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