we have improved the demand, focused the accuracy by 30 points to nearly 90 percent, for Baosteel, the largest of steel manufacturer in China, covering the world as well. Led by Lenovo research, we launched the industry-leading commercial ready AR headset, DaystAR, partnering with companies like the ones in this room. This technology is being used to revolutionize the way companies service utility, and even our jet engines. Using our workstations, servers, and award-winning imaging processing algorithms, we have partnered with hospitals to process complex CT scan data in minutes. So, this enable the doctors to more successfully detect the tumors, and it increases the success rate of cancer diagnosis all around the world. We are also piloting our smart IoT driven warehouse solution with one of the world's largest retail companies to greatly improve the efficiency. So, the opportunities are endless. This is where Lenovo will truly shine. When we combine the industry know-how of our customers with our end-to-end technology offerings, our intelligent vertical solutions like this are growing, which Kirk and Christian will share more. Now, what will drive this transformation even faster? The speed at which our networks operate, specifically 5G. You may know that Lenovo just launched the first-ever 5G smartphone, our Moto Z3, with the new 5G Moto model. We are partnering with multiple major network providers like Verizon, China Mobile. With the 5G model scheduled to ship early next year, we will be the first company to provide a 5G mobile experience to any users, customers. This is amazing innovation. You don't have to buy a new phone, just the 5G clip on. What can I say, except wow. (audience laughs) 5G is 10 times the fast faster than 4G. Its download speed will transform how people engage with the world, driverless car, new types of smart wearables, gaming, home security, industrial intelligence, all will be transformed. Finally, accelerating with partners, as ready as we are at Lenovo, we need partners to unlock our full potential, partners here to create with us the edge of the intelligent transformation. The opportunities of intelligent transformation are too profound, the scale is too vast. No company can drive it alone fully. We are eager to collaborate with all partners that can help bring our vision to life. We are dedicated to open partnerships, dedicated to cross-border collaboration, unify the standards, share the advantage, and market the synergies. We partner with the biggest names in the industry, Intel, Microsoft, AMD, Qualcomm, Google, Amazon, and Disney. We also find and partner with the smaller innovators as well. We're building the ultimate partner experience, open, shared, collaborative, diverse. So, everything is in place for intelligent transformation on a global scale. Smart devices are everywhere, the infrastructure is in place, networks are accelerating, and the industries demand to be more intelligent, and Lenovo is at the center of it all. We are helping to drive change with the hundreds of companies, companies just like yours, every day. We are your partner for intelligent transformation. Transformation never stops. This is what you will hear from Kirk, including details about Lenovo NetApp global partnership we just announced this morning. We've made the investments in every single aspect of the technology. We have the end-to-end resources to meet your end-to-end needs. As you attend the breakout session this afternoon, I hope you see for yourself how much Lenovo has transformed as a company this past year, and how we truly are delivering a future of intelligent transformation. Now, let me invite to the stage Kirk Skaugen, our president of Data Center growth to tell you about the exciting transformation happening in the global Data C enter market. Thank you. (audience applauding) (upbeat music) >> Well, good morning. >> Good morning. >> Good morning! >> Good morning! >> Excellent, well, I'm pleased to be here this morning to talk about how we're transforming the Data Center and taking you as our customers through your own intelligent transformation journey. Last year I stood up here at Transform 1.0, and we were proud to announce the largest Data Center portfolio in Lenovo's history, so I thought I'd start today and talk about the portfolio and the progress that we've made over the last year, and the strategies that we have going forward in phase 2.0 of Lenovo's transformation to be one of the largest data center companies in the world. We had an audacious vision that we talked about last year, and that is to be the most trusted data center provider in the world, empowering customers through the new IT, intelligent transformation. And now as the world's largest supercomputer provider, giving something back to humanity, is very important this week with the hurricanes now hitting North Carolina's coast, but we take this most trusted aspect very seriously, whether it's delivering the highest quality products on time to you as customers with the highest levels of security, or whether it's how we partner with our channel partners and our suppliers each and every day. You know we're in a unique world where we're going from hundreds of millions of PCs, and then over the next 25 years to hundred billions of connected devices, so each and every one of you is going through this intelligent transformation journey, and in many aspects were very early in that cycle. And we're going to talk today about our role as the largest supercomputer provider, and how we're solving humanity's greatest challenges. Last year we talked about two special milestones, the 25th anniversary of ThinkPad, but also the 25th anniversary of Lenovo with our IBM heritage in x86 computing. I joined the workforce in 1992 out of college, and the IBM first personal server was launching at the same time with an OS2 operating system and a free mouse when you bought the server as a marketing campaign. (audience laughing) But what I want to be very clear today, is that the innovation engine is alive and well at Lenovo, and it's really built on the culture that we're building as a company. All of these awards at the bottom are things that we earned over the last year at Lenovo. As a Fortune now 240 company, larger than companies like Nike, or AMEX, or Coca-Cola. The one I'm probably most proud of is Forbes first list of the top 2,000 globally regarded companies. This was something where 15,000 respondents in 60 countries voted based on ethics, trustworthiness, social conduct, company as an employer, and the overall company performance, and Lenovo was ranked number 27 of 2000 companies by our peer group, but we also now one of-- (audience applauding) But we also got a perfect score in the LGBTQ Equality Index, exemplifying the diversity internally. We're number 82 in the top working companies for mothers, top working companies for fathers, top 100 companies for sustainability. If you saw that factory, it's filled with solar panels on the top of that. And now again, one of the top global brands in the world. So, innovation is built on a customer foundation of trust. We also said last year that we'd be crossing an amazing milestone. So we did, over the last 12 months ship our 20 millionth x86 server. So, thank you very much to our customers for this milestone. (audience applauding) So, let me recap some of the transformation elements that have happened over the last year. Last year I talked about a lot of brand confusion, because we had the ThinkServer brand from the legacy Lenovo, the System x, from IBM, we had acquired a number of networking companies, like BLADE Network Technologies, et cetera, et cetera. Over the last year we've been ramping based on two brand structures, ThinkAgile for next generation IT, and all of our software-defined infrastructure products and ThinkSystem as the world's highest performance, highest reliable x86 server brand, but for servers, for storage, and for networking. We have transformed every single aspect of the customer experience. A year and a half ago, we had four different global channel programs around the world. Typically we're about twice the mix to our channel partners of any of our competitors, so this was really important to fix. We now have a single global Channel program, and have technically certified over 11,000 partners to be technical experts on our product line to deliver better solutions to our customer base. Gardner recently recognized Lenovo as the 26th ranked supply chain in the world. And, that's a pretty big honor, when you're up there with Amazon and Walmart and others, but in tech, we now are in the top five supply chains. You saw the factory network from YY, and today we'll be talking about product shipping in more than 160 countries, and I know there's people here that I've met already this morning, from India, from South Africa, from Brazil and China. We announced new Premier Support services, enabling you to go directly to local language support in nine languages in 49 countries in the world, going directly to a native speaker level three support engineer. And today we have more than 10,000 support specialists supporting our products in over 160 countries. We've delivered three times the number of engineered solutions to deliver a solutions orientation, whether it's on HANA, or SQL Server, or Oracle, et cetera, and we've completely reengaged our system integrator channel. Last year we had the CIO of DXE on stage, and here we're talking about more than 175 percent growth through our system integrator channel in the last year alone as we've brought that back and really built strong relationships there. So, thank you very much for amazing work here on the customer experience. (audience applauding) We also transformed our leadership. We thought it was extremely important with a focus on diversity, to have diverse talent from the legacy IBM, the legacy Lenovo, but also outside the industry. We made about 19 executive changes in the DCG group. This is the most senior leadership team within DCG, all which are newly on board, either from our outside competitors mainly over the last year. About 50 percent of our executives were now hired internally, 50 percent externally, and 31 percent of those new executives are diverse, representing the diversity of our global customer base and gender. So welcome, and most of them you're going to be able to meet over here in the breakout sessions later today. (audience applauding) But some things haven't changed, they're just keeping getting better within Lenovo. So, last year I got up and said we were committed with the new ThinkSystem brand to be a world performance leader. You're going to see that we're sponsoring Ducati for MotoGP. You saw the Ferrari out there with Formula One. That's not a surprise. We want the Lenovo ThinkSystem and ThinkAgile brands to be synonymous with world record performance. So in the last year we've gone from 39 to 89 world records, and partners like Intel would tell you, we now have four times the number of world record workloads on Lenovo hardware than any other server company on the planet today, with more than 89 world records across HPC, Java, database, transaction processing, et cetera. And we're proud to have just brought on Doug Fisher from Intel Corporation who had about 10-17,000 people on any given year working for him in workload optimizations across all of our software. It's just another testament to the leadership team we're bringing in to keep focusing on world-class performance software and solutions. We also per ITIC, are the number one now in x86 server reliability five years running. So, this is a survey where CIOs are in a blind survey asked to submit their reliability of their uptime on their x86 server equipment over the last 365 days. And you can see from 2016 to 2017 the downtime, there was over four hours as noted by the 750 CXOs in more than 20 countries is about one percent for the Lenovo products, and is getting worse generation from generation as we went from Broadwell to Pearlie. So we're taking our reliability, which was really paramount in the IBM System X heritage, and ensuring that we don't just recognize high performance but we recognize the highest level of reliability for mission-critical workloads. And what that translates into is that we at once again have been ranked number one in customer satisfaction from you our customers in 19 of 22 attributes, in North America in 18 of 22. This is a survey by TVR across hundreds of customers of us and our top competitors. This is the ninth consecutive study that we've been ranked number one in customer satisfaction, so we're taking this extremely seriously, and in fact YY now has increased the compensation of every single Lenovo employee. Up to 40 percent of their compensation bonus this year is going to be based on customer metrics like quality, order to ship, and things of this nature. So, we're really putting every employee focused on customer centricity this year. So, the summary on Transform 1.0 is that every aspect of what you knew about Lenovo's data center group has transformed, from the culture to the branding to dedicated sales and marketing, supply chain and quality groups, to a worldwide channel program and certifications, to new system integrator relationships, and to the new leadership team. So, rather than me just talk about it, I thought I'd share a quick video about what we've done over the last year, if you could run the video please. Turn around for a second. (epic music) (audience applauds) Okay. So, thank you to all our customers that allowed us to publicly display their logos in that video. So, what that means for you as investors, and for the investor community out there is, that our customers have responded, that this year Gardner just published that we are the fastest growing server company in the top 10, with 39 percent growth quarter-on-quarter, and 49 percent growth year-on-year. If you look at the progress we've made since the transformation the last three quarters publicly, we've grown 17 percent, then 44 percent, then 68 percent year on year in revenue, and I can tell you this quarter I'm as confident as ever in the financials around the DCG group, and it hasn't been in one area. You're going to see breakout sessions from hyperscale, software-defined, and flash, which are all growing more than a 100 percent year-on-year, supercomputing which we'll talk about shortly, now number one, and then ultimately from profitability, delivering five consecutive quarters of pre-tax profit increase, so I think, thank you very much to the customer base who's been working with us through this transformation journey. So, you're here to really hear what's next on 2.0, and that's what I'm excited to talk about today. Last year I came up with an audacious goal that we would become the largest supercomputer company on the planet by 2020, and this graph represents since the acquisition of the IBM System x business how far we were behind being the number one supercomputer. When we started we were 182 positions behind, even with the acquisition for example of SGI from HP, we've now accomplished our goal actually two years ahead of time. We're now the largest supercomputer company in the world. About one in every four supercomputers, 117 on the list, are now Lenovo computers, and you saw in the video where the universities are said, but I think what I'm most proud of is when your customers rank you as the best. So the awards at the bottom here, are actually Readers Choice from the last International Supercomputing Show where the scientific researchers on these computers ranked their vendors, and we were actually rated the number one server technology in supercomputing with our ThinkSystem SD530, and the number one storage technology with our ThinkSystem DSS-G, but more importantly what we're doing with the technology. You're going to see we won best in life sciences, best in data analytics, and best in collaboration as well, so you're going to see all of that in our breakout sessions. As you saw in the video now, 17 of the top 25 research institutions in the world are now running Lenovo supercomputers. And again coming from Raleigh and watching that hurricane come across the Atlantic, there are eight supercomputers crunching all of those models you see from Germany to Malaysia to Canada, and we're happy to have a SciNet from University of Toronto here with us in our breakout session to talk about what they're doing on climate modeling as well. But we're not stopping there. We just announced our new Neptune warm water cooling technology, which won the International Supercomputing Vendor Showdown, the first time we've won that best of show in 25 years, and we've now installed this. We're building out LRZ in Germany, the first ever warm water cooling in Peking University, at the India Space Propulsion Laboratory, at the Malaysian Weather and Meteorological Society, at Uninett, at the largest supercomputer in Norway, T-Systems, University of Birmingham. This is truly amazing technology where we're actually using water to cool the machine to deliver a significantly more energy-efficient computer. Super important, when we're looking at global warming and some of the electric bills can be millions of dollars just for one computer, and could actually power a small city just with the technology from the computer. We've built AI centers now in Morrisville, Stuttgart, Taipei, and Beijing, where customers can bring their AI workloads in with experts from Intel, from Nvidia, from our FPGA partners, to work on their workloads, and how they can best implement artificial intelligence. And we also this year launched LICO which is Lenovo Intelligent Compute Orchestrator software, and it's a software solution that simplifies the management and use of distributed clusters in both HPC and AI model development. So, what it enables you to do is take a single cluster, and run both HPC and AI workloads on it simultaneously, delivering better TCO for your environment, so check out LICO as well. A lot of the customers here and Wall Street are very excited and using it already. And we talked about solving humanity's greatest challenges. In the breakout session, you're going to have a virtual reality experience where you're going to be able to walk through what as was just ranked the world's most beautiful data center, the Barcelona Supercomputer. So, you can actually walk through one of the largest supercomputers in the world from Barcelona. You can see the work we're doing with NC State where we're going to have to grow the food supply of the world by 50 percent, and there's not enough fresh water in the world in the right places to actually make all those crops grow between now and 2055, so you're going to see the progression of how they're mapping the entire globe and the water around the world, how to build out the crop population over time using AI. You're going to see our work with Vestas is this largest supercomputer provider in the wind turbine areas, how they're working on wind energy, and then with University College London, how they're working on some of the toughest particle physics calculations in the world. So again, lots of opportunity here. Take advantage of it in the breakout sessions. Okay, let me transition to hyperscale. So in hyperscale now, we have completely transformed our business model. We are now powering six of the top 10 hyperscalers in the world, which is a significant difference from where we were two years ago. And the reason we're doing that, is we've coined a term called ODM+. We believe that hyperscalers want more procurement power than an ODM, and Lenovo is doing about $18 billion of procurement a year. They want a broader global supply chain that they can get from a local system integrator. We're more than 160 countries around the world, but they want the same world-class quality and reliability like they get from an MNC. So, what we're doing now is instead of just taking off the shelf motherboards from somewhere, we're starting with a blank sheet of paper, we're working with the customer base on customized SKUs and you can see we already are developing 33 custom solutions for the largest hyperscalers in the world. And then we're not just running notebooks through this factory where YY said, we're running 37 notebook boards a minute, we're now putting in tens and tens and tens of thousands of server board capacity per month into this same factory, so absolutely we can compete with the most aggressive ODM's in the world, but it's not just putting these things in in the motherboard side, we're also building out these systems all around the world, India, Brazil, Hungary, Mexico, China. This is an example of a new hyperscale customer we've had this last year, 34,000 servers we delivered in the first six months. The next 34,000 servers we delivered in 68 days. The next 34,000 servers we delivered in 35 days, with more than 99 percent on-time delivery to 35 data centers in 14 countries as diverse as South Africa, India, China, Brazil, et cetera. And I'm really ashamed to say it was 99.3, because we did have a forklift driver who rammed their forklift right through the middle of the one of the server racks. (audience laughing) At JFK Airport that we had to respond to, but I think this gives you a perspective of what it is to be a top five global supply chain and technology. So last year, I said we would invest significantly in IP, in joint ventures, and M and A to compete in software defined, in networking, and in storage, so I wanted to give you an update on that as well. Our newest software-defined partnership is with Cloudistics, enabling a fully composable cloud infrastructure. It's an exclusive agreement, you can see them here. I think Nag, our founder, is going to be here today, with a significant Lenovo investment in the company. So, this new ThinkAgile CP series delivers the simplicity of the public cloud, on-premise with exceptional support and a marketplace of essential enterprise applications all with a single click deployment. So simply put, we're delivering a private cloud with a premium experience. It's simple in that you need no specialists to deploy it. An IT generalist can set it up and manage it. It's agile in that you can provision dozens of workloads in minutes, and it's transformative in that you get all of the goodness of public cloud on-prem in a private cloud to unlock opportunity for use. So, we're extremely excited about the ThinkAgile CP series that's now shipping into the marketplace. Beyond that we're aggressively ramping, and we're either doubling, tripling, or quadrupling our market share as customers move from traditional server technology to software-defined technology. With Nutanix we've been public, growing about more than 150 percent year-on-year, with Nutanix as their fastest growing Nutanix partner, but today I want to set another audacious goal. I believe we cannot just be Nutanix's fastest growing partner but we can become their largest partner within two years. On Microsoft, we are already four times our market share on Azure stack of our traditional business. We were the first to launch our ThinkAgile on Broadwell and on Skylake with the Azure Stack Infrastructure. And on VMware we're about twice our market segment share. We were the first to deliver an Intel-optimized Optane-certified VSAN node. And with Optane technology, we're delivering 50 percent more VM density than any competitive SSD system in the marketplace, about 10 times lower latency, four times the performance of any SSD system out there, and Lenovo's first to market on that. And at VMworld you saw CEO Pat Gelsinger of VMware talked about project dimension, which is Edge as a service, and we're the only OEM beyond the Dell family that is participating today in project dimension. Beyond that you're going to see a number of other partnerships we have. I'm excited that we have the city of Bogota Columbia here, an eight million person city, where we announced a 3,000 camera video surveillance solution last month. With pivot three you're going to see city of Bogota in our breakout sessions. You're going to see a new partnership with Veeam around backup that's launching today. You're going to see partnerships with scale computing in IoT and hyper-converged infrastructure working on some of the largest retailers in the world. So again, everything out in the breakout session. Transitioning to storage and data management, it's been a great year for Lenovo, more than a 100 percent growth year-on-year, 2X market growth in flash arrays. IDC just reported 30 percent growth in storage, number one in price performance in the world and the best HPC storage product in the top 500 with our ThinkSystem DSS G, so strong coverage, but I'm excited today to announce for Transform 2.0 that Lenovo is launching the largest data management and storage portfolio in our 25-year data center history. (audience applauding) So a year ago, the largest server portfolio, becoming the largest fastest growing server OEM, today the largest storage portfolio, but as you saw this morning we're not doing it alone. Today Lenovo and NetApp, two global powerhouses are joining forces to deliver a multi-billion dollar global alliance in data management and storage to help customers through their intelligent transformation. As the fastest growing worldwide server leader and one of the fastest growing flash array and data management companies in the world, we're going to deliver more choice to customers than ever before, global scale that's never been seen, supply chain efficiencies, and rapidly accelerating innovation and solutions. So, let me unwrap this a little bit for you and talk about what we're announcing today. First, it's the largest portfolio in our history. You're going to see not just storage solutions launching today but a set of solution recipes from NetApp that are going to make Lenovo server and NetApp or Lenovo storage work better together. The announcement enables Lenovo to go from covering 15 percent of the global storage market to more than 90 percent of the global storage market and distribute these products in more than 160 countries around the world. So we're launching today, 10 new storage platforms, the ThinkSystem DE and ThinkSystem DM platforms. They're going to be centrally managed, so the same XClarity management that you've been using for server, you can now use across all of your storage platforms as well, and it'll be supported by the same 10,000 plus service personnel that are giving outstanding customer support to you today on the server side. And we didn't come up with this in the last month or the last quarter. We're announcing availability in ordering today and shipments tomorrow of the first products in this portfolio, so we're excited today that it's not just a future announcement but something you as customers can take advantage of immediately. (audience applauding) The second part of the announcement is we are announcing a joint venture in China. Not only will this be a multi-billion dollar global partnership, but Lenovo will be a 51 percent owner, NetApp a 49 percent owner of a new joint venture in China with the goal of becoming in the top three storage companies in the largest data and storage market in the world. We will deliver our R and D in China for China, pooling our IP and resources together, and delivering a single route to market through a complementary channel, not just in China but worldwide. And in the future I just want to tell everyone this is phase one. There is so much exciting stuff. We're going to be on the stage over the next year talking to you about around integrated solutions, next-generation technologies, and further synergies and collaborations. So, rather than just have me talk about it, I'd like to welcome to the stage our new partner NetApp and Brad Anderson who's the senior vice president and general manager of NetApp Cloud Infrastructure. (upbeat music) (audience applauding) >> Thank You Kirk. >> So Brad, we've known each other a long time. It's an exciting day. I'm going to give you the stage and allow you to say NetApp's perspective on this announcement. >> Very good, thank you very much, Kirk. Kirk and I go back to I think 1994, so hey good morning and welcome. My name is Brad Anderson. I manage the Cloud Infrastructure Group at NetApp, and I am honored and privileged to be here at Lenovo Transform, particularly today on today's announcement. Now, you've heard a lot about digital transformation about how companies have to transform their IT to compete in today's global environment. And today's announcement with the partnership between NetApp and Lenovo is what that's all about. This is the joining of two global leaders bringing innovative technology in a simplified solution to help customers modernize their IT and accelerate their global digital transformations. Drawing on the strengths of both companies, Lenovo's high performance compute world-class supply chain, and NetApp's hybrid cloud data management, hybrid flash and all flash storage solutions and products. And both companies providing our customers with the global scale for them to be able to meet their transformation goals. At NetApp, we're very excited. This is a quote from George Kurian our CEO. George spent all day yesterday with YY and Kirk, and would have been here today if it hadn't been also our shareholders meeting in California, but I want to just convey how excited we are for all across NetApp with this partnership. This is a partnership between two companies with tremendous market momentum. Kirk took you through all the amazing results that Lenovo has accomplished, number one in supercomputing, number one in performance, number one in x86 reliability, number one in x86 customers sat, number five in supply chain, really impressive and congratulations. Like Lenovo, NetApp is also on a transformation journey, from a storage company to the data authority in hybrid cloud, and we've seen some pretty impressive momentum as well. Just last week we became number one in all flash arrays worldwide, catching EMC and Dell, and we plan to keep on going by them, as we help customers modernize their their data centers with cloud connected flash. We have strategic partnerships with the largest hyperscalers to provide cloud native data services around the globe and we are having success helping our customers build their own private clouds with just, with a new disruptive hyper-converged technology that allows them to operate just like hyperscalers. These three initiatives has fueled NetApp's transformation, and has enabled our customers to change the world with data. And oh by the way, it has also fueled us to have meet or have beaten Wall Street's expectations for nine quarters in a row. These are two companies with tremendous market momentum. We are also building this partnership for long term success. We think about this as phase one and there are two important components to phase one. Kirk took you through them but let me just review them. Part one, the establishment of a multi-year commitment and a collaboration agreement to offer Lenovo branded flash products globally, and as Kurt said in 160 countries. Part two, the formation of a joint venture in PRC, People's Republic of China, that will provide long term commitment, joint product development, and increase go-to-market investment to meet the unique needs to China. Both companies will put in storage technologies and storage expertise to form an independent JV that establishes a data management company in China for China. And while we can dream about what phase two looks like, our entire focus is on making phase one incredibly successful and I'm pleased to repeat what Kirk, is that the first products are orderable and shippable this week in 160 different countries, and you will see our two companies focusing on the here and now. On our joint go to market strategy, you'll see us working together to drive strategic alignment, focused execution, strong governance, and realistic expectations and milestones. And it starts with the success of our customers and our channel partners is job one. Enabling customers to modernize their legacy IT with complete data center solutions, ensuring that our customers get the best from both companies, new offerings the fuel business success, efficiencies to reinvest in game-changing initiatives, and new solutions for new mission-critical applications like data analytics, IoT, artificial intelligence, and machine learning. Channel partners are also top of mind for both our two companies. We are committed to the success of our existing and our future channel partners. For NetApp channel partners, it is new pathways to new segments and to new customers. For Lenovo's channel partners, it is the competitive weapons that now allows you to compete and more importantly win against Dell, EMC, and HP. And the good news for both companies is that our channel partner ecosystem is highly complementary with minimal overlap. Today is the first day of a very exciting partnership, of a partnership that will better serve our customers today and will provide new opportunities to both our companies and to our partners, new products to our customers globally and in China. I am personally very excited. I will be on the board of the JV. And so, I look forward to working with you, partnering with you and serving you as we go forward, and with that, I'd like to invite Kirk back up. (audience applauding) >> Thank you. >> Thank you. >> Well, thank you, Brad. I think it's an exciting overview, and these products will be manufactured in China, in Mexico, in Hungary, and around the world, enabling this amazing supply chain we talked about to deliver in over 160 countries. So thank you Brad, thank you George, for the amazing partnership. So again, that's not all. In Transform 2.0, last year, we talked about the joint ventures that were coming. I want to give you a sneak peek at what you should expect at future Lenovo events around the world. We have this Transform in Beijing in a couple weeks. We'll then be repeating this in 20 different locations roughly around the world over the next year, and I'm excited probably more than ever about what else is coming. Let's talk about Telco 5G and network function virtualization. Today, Motorola phones are certified on 46 global networks. We launched the world's first 5G upgradable phone here in the United States with Verizon. Lenovo DCG sells to 58 telecommunication providers around the world. At Mobile World Congress in Barcelona and Shanghai, you saw China Telecom and China Mobile in the Lenovo booth, China Telecom showing a video broadband remote access server, a VBRAS, with video streaming demonstrations with 2x less jitter than they had seen before. You saw China Mobile with a virtual remote access network, a VRAN, with greater than 10 times the throughput and 10x lower latency running on Lenovo. And this year, we'll be launching a new NFV company, a software company in China for China to drive the entire NFV stack, delivering not just hardware solutions, but software solutions, and we've recently hired a new CEO. You're going to hear more about that over the next several quarters. Very exciting as we try to drive new economics into the networks to deliver these 20 billion devices. We're going to need new economics that I think Lenovo can uniquely deliver. The second on IoT and edge, we've integrated on the device side into our intelligent devices group. With everything that's going to consume electricity computes and communicates, Lenovo is in a unique position on the device side to take advantage of the communications from Motorola and being one of the largest device companies in the world. But this year, we're also going to roll out a comprehensive set of edge gateways and ruggedized industrial servers and edge servers and ISP appliances for the edge and for IoT. So look for that as well. And then lastly, as a service, you're going to see Lenovo delivering hardware as a service, device as a service, infrastructure as a service, software as a service, and hardware as a service, not just as a glorified leasing contract, but with IP, we've developed true flexible metering capability that enables you to scale up and scale down freely and paying strictly based on usage, and we'll be having those announcements within this fiscal year. So Transform 2.0, lots to talk about, NetApp the big news of the day, but a lot more to come over the next year from the Data Center group. So in summary, I'm excited that we have a lot of customers that are going to be on stage with us that you saw in the video. Lots of testimonials so that you can talk to colleagues of yourself. Alamos Gold from Canada, a Canadian gold producer, Caligo for data optimization and privacy, SciNet, the largest supercomputer we've ever put into North America, and the largest in Canada at the University of Toronto will be here talking about climate change. City of Bogota again with our hyper-converged solutions around smart city putting in 3,000 cameras for criminal detection, license plate detection, et cetera, and then more from a channel mid market perspective, Jerry's Foods, which is from my home state of Wisconsin, and Minnesota which has about 57 stores in the specialty foods market, and how they're leveraging our IoT solutions as well. So again, about five times the number of demos that we had last year. So in summary, first and foremost to the customers, thank you for your business. It's been a great journey and I think we're on a tremendous role. You saw from last year, we're trying to build credibility with you. After the largest server portfolio, we're now the fastest-growing server OEM per Gardner, number one in performance, number one in reliability, number one in customer satisfaction, number one in supercomputing. Today, the largest storage portfolio in our history, with the goal of becoming the fastest growing storage company in the world, top three in China, multibillion-dollar collaboration with NetApp. And the transformation is going to continue with new edge gateways, edge servers, NFV solutions, telecommunications infrastructure, and hardware as a service with dynamic metering. So thank you for your time. I've looked forward to meeting many of you over the next day. We appreciate your business, and with that, I'd like to bring up Rod Lappen to introduce our next speaker. Rod? (audience applauding) >> Thanks, boss, well done. Alright ladies and gentlemen. No real secret there. I think we've heard why I might talk about the fourth Industrial Revolution in data and exactly what's going on with that. You've heard Kirk with some amazing announcements, obviously now with our NetApp partnership, talk about 5G, NFV, cloud, artificial intelligence, I think we've hit just about all the key hot topics. It's with great pleasure that I now bring up on stage Mr. Christian Teismann, our senior vice president and general manager of commercial business for both our PCs and our IoT business, so Christian Teismann. (techno music) Here, take that. >> Thank you. I think I'll need that. >> Okay, Christian, so obviously just before we get down, you and I last year, we had a bit of a chat about being in New York. >> Exports. >> You were an expat in New York for a long time. >> That's true. >> And now, you've moved from New York. You're in Munich? >> Yep. >> How does that feel? >> Well Munich is a wonderful city, and it's a great place to live and raise kids, but you know there's no place in the world like New York. >> Right. >> And I miss it a lot, quite frankly. >> So what exactly do you miss in New York? >> Well there's a lot of things in New York that are unique, but I know you spent some time in Japan, but I still believe the best sushi in the world is still in New York City. (all laughing) >> I will beg to differ. I will beg to differ. I think Mr. Guchi-san from Softbank is here somewhere. He will get up an argue very quickly that Japan definitely has better sushi than New York. But obviously you know, it's a very very special place, and I have had sushi here, it's been fantastic. What about Munich? Anything else that you like in Munich? >> Well I mean in Munich, we have pork knuckles. >> Pork knuckles. (Christian laughing) Very similar sushi. >> What is also very fantastic, but we have the real, the real Oktoberfest in Munich, and it starts next week, mid-September, and I think it's unique in the world. So it's very special as well. >> Oktoberfest. >> Yes. >> Unfortunately, I'm not going this year, 'cause you didn't invite me, but-- (audience chuckling) How about, I think you've got a bit of a secret in relation to Oktoberfest, probably not in Munich, however. >> It's a secret, yes, but-- >> Are you going to share? >> Well I mean-- >> See how I'm putting you on the spot? >> In the 10 years, while living here in New York, I was a regular visitor of the Oktoberfest at the Lower East Side in Avenue C at Zum Schneider, where I actually met my wife, and she's German. >> Very good. So, how about a big round of applause? (audience applauding) Not so much for Christian, but more I think, obviously for his wife, who obviously had been drinking and consequently ended up with you. (all laughing) See you later, mate. >> That's the beauty about Oktoberfest, but yes. So first of all, good morning to everybody, and great to be back here in New York for a second Transform event. New York clearly is the melting pot of the world in terms of culture, nations, but also business professionals from all kind of different industries, and having this event here in New York City I believe is manifesting what we are trying to do here at Lenovo, is transform every aspect of our business and helping our customers on the journey of intelligent transformation. Last year, in our transformation on the device business, I talked about how the PC is transforming to personalized computing, and we've made a lot of progress in that journey over the last 12 months. One major change that we have made is we combined all our device business under one roof. So basically PCs, smart devices, and smart phones are now under the roof and under the intelligent device group. But from my perspective makes a lot of sense, because at the end of the day, all devices connect in the modern world into the cloud and are operating in a seamless way. But we are also moving from a device business what is mainly a hardware focus historically, more and more also into a solutions business, and I will give you during my speech a little bit of a sense of what we are trying to do, as we are trying to bring all these components closer together, and specifically also with our strengths on the data center side really build end-to-end customer solution. Ultimately, what we want to do is make our business, our customer's businesses faster, safer, and ultimately smarter as well. So I want to look a little bit back, because I really believe it's important to understand what's going on today on the device side. Many of us have still grown up with phones with terminals, ultimately getting their first desktop, their first laptop, their first mobile phone, and ultimately smartphone. Emails and internet improved our speed, how we could operate together, but still we were defined by linear technology advances. Today, the world has changed completely. Technology itself is not a limiting factor anymore. It is how we use technology going forward. The Internet is pervasive, and we are not yet there that we are always connected, but we are nearly always connected, and we are moving to the stage, that everything is getting connected all the time. Sharing experiences is the most driving force in our behavior. In our private life, sharing pictures, videos constantly, real-time around the world, with our friends and with our family, and you see the same behavior actually happening in the business life as well. Collaboration is the number-one topic if it comes down to workplace, and video and instant messaging, things that are coming from the consumer side are dominating the way we are operating in the commercial business as well. Most important beside technology, that a new generation of workforce has completely changed the way we are working. As the famous workforce the first generation of Millennials that have now fully entered in the global workforce, and the next generation, it's called Generation Z, is already starting to enter the global workforce. By 2025, 75 percent of the world's workforce will be composed out of two of these generations. Why is this so important? These two generations have been growing up using state-of-the-art IT technology during their private life, during their education, school and study, and are taking these learnings and taking these behaviors in the commercial workspace. And this is the number one force of change that we are seeing in the moment. Diverse workforces are driving this change in the IT spectrum, and for years in many of our customers' focus was their customer focus. Customer experience also in Lenovo is the most important thing, but we've realized that our own human capital is equally valuable in our customer relationships, and employee experience is becoming a very important thing for many of our customers, and equally for Lenovo as well. As you have heard YY, as we heard from YY, Lenovo is focused on intelligent transformation. What that means for us in the intelligent device business is ultimately starting with putting intelligence in all of our devices, smartify every single one of our devices, adding value to our customers, traditionally IT departments, but also focusing on their end users and building products that make their end users more productive. And as a world leader in commercial devices with more than 33 percent market share, we can solve problems been even better than any other company in the world. So, let's talk about transformation of productivity first. We are in a device-led world. Everything we do is connected. There's more interaction with devices than ever, but also with spaces who are increasingly becoming smart and intelligent. YY said it, by 2020 we have more than 20 billion connected devices in the world, and it will grow exponentially from there on. And users have unique personal choices for technology, and that's very important to recognize, and we call this concept a digital wardrobe. And it means that every single end-user in the commercial business is composing his personal wardrobe on an ongoing basis and is reconfiguring it based on the work he's doing and based where he's going and based what task he is doing. I would ask all of you to put out all the devices you're carrying in your pockets and in your bags. You will see a lot of you are using phones, tablets, laptops, but also cameras and even smartwatches. They're all different, but they have one underlying technology that is bringing it all together. Recognizing digital wardrobe dynamics is a core factor for us to put all the devices under one roof in IDG, one business group that is dedicated to end-user solutions across mobile, PC, but also software services and imaging, to emerging technologies like AR, VR, IoT, and ultimately a AI as well. A couple of years back there was a big debate around bring-your-own-device, what was called consumerization. Today consumerization does not exist anymore, because consumerization has happened into every single device we build in our commercial business. End users and commercial customers today do expect superior display performance, superior audio, microphone, voice, and touch quality, and have it all connected and working seamlessly together in an ease of use space. We are already deep in the journey of personalized computing today. But the center point of it has been for the last 25 years, the mobile PC, that we have perfected over the last 25 years, and has been the undisputed leader in mobility computing. We believe in the commercial business, the ThinkPad is still the core device of a digital wardrobe, and we continue to drive the success of the ThinkPad in the marketplace. We've sold more than 140 million over the last 26 years, and even last year we exceeded nearly 11 million units. That is about 21 ThinkPads per minute, or one Thinkpad every three seconds that we are shipping out in the market. It's the number one commercial PC in the world. It has gotten countless awards but we felt last year after Transform we need to build a step further, in really tailoring the ThinkPad towards the need of the future. So, we announced a new line of X1 Carbon and Yoga at CES the Consumer Electronics Show. And the reason is not we want to sell to consumer, but that we do recognize that a lot of CIOs and IT decision makers need to understand what consumers are really doing in terms of technology to make them successful. So, let's take a look at the video. (suspenseful music) >> When you're the number one business laptop of all time, your only competition is yourself. (wall shattering) And, that's different. Different, like resisting heat, ice, dust, and spills. Different, like sharper, brighter OLA display. The trackpoint that reinvented controls, and a carbon fiber roll cage to protect what's inside, built by an engineering and design team, doing the impossible for the last 25 years. This is the number one business laptop of all time, but it's not a laptop. It's a ThinkPad. (audience applauding) >> Thank you very much. And we are very proud that Lenovo ThinkPad has been selected as the best laptop in the world in the second year in a row. I think it's a wonderful tribute to what our engineers have been done on this one. And users do want awesome displays. They want the best possible audio, voice, and touch control, but some users they want more. What they want is super power, and I'm really proud to announce our newest member of the X1 family, and that's the X1 extreme. It's exceptionally featured. It has six core I9 intel chipset, the highest performance you get in the commercial space. It has Nvidia XTX graphic, it is a 4K UHD display with HDR with Dolby vision and Dolby Atmos Audio, two terabyte in SSD, so it is really the absolute Ferrari in terms of building high performance commercial computer. Of course it has touch and voice, but it is one thing. It has so much performance that it serves also a purpose that is not typical for commercial, and I know there's a lot of secret gamers also here in this room. So you see, by really bringing technology together in the commercial space, you're creating productivity solutions of one of a kind. But there's another category of products from a productivity perspective that is incredibly important in our commercial business, and that is the workstation business . Clearly workstations are very specifically designed computers for very advanced high-performance workloads, serving designers, architects, researchers, developers, or data analysts. And power and performance is not just about the performance itself. It has to be tailored towards the specific use case, and traditionally these products have a similar size, like a server. They are running on Intel Xeon technology, and they are equally complex to manufacture. We have now created a new category as the ultra mobile workstation, and I'm very proud that we can announce here the lightest mobile workstation in the industry. It is so powerful that it really can run AI and big data analysis. And with this performance you can go really close where you need this power, to the sensors, into the cars, or into the manufacturing places where you not only wannna read the sensors but get real-time analytics out of these sensors. To build a machine like this one you need customers who are really challenging you to the limit. and we're very happy that we had a customer who went on this journey with us, and ultimately jointly with us created this product. So, let's take a look at the video. (suspenseful music) >> My world involves pathfinding both the hardware needs to the various work sites throughout the company, and then finding an appropriate model of desktop, laptop, or workstation to match those needs. My first impressions when I first seen the ThinkPad P1 was I didn't actually believe that we could get everything that I was asked for inside something as small and light in comparison to other mobile workstations. That was one of the I can't believe this is real sort of moments for me. (engine roars) >> Well, it's better than general when you're going around in the wind tunnel, which isn't alway easy, and going on a track is not necessarily the best bet, so having a lightweight very powerful laptop is extremely useful. It can take a Xeon processor, which can support ECC from when we try to load a full car, and when we're analyzing live simulation results. through and RCFT post processor or example. It needs a pretty powerful machine. >> It's come a long way to be able to deliver this. I hate to use the word game changer, but it is that for us. >> Aston Martin has got a lot of different projects going. There's some pretty exciting projects and a pretty versatile range coming out. Having Lenovo as a partner is certainly going to ensure that future. (engine roars) (audience applauds) >> So, don't you think the Aston Martin design and the ThinkPad design fit very well together? (audience laughs) So if Q, would get a new laptop, I think you would get a ThinkPad X P1. So, I want to switch gears a little bit, and go into something in terms of productivity that is not necessarily on top of the mind or every end user but I believe it's on top of the mind of every C-level executive and of every CEO. Security is the number one threat in terms of potential risk in your business and the cost of cybersecurity is estimated by 2020 around six trillion dollars. That's more than the GDP of Japan and we've seen a significant amount of data breach incidents already this years. Now, they're threatening to take companies out of business and that are threatening companies to lose a huge amount of sensitive customer data or internal data. At Lenovo, we are taking security very, very seriously, and we run a very deep analysis, around our own security capabilities in the products that we are building. And we are announcing today a new brand under the Think umbrella that is called ThinkShield. Our goal is to build the world's most secure PC, and ultimately the most secure devices in the industry. And when we looked at this end-to-end, there is no silver bullet around security. You have to go through every aspect where security breaches can potentially happen. That is why we have changed the whole organization, how we look at security in our device business, and really have it grouped under one complete ecosystem of solutions, Security is always something where you constantly are getting challenged with the next potential breach the next potential technology flaw. As we keep innovating and as we keep integrating, a lot of our partners' software and hardware components into our products. So for us, it's really very important that we partner with companies like Intel, Microsoft, Coronet, Absolute, and many others to really as an example to drive full encryption on all the data seamlessly, to have multi-factor authentication to protect your users' identity, to protect you in unsecured Wi-Fi locations, or even simple things like innovation on the device itself, to and an example protect the camera, against usage with a little thing like a thinkShutter that you can shut off the camera. SO what I want to show you here, is this is the full portfolio of ThinkShield that we are announcing today. This is clearly not something I can even read to you today, but I believe it shows you the breadth of security management that we are announcing today. There are four key pillars in managing security end-to-end. The first one is your data, and this has a lot of aspects around the hardware and the software itself. The second is identity. The third is the security around online, and ultimately the device itself. So, there is a breakout on security and ThinkShield today, available in the afternoon, and encourage you to really take a deeper look at this one. The first pillar around productivity was the device, and around the device. The second major pillar that we are seeing in terms of intelligent transformation is the workspace itself. Employees of a new generation have a very different habit how they work. They split their time between travel, working remotely but if they do come in the office, they expect a very different office environment than what they've seen in the past in cubicles or small offices. They come into the office to collaborate, and they want to create ideas, and they really work in cross-functional teams, and they want to do it instantly. And what we've seen is there is a huge amount of investment that companies are doing today in reconfiguring real estate reconfiguring offices. And most of these kind of things are moving to a digital platform. And what we are doing, is we want to build an entire set of solutions that are just focused on making the workspace more productive for remote workforce, and to create technology that allow people to work anywhere and connect instantly. And the core of this is that we need to be, the productivity of the employee as high as possible, and make it for him as easy as possible to use these kind of technologies. Last year in Transform, I announced that we will enter the smart office space. By the end of last year, we brought the first product into the market. It's called the Hub 500. It's already deployed in thousands of our customers, and it's uniquely focused on Microsoft Skype for Business, and making meeting instantly happen. And the product is very successful in the market. What we are announcing today is the next generation of this product, what is the Hub 700, what has a fantastic audio quality. It has far few microphones, and it is usable in small office environment, as well as in major conference rooms, but the most important part of this new announcement is that we are also announcing a software platform, and this software platform allows you to run multiple video conferencing software solutions on the same platform. Many of you may have standardized for one software solution or for another one, but as you are moving in a world of collaborating instantly with partners, customers, suppliers, you always will face multiple software standards in your company, and Lenovo is uniquely positioned but providing a middleware platform for the device to really enable multiple of these UX interfaces. And there's more to come and we will add additional UX interfaces on an ongoing base, based on our customer requirements. But this software does not only help to create a better experience and a higher productivity in the conference room or the huddle room itself. It really will allow you ultimately to manage all your conference rooms in the company in one instance. And you can run AI technologies around how to increase productivity utilization of your entire conference room ecosystem in your company. You will see a lot more devices coming from the node in this space, around intelligent screens, cameras, and so on, and so on. The idea is really that Lenovo will become a core provider in the whole movement into the smart office space. But it's great if you have hardware and software that is really supporting the approach of modern IT, but one component that Kirk also mentioned is absolutely critical, that we are providing this to you in an as a service approach. Get it what you want, when you need it, and pay it in the amount that you're really using it. And within UIT there is also I think a new philosophy around IT management, where you're much more focused on the value that you are consuming instead of investing into technology. We are launched as a service two years back and we already have a significant number of customers running PC as a service, but we believe as a service will stretch far more than just the PC device. It will go into categories like smart office. It might go even into categories like phone, and it will definitely go also in categories like storage and server in terms of capacity management. I want to highlight three offerings that we are also displaying today that are sort of building blocks in terms of how we really run as a service. The first one is that we collaborated intensively over the last year with Microsoft to be the launch pilot for their Autopilot offering, basically deploying images easily in the same approach like you would deploy a new phone on the network. The purpose really is to make new imaging and enabling new PC as seamless as it's used to be in the phone industry, and we have a complete set of offerings, and already a significant number customers have deployed Autopilot with Lenovo. The second major offering is Premier Support, like in the in the server business, where Premier Support is absolutely critical to run critical infrastructure, we see a lot of our customers do want to have Premier Support for their end users, so they can be back into work basically instantly, and that you have the highest possible instant repair on every single device. And then finally we have a significant amount of time invested into understanding how the software as a service really can get into one philosophy. And many of you already are consuming software as a service in many different contracts from many different vendors, but what we've created is one platform that really can manage this all together. All these things are the foundation for a device as a service offering that really can manage this end-to-end. So, implementing an intelligent workplace can be really a daunting prospect depending on where you're starting from, and how big your company ultimately is. But how do you manage the transformation of technology workspace if you're present in 50 or more countries and you run an infrastructure for more than 100,000 people? Michelin, famous for their tires, infamous for their Michelin star restaurant rating, especially in New York, and instantly recognizable by the Michelin Man, has just doing that. Please welcome with me Damon McIntyre from Michelin to talk to us about the challenges and transforming collaboration and productivity. (audience applauding) (electronic dance music) Thank you, David. >> Thank you, thank you very much. >> We on? >> So, how do you feel here? >> Well good, I want to thank you first of all for your partnership and the devices you create that helped us design, manufacture, and distribute the best tire in the world, okay? I just had to say it and put out there, alright. And I was wondering, were those Michelin tires on that Aston Martin? >> I'm pretty sure there is no other tire that would fit to that. >> Yeah, no, thank you, thank you again, and thank you for the introduction. >> So, when we talk about the transformation happening really in the workplace, the most tangible transformation that you actually see is the drastic change that companies are doing physically. They're breaking down walls. They're removing cubes, and they're moving to flexible layouts, new desks, new huddle rooms, open spaces, but the underlying technology for that is clearly not so visible very often. So, tell us about Michelin's strategy, and the technology you are deploying to really enable this corporation. >> So we, so let me give a little bit a history about the company to understand the daunting tasks that we had before us. So we have over 114,000 people in the company under 170 nationalities, okay? If you go to the corporate office in France, it's Clermont. It's about 3,000 executives and directors, and what have you in the marketing, sales, all the way up to the chain of the global CIO, right? Inside of the Americas, we merged in Americas about three years ago. Now we have the Americas zone. There's about 28,000 employees across the Americas, so it's really, it's really hard in a lot of cases. You start looking at the different areas that you lose time, and you lose you know, your productivity and what have you, so there, it's when we looked at different aspects of how we were going to manage the meeting rooms, right? because we have opened up our areas of workspace, our CIO, CEOs in our zones will no longer have an office. They'll sit out in front of everybody else and mingle with the crowd. So, how do you take those spaces that were originally used by an individual but now turn them into like meeting rooms? So, we went through a large process, and looked at the Hub 500, and that really met our needs, because at the end of the day what we noticed was, it was it was just it just worked, okay? We've just added it to the catalog, so we're going to be deploying it very soon, and I just want to again point that I know everybody struggles with this, and if you look at all the minutes that you lose in starting up a meeting, and we know you know what I'm talking about when I say this, it equates to many many many dollars, okay? And so at the end the day, this product helps us to be more efficient in starting up the meeting, and more productive during the meeting. >> Okay, it's very good to hear. Another major trend we are seeing in IT departments is taking a more hands-off approach to hardware. We're seeing new technologies enable IT to create a more efficient model, how IT gets hardware in the hands of end-users, and how they are ultimately supporting themselves. So what's your strategy around the lifecycle management of the devices? >> So yeah you mentioned, again, we'll go back to the 114,000 employees in the company, right? You imagine looking at all the devices we use. I'm not going to get into the number of devices we have, but we have a set number that we use, and we have to go through a process of deploying these devices, which we right now service our own image. We build our images, we service them through our help desk and all that process, and we go through it. If you imagine deploying 25,000 PCs in a year, okay? The time and the daunting task that's behind all that, you can probably add up to 20 or 30 people just full-time doing that, okay? So, with partnering with Lenovo and their excellent technology, their technical teams, and putting together the whole process of how we do imaging, it now lifts that burden off of our folks, and it shifts it into a more automated process through the cloud, okay? And, it's with the Autopilot on the end of the project, we'll have Autopilot fully engaged, but what I really appreciate is how Lenovo really, really kind of got with us, and partnered with us for the whole process. I mean it wasn't just a partner between Michelin and Lenovo. Microsoft was also partnered during that whole process, and it really was a good project that we put together, and we hope to have something in a full production mode next year for sure. >> So, David thank you very, very much to be here with us on stage. What I really want to say, customers like you, who are always challenging us on every single aspect of our capabilities really do make the big difference for us to get better every single day and we really appreciate the partnership. >> Yeah, and I would like to say this is that I am, I'm doing what he's exactly said he just said. I am challenging Lenovo to show us how we can innovate in our work space with your devices, right? That's a challenge, and it's going to be starting up next year for sure. We've done some in the past, but I'm really going to challenge you, and my whole aspect about how to do that is bring you into our workspace. Show you how we make how we go through the process of making tires and all that process, and how we distribute those tires, so you can brainstorm, come back to the table and say, here's a device that can do exactly what you're doing right now, better, more efficient, and save money, so thank you. >> Thank you very much, David. (audience applauding) Well it's sometimes really refreshing to get a very challenging customers feedback. And you know, we will continue to grow this business together, and I'm very confident that your challenge will ultimately help to make our products even more seamless together. So, as we now covered productivity and how we are really improving our devices itself, and the transformation around the workplace, there is one pillar left I want to talk about, and that's really, how do we make businesses smarter than ever? What that really means is, that we are on a journey on trying to understand our customer's business, deeper than ever, understanding our customer's processes even better than ever, and trying to understand how we can help our customers to become more competitive by injecting state-of-the-art technology in this intelligent transformation process, into core processes. But this cannot be done without talking about a fundamental and that is the journey towards 5G. I really believe that 5G is changing everything the way we are operating devices today, because they will be connected in a way like it has never done before. YY talked about you know, 20 times 10 times the amount of performance. There are other studies that talk about even 200 times the performance, how you can use these devices. What it will lead to ultimately is that we will build devices that will be always connected to the cloud. And, we are preparing for this, and Kirk already talked about, and how many operators in the world we already present with our Moto phones, with how many Telcos we are working already on the backend, and we are working on the device side on integrating 5G basically into every single one of our product in the future. One of the areas that will benefit hugely from always connected is the world of virtual reality and augmented reality. And I'm going to pick here one example, and that is that we have created a commercial VR solution for classrooms and education, and basically using consumer type of product like our Mirage Solo with Daydream and put a solution around this one that enables teachers and schools to use these products in the classroom experience. So, students now can have immersive learning. They can studying sciences. They can look at environmental issues. They can exploring their careers, or they can even taking a tour in the next college they're going to go after this one. And no matter what grade level, this is how people will continue to learn in the future. It's quite a departure from the old world of textbooks. In our area that we are looking is IoT, And as YY already elaborated, we are clearly learning from our own processes around how we improve our supply chain and manufacturing and how we improve also retail experience and warehousing, and we are working with some of the largest companies in the world on pilots, on deploying IoT solutions to make their businesses, their processes, and their businesses, you know, more competitive, and some of them you can see in the demo environment. Lenovo itself already is managing 55 million devices in an IoT fashion connecting to our own cloud, and constantly improving the experience by learning from the behavior of these devices in an IoT way, and we are collecting significant amount of data to really improve the performance of these systems and our future generations of products on a ongoing base. We have a very strong partnership with a company called ADLINK from Taiwan that is one of the leading manufacturers of manufacturing PC and hardened devices to create solutions on the IoT platform. The next area that we are very actively investing in is commercial augmented reality. I believe augmented reality has by far more opportunity in commercial than virtual reality, because it has the potential to ultimately improve every single business process of commercial customers. Imagine in the future how complex surgeries can be simplified by basically having real-time augmented reality information about the surgery, by having people connecting into a virtual surgery, and supporting the surgery around the world. Visit a furniture store in the future and see how this furniture looks in your home instantly. Doing some maintenance on some devices yourself by just calling the company and getting an online manual into an augmented reality device. Lenovo is exploring all kinds of possibilities, and you will see a solution very soon from Lenovo. Early when we talked about smart office, I talked about the importance of creating a software platform that really run all these use cases for a smart office. We are creating a similar platform for augmented reality where companies can develop and run all their argumented reality use cases. So you will see that early in 2019 we will announce an augmented reality device, as well as an augmented reality platform. So, I know you're very interested on what exactly we are rolling out, so we will have a first prototype view available there. It's still a codename project on the horizon, and we will announce it ultimately in 2019, but I think it's good for you to take a look what we are doing here. So, I just wanted to give you a peek on what we are working beyond smart office and the device productivity in terms of really how we make businesses smarter. It's really about increasing productivity, providing you the most secure solutions, increase workplace collaboration, increase IT efficiency, using new computing devices and software and services to make business smarter in the future. There's no other company that will enable to offer what we do in commercial. No company has the breadth of commercial devices, software solutions, and the same data center capabilities, and no other company can do more for your intelligent transformation than Lenovo. Thank you very much. (audience applauding) >> Thanks mate, give me that. I need that. Alright, ladies and gentlemen, we are done. So firstly, I've got a couple of little housekeeping pieces at the end of this and then we can go straight into going and experiencing some of the technology we've got on the left-hand side of the room here. So, I want to thank Christian obviously. Christian, awesome as always, some great announcements there. I love the P1. I actually like the Aston Martin a little bit better, but I'll take either if you want to give me one for free. I'll take it. We heard from YY obviously about the industry and how the the fourth Industrial Revolution is impacting us all from a digital transformation perspective, and obviously Kirk on DCG, the great NetApp announcement, which is going to be really exciting, actually that Twitter and some of the social media panels are absolutely going crazy, so it's good to see that the industry is really taking some impact. Some of the publications are really great, so thank you for the media who are obviously in the room publishing right no. But now, I really want to say it's all of your turn. So, all of you up the back there who are having coffee, it's your turn now. I want everyone who's sitting down here after this event move into there, and really take advantage of the 15 breakouts that we've got set there. There are four breakout sessions from a time perspective. I want to try and get you all out there at least to use up three of them and use your fourth one to get out and actually experience some of the technology. So, you've got four breakout sessions. A lot of the breakout sessions are actually done twice. If you have not downloaded the app, please download the app so you can actually see what time things are going on and make sure you're registering correctly. There's a lot of great experience of stuff out there for you to go do. I've got one quick video to show you on some of the technology we've got and then we're about to close. Alright, here we are acting crazy. Now, you can see obviously, artificial intelligence machine learning in the browser. God, I hate that dance, I'm not a Millenial at all. It's effectively going to be implemented by healthcare. I want you to come around and test that out. Look at these two guys. This looks like a Lenovo management meeting to be honest with you. These two guys are actually concentrating, using their brain power to race each others in cars. You got to come past and give that a try. Give that a try obviously. Fantastic event here, lots of technology for you to experience, and great partners that have been involved as well. And so, from a Lenovo perspective, we've had some great alliance partners contribute, including obviously our number one partner, Intel, who's been a really big loyal contributor to us, and been a real part of our success here at Transform. Excellent, so please, you've just seen a little bit of tech out there that you can go and play with. I really want you, I mean go put on those black things, like Scott Hawkins our chief marketing officer from Lenovo's DCG business was doing and racing around this little car with his concentration not using his hands. He said it's really good actually, but as soon as someone comes up to speak to him, his car stops, so you got to try and do better. You got to try and prove if you can multitask or not. Get up there and concentrate and talk at the same time. 62 different breakouts up there. I'm not going to go into too much detai, but you can see we've got a very, very unusual numbering system, 18 to 18.8. I think over here we've got a 4849. There's a 4114. And then up here we've got a 46.1 and a 46.2. So, you need the decoder ring to be able to understand it. Get over there have a lot of fun. Remember the boat leaves today at 4:00 o'clock, right behind us at the pier right behind us here. There's 400 of us registered. Go onto the app and let us know if there's more people coming. It's going to be a great event out there on the Hudson River. Ladies and gentlemen that is the end of your keynote. I want to thank you all for being patient and thank all of our speakers today. Have a great have a great day, thank you very much. (audience applauding) (upbeat music) ♪ Ba da bop bop bop ♪ ♪ Ba da bop bop bop ♪ ♪ Ba da bop bop bop ♪ ♪ Ba da bop bop bop ♪ ♪ Ba da bop bop bop ♪ ♪ Ba da bop bop bop ♪ ♪ Ba da bop bop bop ba do ♪

>> Narrator: Live from New York City, it's theCUBE. Covering Lenovo Transform 2017. Brought to you by: Lenovo. >> Welcome back to theCUBE's coverage of the Lenovo Transform Event. I'm your host, Rebecca Knight, along with my co-host, Stu Miniman, who is a Senior Analyst at Wikibon. We are joined by Kirk Skaugan. He is the Executive Vice President and President of Lenovo Data Group. Welcome back to theCUBE, Kirk. You're a veteran. >> Yeah, we're doing this on a monthly basis. It's great. >> So you're fresh off the keynote. The theme of this conference is transform. Lenovo has undergone a massive transformation in recent years. What is your focus, and where do you see the biggest points of change in the company? >> Well, I think we're sort of celebrating today, this transformation to the next phase of our growth. If you think about us as a company, we've kind of acquired the x86 business, server business from IBM a few years ago, and we are also building off more than a decade of our China heritage, for the ThinkServer business, so that's combining the two together. Kind of driving to our next phase of growth. The whole purpose of today is really transforming the customer experience, and starting with the customer first. We're incredibly proud that we just got ranked number one in customer satisfaction, again but we're not kind of stopping there. We're going to use this announcement today to catapult us ahead. >> Customer service has always been a strength of Lenovo, and as you said, you're going to continue to drive toward that. You said in the keynote that you're incentivizing employees around customer service. Can you talk a little bit about how you plan on maintaining the edge? >> So this year, every Lenovo employee is getting incentivized on customer experience. We're making them take a personal goal of how they can better improve the customer. Regardless of whether you're an engineer, or you're in phone support, or these kind of things, so it really starts at the grass-roots level. It gets everybody thinking customer first, which is great. Again, we're excited, because we're in 21 of the 22 categories, number one is x86 servers, but we're constantly learning and wanting to improve. That's where we're starting. >> Kirk, Y.Y. in his keynote, talked about, just the pace of change. That, forget about 18 years ago, 18 months ago we probably couldn't predict how fast things are going. How does that drive your strategy? How you work with customers, and drive the product line? >> So I think customers are asking for simplicity. It's getting so complex, and the rate of change is so much, so when we did this design of both our server storage and networking, we're kind of future-proofing it. We are actually dramatically reducing the number of products, but building to be more flexible, so you can qualify less solutions, but have them live longer in your data-center. That's been a key attribute as we look at future-proofing. Also, as we move to software-defined, that's going to be a key element as well, because people aren't looking to change out the hardware as much as they are the software part. Everything from our configuration managers to our system hardware management, and with Xclarity, the whole design experience, we're changing to simply the experience for the customer. 'Cause the change is almost getting to the point that it's too much for people to handle, from a technology transformation perspective. >> You're celebrating 25 years of the x86 server that you're offering, so explain to us the new branding. You've got two new brands that you've announced today. The kind of, thinking behind that, and walk us through what they are. >> Sure, so today, we're announcing ThinkSystem and ThinkAgile. So on the server side, we had both the ThinkServer brand from Lenovo and the SystemX brand from IBM. We're building those two together. The engineers were given the charter years ago, to say how do you stay number one in reliability, Number one in customer satisfaction, and then we have a legacy now of over 150 world-record benchmarks. So it's a brand that's highly flexible, premium, and it's going to span now, not only our server products, but server, storage, and networking. One of the surprises I had joining Lenovo is just, we have hundreds of engineers in networking that the old IBM had acquired from companies like Blade Network Technologies, and now things like hyper-converged storage. Once you've solved the storage-compute integration, networking becomes the next bottleneck. The products we're announcing today on ThinkAgile, which is our software-defined products, are helping solve not only the hyper-converge storage problems, but also some of the challenges that brings to networking, and moving traffic from a traditional north-south architecture to east-west. Simply put, ThinkSystem for network, storage, and server; and ThinkAgile for software-defined. >> On the ThinkAgile, the two partners that I saw highlighted up on screen were Nutanix, which you've had in OEM for awhile, and the Microsoft Azure, with Azure staff, we knew is coming this year. Both of those companies have a lot of partners. Why is Lenovo positioned to be a strong contender with both of those companies. >> I think that when we talk to CIOs, what we're hearing pretty constantly is that Lenovo's lack of legacy... We don't have a huge legacy router business, or a huge legacy sand business, and all the associated costs and services. We see our competitors sometimes up, pushing one more generation of the legacy technology, and so we feel like we're getting pulled in to leap ahead, not being encumbered by the past. Then I always say, little things don't mean a lot; little things mean everything. It's the thousands of Lenovo engineers that are tuning this for both of those solutions, especially for Nutonix, we've got integrated networking now, in the stack, so we're not just solving the storage problem, but we're addressing that network solution as well. There's a reason why we have 150 world-record benchmarks. It's that fine-tuning with our partners to get the last few bits of performance out of the systems. >> I wonder if you could talk a little bit more about this lack of legacy, as well as the cost-efficiencies that you referenced in the keynote, in terms of having everything in China, and you described going left to make the servers, and going right to make the PCs. Can you talk a little bit about how that helps Lenovo improve it's offerings? >> So I think that we have the benefits of being an autonomous data center group, and making our own decisions, but we're taking care of the manufacturing, taking advantage of the manufacturing capability of Lenovo. If you look at the devices inside, Lenovo's building about four devices a second. On the server side, we build a little bit over a hundred servers an hour. But if you go into, for example, we have factories in Sárvár, Hungary; Monterrey, Mexico; North Carolina; and even Shenzen. If you go into our Shenzen factory, the parts warehouse is common on the first floor. It comes up through the second floor, and actually goes left for notebooks, right for servers. So all that vendor-managed inventory, we're taking advantage of that scale of four devices a second, and we get that advantage, unlike some of our competitors. What that really means to our customers is we can compete with the best commodity costs, and the best manufacturing costs in the industry. Some of our third-party analysts are saying we have manufacturing rates that could be almost half of our competition, because some of the scale that we have. >> Kirk, one of the things that caught my attention in the keynote was talking about using the intelligence, and inside your supply-chain through the whole life-cycle of the product. Can you give us a little bit of insight as to how you're using it internally, and what customers see from that. >> So we just hired our Chief Technology Officer, was Dr. Rui, Yong, who's ex-Microsoft. He's one of the world leaders in Artificial Intelligence. Our CIO and us in the data-center group, we've all been collaborating to bring Artificial Intelligence deeper into everything we do, but even from our supply chain to our order delivery, which is why I think our customer satisfaction rates are so high, because we can predict the supply chain, the right amount of inventory, and shipping it all the way through, and predicting the dock-date to our customers incredibly well. One of the key learners we had over the last couple of years of acquiring the IBM x86 server business, it took us almost two years to get off the IT systems, right? We had over forty different databases that we had to integrate in, and now that, as of January 1, they've all become part of Lenovo, pulling those big data analytics together and using Artificial Intelligence, we can now track the aged population of all of the installed base of over about two and a half million servers that we have out there, who's coming up for warranty replacements, who's coming up for hardware replacements, and it's almost that predictive analytics that customers are really valuing. >> In terms of Lenovo and it's aspirations for the future, in terms of becoming the world's biggest super-computing company, you are the fastest growing, but let's talk about impact. This is something that Y.Y. talked about in his keynote, and really making sure that Lenovo is working, not just helping companies sell more widgets, but also with scientific breakthroughs, curing diseases, predicting the effect of climate change. How big a part is that of your job? >> I think it's something that's incredibly motivating to Lenovo employees, beyond financial return to shareholders, is every day I get internal texts or WeChats from Lenovo employees that are feeling really proud to be part of a company that's off trying to do something good for humanity, as well. I mean on the PC side, we're selling ChromeBooks and bridging the digital divide between kids in Africa and kids in the major metropolitan areas of the world, but on the data center side, things like we did with the Barcelona supercomputer, where we now have the fastest, next-generation Intel computer on the planet. It is one of the breakthroughs of predicting weather and climate change, predicting and tracking the next tsunami to evacuate coastlines faster, trying to find cures to some of the most terrible diseases on Earth. It's a huge part of the culture, of trying to do good for the world, not just make a financial return. >> Kirk, I want to go back to ThinkAgile for a second, because you dropped a hint that we couldn't let pass. Said that it's likely that we should expect M and A, from Lenovo here, now, I don't expect you to tell us who you're looking at, but what do you look for, what type of company to look for, or what would fit well into the Lenovo portfolio? >> Well, it's funny, because we're Lenovo, so we're not Huawei, or Cisco, or EMC, right? Big names, without saying traditional networking and storage. All of these startups out there that are essentially competing with those large legacy companies are coming to us saying, we want either access to China, given our strong China presence, but also global-scale. Because once they get to a couple hundred million dollars in revenue, they have a real tough time scaling, and as I said, we're participating now in over 160 countries, 50 call-centers. That's a pretty big investment, even for some of the fastest growing software-defined companies in the world, to set up. I think we want to build our own internal intellectual property, but we're also going to look at joint ventures and M and A's in the areas of software-defined networking, software-defined storage, because our customers, again, see us with that lack of legacy and are really pushing us to go even faster, which is great. >> So those are the business that you're interested in, but what are the kind of cultures that you're looking for, particularly because culture is such an important part of Lenovo? >> One of the reasons I moved from Intel to Lenovo is that they're just fierceless innovators, right? And we became number one in PC through innovation, not just cost-cutting and I see that on the data-center side as well. All of those little things that matter. So I think we want to have people who have the highest of aspirations. When we go into something, we want to be number one in it. People who are fearless, they're not afraid of companies that might be three or four times our size, but that want to make a global impact. A lot of these customers, they've already made their financial returns in a previous startup, and now they're looking at how they can go change the world, and the scale that Lenovo brings, I think is something that's pretty exciting to them. >> Kirk, on the Intel point, I think this is the fourth show that we've done theCUBE at this year, where Intel's been up on stage, arm and arm with a partner, in the cloud-space, in the server-space, talking about that next generation chipset. What's going to set Lenovo apart with this next wave, and what are your customers excited about for this next spin of the Intel chipset? >> We're seeing 59% performance improvement on things like SAP HANA, where we're number one in the world in installations. We're seeing better total cost of ownership productions. So particularly in hyper-scale and HPC, we see a step-function transition over, almost immediately on the new Intel chips. We're looking at all architectures, of course, as well, but I think with Intel, we've put in the largest omni-pass solutions on the planet. With Barcelona supercomputer, we're working not just on processors, but on the SSDs, on their accelerator, on high technology, on the fabrics. So we have a really tight innovation relationship with them, so we're selling probably more content per box, therefore we're obviously able to fine-tune the entire portfolio together with them. I think customers are excited about us continuing this world-record performance that we've had. The TCO reductions, of getting to lower power. Most of these supercomputers are still constrained by power. We have more than 25 patents now in water-cooling technology to try to be greener for the Earth. I think that those are some of the things that we're seeing from Intel. >> Those are the selling points. >> Yeah, higher performance. We have a very tight, close relationship, so there's not a lot of finger-pointing. We get into an issue, as all companies do, we can solve it very, very quickly. I think again, being number one in customer satisfaction from a third-party is our testament to that. >> Kirk, this last question I had on that, the hyperscale market. Can you just give us the update, as kind of Lenovo's position there. Heard a lot about the HPC market, we know, kind of a traditional enterprise market, but hyperscale, I think, is one of the areas you differentiate yourself. >> We obviously sell Dubai, to Alibaba, Tencent is part of China, we're one of their largest suppliers and partners, and we're now expanding, through this new segment-focus into the west coast of the United States. We don't necessarily go out and say the names of those customers, but there are multiple hyperscale customers in the top ten, many of which are based in the US that we are already now shipping into significantly more units this year than last year. It's a function of really getting cost-optimized. Again, we're taking advantage of PC economics and bringing them to hyperscale computing, so we're not afraid of low-margin, high-volume business, because that's what we're doing in the PC space every day. So, we're going to continue to expand, not just in the top-tier ones, but also moving into the tier two, tier three, kind of customer bases as well, so we're expanding that sales force. Looking at it only end-to-end, only burdening it with what it needs to be burdened with, right? Relative to the cost structure so that we can compete with the best, most cost-effective companies in the world, and still make a little bit of money for Lenovo shareholders. >> Kirk, thanks so much for joining us. It's been a pleasure having you on the show. >> Yeah, the excitement around here's been great. We appreciate you guys coming, and appreciate your time. >> Great. I'm Rebecca Knight for Stu Miniman, we'll be back with more of Lenovo Transform after this.

>> Narrator: Live from Boston, Massachusetts, it's The Cube, covering Red Hat Summit 2017, brought to you by Red Hat. >> Welcome back to The Cube's coverage of the Red Hat Summit here in Boston, Massachusetts. I'm your host, Rebecca Knight, along with my cohost, Stu Miniman. We are joined by Kirk Skaugen, he is the Executive Vice President and President of Lenovo Data Center group, Lenovo. So thanks so much for joining us, Kirk. >> Thanks for having me. >> I want to start out by talking about Lenovo's commitment to open source, right. We're hearing a lot about this in this summit, It's the real deal! >> Yeah, well I was at for 24 years and had a long partnership with Red Hat there so as I moved over to Lenovo on that, open source is a key aspect of our strategy. Kind of foundational for us and where we sit with the days in our company, because we don't have this legacy. We're not someone who's trying to protect an old router business or an old storage business. So as we look at open source as part of our, kind of, open partnerships commitment, it's pretty foundational to what we're doing. >> Kirk, could you help us unpack that a little bit? We heard in Keynote this morning they talked about open source hardware. I know you guys have been involved in OCP. How much is software, how much is hardware? Where do you guys put commitment in? How much of it is partners? >> Yeah, so I think we're in about over 30 different standards bodies now committed to open source. It really happened after our acquisition of the IBM xSeries server business, so now we're the third largest x86 server provider in the world and we're expanding ahead in the data center, so we're participating about 30 standards bodies. We have about 12 open source projects going on with Red Hat, and we're really at the base level, announcing today something called Open Platform at Lenovo. It's something we said we would do a year ago at this conference, and now here at the Red Hat summit we're showing it in our booth actually there. It's a base open platform with an optimized stack which you can put NFE and other solutions on top of, so that's one example of things we said we were going to do a year ago today and then are doing today. It's really about, from our perspective, optimizing the base hardware for all these platforms. >> Interesting, we look at things. I hear people look at open source and there's more transparency. It's not like '08; there's a secret project we're working on and here it is. You worked at Intel. Everybody kind of understood the tick-tock that went on there, how does open source influence the planing that you guys go into and do you feel the road maps at a company like Lenovo are more transparent since you're part of open source? I mean, again, what you should expect from us is we're a leader in x86 system technology but we've also acquired assets like blade network technologies in the past as well. We're expanding as a company out of our server routes into networking and storage. We think containerization is going to be the future. Today we're sitting with, something like 32 world record benchmarks and our theme is kind of "different is better" which means it's the little things that we're doing with all these partners to tune out the best performance of these systems working with our partners. We're not trying to go far up the stack and compete with our partners. I think that makes us a little bit unique. We're in trying to be the best x86 system provider in the world. Expand that into storage and networking as we get the software defined. >> Great, and absolutely. It would be useful to kind of explain your role in the data center group itself. As you said, you've got in some pieces. >> Some came from the IBM, there's various acquisitions. >> Kirk: Mmmhmm. >> Lay out a little bit more of what you guys do and what your partner does. >> Sure, so I think a lot of people know Lenovo as being number one in PCs. This is the 25th year of ThinkPad and we look at our Think Server brand today and our X series brand that we acquired from IBM. >> So we're, again, the third largest server provider but expanding that into storage and networking and then we acquired the Motorola phone business, so we just crossed to be number four in the world outside of China, with a presence in India. So we basically have three businesses within Lenovo but Data Center group, we believe, is a big growth driver for the future. A lot of people I think, 25 years ago, would have never thought Lenovo would be number one in PCs worldwide. I think we're kind of sitting there as a server provider with number one in customer satisfaction, number one in server reliability, number one in quality by all these third party measures. Our biggest issue is people don't realize we acquired this amazing asset from IBM so we're here at the summit basically showing and promoting our brand, but also promoting the proof points underneath that. >> This event is very global, multicultural. Lenovo's also a global company. Maybe speak a little bit to that; where your teams live, where development happens and what your customer base looks like. >> I live in Raleigh. We have a dual headquarters in Raleigh and Beijing, but we operate in over 160 countries. We have over 10,000 IT professionals now within the data center group. We have manufacturing in the United States, in Mexico, in Hungary, in China, so we can basically globally ship everywhere. When I looked at moving from Intel to another company, number one this enabled me to get one step closer to the customer, but I thought Lenovo's one of the best companies I saw that we're partnering. I think in the data center group, you look at our list of partners and it's unprecedented partly because we don't have a legacy business, so almost every startup and everybody who wants to do something new ends up wanting access to our presence in China, being number one in China, but also because we're not protecting a legacy so they see us as someone interesting and unique to partnership with. So open source is one of those areas where I think, now that we separated from IBM we're clearly an x86 provider committed to open source and the way we're getting into telecom, where we hadn't been, and competing with our big customers is because we're open and ideally we're more agile and partner better. >> I'm wondering if you could comment on the culture of these culture of these various places. As you said, you've been in Portland for a long time. You're now new to Raleigh. Your company is Beijing and Raleigh and you do business all over the world. How do you experience how these engineers, are they different in different parts of the world? Or is open source really transcending that and there is a much more of an openness and a transparency? >> Yeah, I thought I'd fit really well into the Lenovo culture. I think six months into the job, I feel like it's exceeded my expectations. If you look at the executive staff at Lenovo there's something like seven different nationalities on there from Italy, and Switzerland, and Australia, and the U.S., and China, Hong Kong, Singapore, India. >> Rebecca: And that's by design. >> Yeah, by design. So I think it provides a really unique perspective as you're looking at market trends, and then customers and things like that. When you look at the engineering aspect of it I'm looking at this efficiencies of the PC, the cost economics of the PC, having some of these factors. We're actually one of the last companies who's designing our own systems and putting them in our own factory, so from that perspective we get the efficiencies of being part of a larger PC company, but listen, data center's very different, right? We have a completely autonomous data center group now but we get the efficiencies of that, so we can kind of get the best of all the cultures that we participate in with development in Romania, in India, in China, Raleigh and again, we can manufacture in any place the customer wants us to manufacture pretty much. >> You mentioned that you're one of the last companies that's designing your own systems and putting them into your machines. Is that going to go by the wayside? You're one of the last, so all these other companies have decided it's just not sustainable. Can you comment on that? >> Well I think consolidation is absolutely key. If you look at the PC industry, and I managed the PC business at Intel the last three years. There's absolutely been consolidation in that market. You should look at some of the Japanese suppliers going away, but that's what enabled Lenovo to continue to grow in a multi-hundred million unit market. Today we ship about 100 servers a minute. A hundred servers an hour, rather, about one a minute. If you look at the consolidation trends I think still going to be a lot of consolidation in the market around that, so we believe we can grow in that market. PCs through consolidation, and if the PC market flattens out, even in the data center space where I think there'll be fewer and fewer players that will be able to compete. It really gets down to just uber-efficiency. When you're running in a factory that's building as the number one PC company, you get manufacturing efficiencies that other people can't do at our subscale. So as an example, when we look at things like supercomputing we're now the fastest growing supercomputing company on the planet. 99 of the top 500 supercomputers. That's because we can build very, very efficient products in a market that typically runs on razor-thin margins, right. >> Kirk, we talk about that huge volume of servers. Can you speak to where Lenovo's playing in the service provider and cloud marketplace? >> Sure, I think we just reorganized into kind of, four customer-centric markets. So first is in hyperscale, we participate with Baidu, Alibaba, Tencent and we're expanding across some of the largest hyperscale providers in the West Coast. We believe designing our own board, putting in our own factories gives us the cost economics to compete with the largest data centers in the world, just 'cause we can make money in PC desktop towers which is a pretty commoditized business. We think we can make money there. Software-defined, I think what we're seeing is because of our lack of legacy hardware whether it's a legacy SAN or a legacy routing business, we can leap ahead there both through our own stack but also our partner's stack. Third is supercomputing, so this is something where we brought a lot of that application knowledge over from IBM to the acquisition, and our goal is to continue to be the fastest growing supercomputing company on the planet and right now we're number two in the world, so we're building our Barcelona supercomputer right now to be 12 times more powerful that what it is today. With the University of Adelaide, 30 times more powerful than their last computer. Supercomputing's the third, and then the fourth is just traditional data center. So there you look at things like SAP HANA, where we were solutions-lead. We're trying to not just ship the hardware, but deliver optimized solutons so we feel like the little things don't mean a lot, the little things mean everything. So why does Lenovo have 32 worldwide per benchmarks? 'Cause we're tuning things with SAP, and now, for example, SAP just went public that they're running their own internal HANA on Lenovo. So I think it's a testament, it's the fine tuning of the application. It's hyperscale, software-defined, supercomputing, and then legacy data center infrastructure lead by solutions. Those are our four segments. >> Kirk, you talked about, it was 25 years for ThinkPad. As I look out towards the future, the data center group, what's kind of the touchstone? What are people going to really understand and know that group for in the future? >> Well, I think we want to be most trusted from a data center provider, right. We're not trying to contain anyone in a legacy thinking. We want to leap ahead into software-defined. We think we have the base hardware, customer satisfaction, reliability to do that. So I think, number one, we want to be most trusted. Number two, we're trying to be incredibly agile. Much faster than companies that are larger than us. That's been an innovation culture that's lead us to be number one in PCs, not through cost, but through innovation. We want to be known for innovation and being faster to deploy innovation both with us, but as well was with our partners. So if you go into our both, you showcasing with Intel. We're showcasing with Juniper. We're showcasing with Red Hat. So that's a very decent foundation. I think we can leap ahead, not be encumbered by the past, and be trusted, innovative, cost-effective, and make a lead to software-defined. What's interesting to me is, I think when I joined Intel in 1992, there was something like 100 gigabytes a day. When I joined Lenovo 24 years later, it was like 250 million gigabytes a day of data, if I have my numbers correctly. It's going to leapfrog up just in a massive way over the next 10 years with 5G and the whole internet buildup so you hear that from almost every keynote speaker, but what it means to me is that, we're just at the beginning of cloud transformation. A company like Lenovo, we didn't invent the PC, we just became number one in it over 25 years. We didn't invent servers, but we acquired amazing people. They can then leap us ahead over the next, now, 25 years. (laughing) >> Well Kirk, thank you so much for joining us. Thank you for your time. >> Yeah. Thank you It's a pleasure, it's a great event. So thank you. >> I'm Rebecca Knight for Stu Miniman. We'll be more with the Red Hat summit after this. (electronic music)

>> From Las Vegas. It's the cute covering knowledge sixteen Brought to you by service. Now carry your host David, Dante and Jeffrey. We're >> back. This is knowledge. Sixteen. This is the Q. We go out to the events. We extract the signal from the noise. This is day one of a three day Walter Wall coverage. The Cube has of knowledge. Sixteen Hashtag No. Sixteen like a lander is here. He's the CEO and vice chancellor of college services at Lone Star College. Longtime Cuba Lem like it's great to see again. >> Good scene again to >> another is >> great to catch up with this >> place, Another knowledge have a bigger and better than ever. You're you're speaking later on this afternoon. You've been over at the CIA event house this year going for you. You know, it's going >> great. The CIA oven, of course, is excellent lot of leadership foundations. Keynote TOC where, you know, service now is heading right now. Kind of. You know, that the shift and I always were still back to one of the themes from eons ago. Let's kill email. But the reality is emails not dead. So as we focus on it, you know, I came into this from the stance of moving the enterprise service management. So as I bring a team here, we really get the opportunity to see where we're at today in that comparison, and then how we can leverage the platform and move yourself forward >> So your role is evolving at Lone Star College, You said off camera, you're not giving up a title. A CIA, your CEO. >> Yes, I am the CEO >> and bread. That's not Teo, but your responsibilities are expanding. Talk about that side of things well, >> so well, last year actually been a year and a half. Now human resource is put underneath me. That's why the title change and all that to fit better and then analytics because, you know, analytics is not it much. People want us to think it should be buried inside of it. It never should, because it's about the business process. About the business service human resource is was just around the concept of aligning that service management what we had completed in it around service excellence. One of my right hand's basically put it as customer delight. Our focus is on customer no light. So it is about that communications piece. How do you talk to your customer? How do you move forward? How do you understand what their challenges are and help them find a solution. It may not be its instead of saying no, I can't do that for you. Sorry. You're out of luck. So in that, in that evolution, we've really moved ourselves forward on the enterprise service management platform side and early days, financial aid. We brought in student call centers. Now you've got human. Resource is were talking earlier about We're moving our legal in there. It's going to accelerate the pace it takes to get a contract illegal down TTO one day, maybe two days or some way didn't catch their approvals fast enough. So that's the big transformation from an organization >> of automated. That whole process over I actually, before going, I want to ask you questions about analytics. So you have. Ah, datas are that's working for you outside of it. Is that right or you? The days are >> well, you know, I actually have a team, >> have a data >> team s o. We're talking two different sets. Analytics too, because we're actually using service now. Analytics when it comes to the Service management analytics. Right. But for the organizational analytics, we actually have a large team that that does our analytics everything from dash boarding through, You know, in our case, core institutional reporting that's required. >> And is there a chief data officer as part of that team? >> I have a personal leading that group. >> De facto even >> factor. Yes. >> So there's a lot of discussion to about whether the CDO should report to the c. E. O. In this case, it does. But you had you had said things questions as to whether or not that Data Analytics function should be in it. It's not a night function. We kind of agree on that, but yes, but what kind of reports in to the head of, Well, >> you know, But see, when I when I sit down at that table, I sit down as the vice chancellor college services. So I have to sit down with three separate hats in front of me. Andi, I can't favor one over the other. Otherwise I wouldn't be doing my job currently. So when I look at the analytic side from a perspective, I will get on my team that provides the data, my database services and, you know, why are you not getting this done or what's happening here? So I've gotta look at it from all areas >> like Bill Belichick, GM coach way Tom Brady. You got to figure out who >> you are. At that point, I'm >> well. So is this how the role of the CEO is evolving? I mean, we've heard of this event previously. Frank's Lupin one year a couple years ago, said CEO should be a business person. Absolutely certainly seen examples of that. Now you're sort of given responsibility for you. No other services beyond just services. How was that role evolving? >> Well, rolls about for years. The question is, Is the CIA evolving? So? And that's where the challenges in the organization. So a lot of CEOs they're going through this process now where they're understanding that, Yes, I need to understand what are the business goals and objectives howto achieve those goals howto I had value to the organization. How did not become a cost center that has a target on my back? How you become an enabler enabler for the business And that's really where we came into that part of the process because we're recognized that Alcide nightie was here trying to help find solutions and provide better customer service. I myself come from a background in higher it for a long time through different institutions. And so when somebody talk to me about student services or student success, these air topics, I understand. I came to Lone Star originally because I didn't feel I had the strength in the academic side. And so when I first arrived there, I was really focused on academic understanding how the academic side operates and what they need in it. So I've had the opportunity to get well rounded in education, but it doesn't. It really is just about anybody that comes into this role. You must understand the business you're in, and then the next part is you need to be able to talk. I have an intelligent conversation around a topic area, bring value to the organization and come back with ideas. Well, you know, if we did this so the legal one was rather interesting because we had a new general counsel. Come on, and we're trying to help him, and he's like, Well, there has to be something better. You ask me. It's a better way to approach this. And we were able to dig through. Is that you know, What service? Now we've been doing this in HR. We're doing this here. So finally, we've got them into service now. And they see an opportunity the same way we see it. Which is we're improving. We're getting rid of the little stuff, the mundane work, You know that the task orientated work and we're focusing on the things that are really a challenge. And it has been there for a while because self service and all the other opportunities we've given the customer. Now we can shift that back and say, Okay, I cannot focus on what does the hard thing to get completed. How Doe I really put in effort in and a lot of a lot of staff hours into this one piece. >> So you started service management You mentioned hr Legal >> Financial Aid General Student Carlson are We're looking at scholarships right now. We tell a little bit ideas around our foundation in scholarships and what we could do for them. Grants. Grants are very big challenge because you have to really track and trend your grants. When you look at it, sm the areas that we've matured there are phenomenal, and then we're getting ready now to move and I Tom, which we didn't do because we already built a complete structure around that we were feeding that to service now. So now I'm looking at from opportunity that if I can eliminate a lot of the tools, I put in a play and get into one single tool and maximize the value of that tool. So I think you heard me many times when we talked in this. It's never about the tool. It's always about people in a process first. And then how does the tool come in? Well, this platform, we can actually adjust that because we're not We're not bound by the tool. Like the legal module. They have a great legal module. Well, it didn't fit what we needed. So it's been adjusted accordingly. T meet our needs from the platform side by keeping the core components so we haven't customized. We haven't taken it to a path where we can never upgrade. But at the same time as we looked at the process they had and how do we take that process and then actually put it into play with service now? >> And they were all inward service now do you worry about locking? >> Always. I think >> that Do you manage that risk? >> Well, the very first thing, to be honest with you is any time you enter in any cloud situation or any product situation, you want an exit strategy of some kind In case something goes wrong, something happens. You have to be at that point. So the only way to manage it really is to one. Keep a good, strong partnership. I believe that I have a strong partnership was service now. I don't believe it's a vendor relationship and I think that's critical because as we look at what we're doing each time as a partner, were were engaged with things like Where you heading? What's happening next? You know what? And then the same thing with the user group community were engaged with that group. So from a partner standpoint, we look at that first. But if the worst case scenario came, I've got to be able to get out of the solution. I've gotta have an exit strategy which we actually had designed before we went into it. Now the question becomes is we get further and further entrenched. What do we do and I'm comfortable. I'm comfortable that the company and the operations are going the right direction for me at the same time. If I'm gonna protect my organization to make sure we're safe. >> And that's a big, big part of transparency on the part of service now and your ability to communicate, you know your road map and your needs, I mean, a scale of one to ten ten being, you know, really transparent. How Where would you put service now as an organization >> who? That's a tough one, Especially when I'm sitting here. >> Uh, Frank's not around is a freaking God. He's breathing guy. Let's see. You know, >> a CZ forest transparency. I would give him good, strong seven. >> Yeah, >> I think I would. No company can be completely transparent. They've got a lot of things working in the back room or ideas that they're moving forward >> because they don't know. They don't know what they don't know. Going. Yeah, >> but there's there's ideas that they have that they're moving forward. It's gonna like today with the watch demo. I'm like, Oh, yeah, I love wearables. I you know, I live off. I could very easily now just say Oh, yeah, I just >> got an e mail. Sorry. Yeah, but, >> uh, at the same time is, you know, for them to bring that forward at this point. So they're creative and looking at these items, but they don't want to get out there too soon. >> I'm curious on the partner vendor, you know, mentioned a couple aspects of what defines that relationship of all the vendors you have. How many do you consider to be? You know, close business partners where your, you know, really sitting at the table and building a long term relationship, You gotta have an exit, but its life so much easier. If >> you're working with a partner verse a vendor right now, I would stay out of our partner strategy. We've got four. That's it. But those are four core providers for the organisation. Their leaders in the market space. That's the other key. Most my partnerships or with leaders, of course service. Now, at the time when we first engaged with them and actually I would say, from a partnership standpoint, a strong partner was service. Now, probably since about two thousand ten, we've been on the platform since two thousand eight. So we built that partnership over that first couple of years. You got past that vendor relationship and then moved on from there. But right now, just our core technology stack would be sitting in that partnership room, and I've got others than in that court Technologies. Technically, I'm not a partner there. A vendor there there were by cell. They have a great product, but they don't really want to bring us into that point. And we really haven't approached that point. >> We had a great discussion off camera about you had mentioned. You're looking at potentially expanding into this security realm with service now. And you were sharing with me like your philosophy on security. So I want to document that The premise that I'm going to put forth summarizing our conversation is, you should organizations increasingly should treat security as an ongoing part of their business continuity plans, not necessarily as a sort of separate stovepipe managed by a few security practitioners. Is that a fair summary? >> Yeah, Service continuity is what I use. I don't have >> service continuity, service continuity, that your business. Yeah, it always comes >> out to service continuity. How do you How do you continue that process and provide the same level of service in the in the event. It's very simple to me as I look at all those events as like problem management incident management, you have a response that you have to take, so it has to be inherit. It has to be natural. You just do it way we're talking about that. That response, specially for security, is what's more important is that you have everything planned out and you're ready to deal with that incident in that rock response because it's gonna happen. So how you handle that response can actually dictate your future, right? Wei had that little bit of that discussion there, too. So it does come down to that service continuity. How do you continue to move forward as and get through that threat and then afterwards make sure that you prevent that from happening again. >> Unlike many CEOs that I talked to, your discussions with the overseers at the college are not entrenched largely in the security discussion. You've earned some level of trust with regard to your capabilities. Is a business your ability to respond. Can you talk about that a little bit? How you actually achieve that, what expectations you were able to set and how you're able to execute on that? >> Well, the biggest, biggest part, especially when you look at it at that event, it's how. How is it performed overall over the history? You've gotta have some history. You've gotta have some credentials. How do you deal with these responses in these emergencies? That gives you a little bit more slack in that process, but it is about constant communications. So what the board received for me is communications. It's very straightforward. Typically, in an annual report type format, Short updates clear, concise updates. But then, when event happens, we're talking about the flood that happened in Houston, and very quickly I had an email out and my service test team was already on it. They already implemented their service continuity because while we may be shut down, we have students online taking classes. We have students that need to know what's going on, what's happening so they're calling in, and our service desk continued on through that entire process without issue. So they see that as an example on a regular basis. If we have a system down, everybody gets to see exactly. We did X, Y and Z or if we even have a like today, I should say today Monday we had a blip. We did, Nam. We have. We saw performance degradation. We immediately had a team on. We had a WebEx open with everything running. So we're preparing for a service continuity event that didn't happen. And they see those two because the business units are getting these notifications. Hey, we've gotta WebEx open. We have this issue coming up, and when they see that, they realize how fast we are to respond to what could be a potential issue that we built that trusting relations. >> So that's a good example. If I understand it correctly, the regime that you've put in place puts a heavy emphasis on the response. I mean, obviously you're trying to stop the bad guys who wouldn't go innovated on the response as well. Is that a fair assessment? >> Yes. I mean, the threats, goingto threats gonna happen. The threat happens all the time. So it is about that response. It is being quick to respond to communicate and take care of the problem. >> Do you think that's changed amongst the CEO community in the last ten years that that the shift in mindset toward that response versus so to keep him out big dig a bigger mode, Wider moat. >> Well, you can dig a big, wide moat. Doesn't matter. >> I think I've >> got these big, robust to hot data centers. Amazing firewalls. They're redundant. You tried overload him. They're going to take over. I've got next gen firewalls behind that. I've got you. Just you, layer layer. This tax of protection I have put in you still have to prepare that we're talking about it is Okay, so that's the perimeter. Well, inside my perimeter is one hundred thousand students, those hundred thousand students around my network. So how do I protect against that? So now I have inside perimeter protection. You can build all this entrenchment that you want to build. But the reality is you need we prepared Just gonna happen that you are. Somebody is going to get to that point. Or at least then the alarms up that you have to respond to >> service now is talking yesterday at the financial analyst meeting about you know, the statistic. And I've heard a range here, but it's large that that after an intrusion it takes, on average two hundred five days for the average organization toe. Realize that there's been an intrusion. I've seen numbers as high as three, three, three, fifty, etcetera. Um, first of all, does that sound consistent with what you see in there in the real world and conservative now help compress that time. >> So the interest was service. Now, of course, is tracking and trending those responses. I, tom and Service watch. There's a lot opportunities with those tools and course we have a perimeter we have a pile of tools were using. In our case, our threats are a bit different because, of course, we're not a big financial institutions. So we were not right with all those other pieces. But you're from the days to recover from a major event and my peers and what that have actually experienced a data loss event? Yeah, it easily is that it is easy. That >> and you think, feel is, though that service now could help you attack that compress that >> yes, mainly through the data collection and then the reporting and then as the events going on all of this information that's happening in the problem management side. What you're seeing from outside information coming in and technicians on the inside updating information as they go through it. You have a comprehensive log of the event from start to finish. >> Now you're speaking just right after this. I think you're just what? You're what you're talking about. >> The shift for my tea service management. Teo Enterprise Service Management. It's actually Enterprise. Wow. But I'm actually walking through the journey. But the best part about that is it's the pitfalls we learned along the way because Wei didn't know we went to Enterprise Service Management. It's kind of I think we had a discussion when we went to the cloud. I didn't know we went to cloud. Exactly. I just knew we went to this heavy virtualization, these two out data centers and I kind of realized, Wow, we really pushed into this new this new wage, this new change. >> We've got a new operating model on on, >> you know. But now yeah, it really is about how we are journey to enterprise service management and the fact that we actually started in a price servicemen before I've even heard of it. It just was around The fundamentals of Hungary. Better service provider. How can we help our customers, uh, achieve their objectives and the business units make it simpler? >> My last question is, what's exciting you these days? A CEO practitioner. What? Float your boat? True. >> What's exciting? You see, I asked if you're gonna give me any hard >> questions for you. That's exciting. >> You know, What excites me is that you're seeing the maturity level of a cloud. The platform side. It is so flexible that you can respond to a customer need quickly that you, khun dynamically spin up the capacity Your When I first started this process, trying to build this high availability was difficult. Now hie availability is really not difficult. It's just around. The process is so that the maturity of the technology and the maturity the service piece that excites me. But it also excites me when I start seeing new team, people come into the market space and they understand that already they're coming in with an idol understanding there they're coming down, understand that business mentality. So original Lighty practitioners didn't have that business background. They didn't have that communication skill you're seeing a lot more of it. The organization now. >> Well, you're a real leader in this space. You've got a lot of experience. Appreciate you sharing your knowledge. And I'm sure the service now community does as well. So good luck with your talk this afternoon. And thanks again for coming. >> Thank you. It's great being here. >> All right, Link a lender. Always a pleasure. Keep right, everybody. This is the cue. We'LL be back Live from Mandalay Bay. This is knowledge sixteen. Right back. >> Service. Now is the time.