(upbeat music) >> From ''theCUBE studios,'' in Palo Alto, in Boston, connecting with thought leaders all around the world. This is ''theCUBE Conversation.'' >> Hi, I'm John Walls. And as we're all aware, technology continues to evolve these days at an incredible pace and it's changing the way industries are doing their business all over the world and that's certainly true in telecommunications, CSPs all around the globe are developing plans on how to leverage the power of 5G technology and their network operations are certainly central to that mission. That is the genesis of ''IBM's Cloud for Telecommunications Service.'' That's a unified open hybrid architecture, that was recently launched and was developed to provide telecoms with the solutions they need to meet their very unique network demands and needs. I want us to talk more about that. I'm joined by Steve Canepa, who is the Global GM and Managing Director of the communication sector at IBM. Steve, good to see you today. >> Yeah, you too, John. >> And Jeffrey Hammond. So, he's the Principal Analyst and Vice President at Forrester. Jeffrey, thank you for your time as well today. Good to see you. >> Thanks a lot. It's great to be here. >> Yeah, Steve, let's just jump right in. First off, I mean, to me, the overarching question is, why telecom, I know that IBM has been very focused on providing these kinds of industries specific services, you've done very well in finance, now you're shifting over to telecom. What was the driver there? >> First, great to be with you today, John, and, you know, if we look at the marketplace, especially in 2020, I think the one thing that's, everyone can agree with, is that the rate and pace of change is just really accelerating and is a very, very dynamic marketplace. And so, if we look at the way both our personal lives are now guided by connectivity, and the use of multiple devices throughout the day, the same with our professional lives. So, connectivity really sits at the heart of how value and solutions are delivered and for businesses, this is becoming a critical issue. So, as we work with the telecommunication providers around the world, we're helping them transform their business to make it much more agile, to make it open and make them deliver new services much more quickly and to engage digitally with their clients to bring that kind of experience that we all expect now, so, that the rate pace of change, and the need for the telecommunications industry to bring new value, is really driving a tremendous opportunity for us to work with them. >> Jeffrey what's happening in the telecom space? That, I mean, these aren't just small trends, right? These are tectonic shifts that are going on in terms of their new capabilities and their needs. I'm sure this digital transformation has been driven in some part by COVID, but there are other forces going on here, I would assume too. What do you see from your analyst seat? >> Yeah, I look at it, you know, from a glass half full and a glass half empty approach. From a half empty approach, the shifts to remote work and remote learning, and from traditional retail channels, brick and mortar channels to digital ones, have really put a strain on the existing networking infrastructure, especially, at the Edge, but they've also demonstrated just how critical it is to get that right. You know, as an example, I'm actually talking to you today over my hotspot on my iPhone. So, I think a lot more about the performance of my local cell tower now than I ever did a year ago. and I want it to be as good as it can possibly be and give me as many capabilities as it can. From a glass half full perspective, the opportunities that a modernized network infrastructure gives us are, I think, more readily apparent than ever, you know, most of my wife's doctor's appointments have shifted to remote appointments and every time she calls up to connect, I kind of cringe in the other room and it's like, are they going to get video working? Are they going to get audio working? Are they actually going to have to shift to an old-style phone call to make this happen? Well, things like 5G really are poised to solve those kinds of challenges. They promise, 5G promises, exponential improvements in connectivity speed, capacity, and reductions in latency that are going to allow us to look at some really interesting workloads, IOT workloads, automation workloads, and a lot of Edge use cases. I think 5G sets the stage or Edge compute. Expanding Edge compute scenarios, make it possible to distribute data and services where businesses can best optimize their outcomes, whether it's IOT enabled assets, whether it's connected environments, whether it's personalization, whether it's rich content, AI, or even extended reality workloads. So, you might seem like, that's what a little over the horizon, but it's actually not that far away. And as companies gain the ability to manage and analyze and localize their data, and unlocks real-time insights in a way that they just haven't had before, it can drive expanded engagement and automation in close proximity to the end point devices and customers. And none of that happens without the telco providers and the infrastructure that they own being on board and providing the capabilities for developers like me to take advantage of the infrastructure that they've put in place. So, my perspective on it is, that transformation, that digital transformation, is not going to happen on its own. Someone's got to provision the infrastructure, someone's got to write the code, someone's got to get the services as close to my cell tower or to the Edge as possible and so, that's one of the reasons that when we ask decision makers in the telco space about their priorities from a business perspective, what they tell us is, one of their top three priorities is, we need to improve our ability to innovate and the other two are, we need to grow our revenue and we need to improve our product and services. What's going on from a software perspective in the telco space, is set to make all three of those possible, from my perspective. >> You know, Steve, Jeffrey just unpacked an awful lot there, did a really nice job of that. So, let's talk about first off, that telco relationship IBM's had, or has. You work with data, the 10 largest communication service providers in the world, and I'm sure you're on this journey with them, right? They've been telling you about their challenges and you recognize their needs. This is, you have had maybe some specific examples of that dialogue, that has progressed as your relationship has matured and you provide a different service to them. What are they telling you? What did they tell you say, '' This is where we have got to get better. We've got to get a little sharper, a little leaner.'' And then how did IBM respond to that? >> Yeah, I mean, critical to what Jeffrey just shared is under the covers. You know, 5G is going to take five times the cost that 4G took to deploy. So, if you're a telco, you have to get much more efficient. You have to drive a much more effective TCO into cost of deploying and managing and running that network architecture. When the network becomes a software defined platform, it opens up the opportunity to use open source, open technology, and to drive a tremendous ecosystem of innovation that you can then capture that value onto that open software network. And as the Edge emerged as compute and storage and connectivity, both to the Edge as Jeffrey described, then the opportunity to deliver B2B use cases to take advantage of the latency improvements with 5G, take advantage of the bandwidth capabilities that you have moving video and AI out to the Edge, so, you can create insights as a service. These are the underlying transformations that the telcos are making right now to capture this value. And in fact, we have an institute for business value on our website. You can see some of the surveys and analysis we've done but 84% of the telco clients say, you know, '' Improving the automation and the intelligence of this network platform becomes critical.'' So, from our standpoint, we see a tremendous opportunity to create an open architecture to allow the telcos to regain control of their architecture so that they can pick the solutions and services that work best for them to create value for their customers and then allows them to deploy them incredibly quickly. In fact, just this last week, we announced a milestone with Bharti, a project that we're doing in India, already has over 300 million subscribers. We've taken their ability to deploy their run environment, one of the core domains of the network, where you actually do the access over the cell towers. We've improved that from weeks down to a few days. In fact, our objective is to get to a few minutes. Applying that kind of automation dramatically improves the kind of service they can deliver. When we talk about relationships we have with Vodafone, AT$T, Verizon, about working with them on their mobile Edge compute platforms, it will allow them to extend their network. In fact, with our cloud announcement that you highlighted at the top, we announced a capability called the IBM Cloud Satellite and what IBM Cloud Satellite does is, it's built with Red Hat, so, it's open architecture, it takes advantage of the millions and millions of upstream developers, that are developing every single day to build a foundational shift architecture that allows us to deploy these services so quickly and we can move that capability right now to the Edge. What that means for a telco, is they can deploy those services wherever they want to deploy them, on their private infrastructure or on a public cloud, on a customer's premise, that gives them the flexibility. The automation allows them to do it smartly and very quickly and then in partnering with clients, they can create new end Edge services, things like, you know, manufacturing 4.0 you may have heard of or as you mentioned, advanced healthcare services. Every single industry is going to take advantage of these changes and we're really excited about the opportunity to work in combination with the telcos and speed the pace of innovation in the market. >> Jeffrey, I'd like to go back to the Bharti there. I was going to get into it a little bit later but Steve brought it up. This major Indian CSP, as you mentioned, 300 million subs, 400 million around the world. What does that say to you in terms of its commitment and its, the needs that are being addressed and how it's going to fundamentally change the way it is doing business as far as setting the pace in the telecom industry? >> Well, I think, one of the things that highlights it is, you know, this isn't just a U.S phenomenon or a European phenomenon. Indeed, in some cases we're seeing countries outside the U.S in advance, moving faster, Switzerland, as an example. We expect 90% of the population in Germany to be covered by 5G By 2025, we expect 90% of the population in South Korea to be covered by 2026, 160 million connections in in China as well. So, in some ways, what's happening in the telco world is mirroring what has happened in the public cloud world, which is the world's gone flat. And that's great from a developer perspective because that means that I don't have to learn specialized technologies or specialized services, in order to look at these network infrastructure platforms as part of the addressable surface that I have. That's one of the things that I think has always held the larger developer population back and has kept them from taking advantage of the telco networks. Is, they've always been bit of a black box to the vast majority of developers, you know, IP goes in, IP comes out but that's about all the control I have, unless I want to go and dig deep into those, you know, industry specific specifications. I was cleaning out my office last week because I'm in the process of moving and I came across my '' IMS Explained Handbook from 2006,'' and I remember going deep into that because, you know, we were told that that's going to make it so that IT infrastructure and telco infrastructure is going to converge and it did to a little bit, but not in a way that all the developers out there could really take advantage of telco infrastructure. And then I remember the next thing was like, well, '' Java Amiens on the front end with mobile clients, that's going to make everything different and we're going to be able to build apps everywhere.'' What ended up being was we would write once and test everywhere, across all the different devices that we had to support. And you know, what really drove you equity? Was the iPhone and apps that we could use HTML like technology or that we could use Java to build and it exploded. And we got millions of applications on the front end of the network. What I see potentially happening now, is the same thing on the backend infrastructure side, because the reality is for any developer that is trying to build modern applications, that's trying to take advantage of cloud native technologies, things start with containers and specifically, OCI compliant containers. That is the basis for how we think about building services and handing them off to operators to run them for us. And with what's going on here, by building on top of OpenShift, you take that, you know, essentially de facto standard of containers as the way that we communicate on the infrastructure side globally, from a software development perspective and you make that the entry point for developers into the modern telco outcome system. And so, basically, it means that if I want to push all the way out to the Edge and I want to get as close as I possibly can, as long as I can give you a container to execute that capability, I'm well on the way to making that a reality, that's a game changer in my opinion. >> Yeah, I was on. >> Just to pick it, just if I could, just to pick up on that because I think Jeffrey made a really important point. So, it's kind of like, in a way, an auntie to the ball here is this open architecture because it empowers the entire ecosystem and it allows the telcos to take advantage of enormous innovation that's happening in the marketplace. And that's why, you know, the 35 ecosystem partners that we announced when we announced the IBM Cloud for telco, that's why they're so important because it allows you to have choice. But the other piece, which he hinted at, I wanted to just underscore, is today, in it kind of the first wave of cloud, only about 20% of the applications move to cloud. They were mostly funny digital applications. In fact, we moved our funny digital applications as well into Watson, we have over 1.5 billion customers of telcos today around the world that can access Watson, through our various chatbot and call center or an agent assist solutions we've deployed. But the 80% of applications that haven't moved yet, haven't moved because it's tough to move them, because they're mission critical, they need, you know, regulatory controls, they have to have world-class security, they need to be able to provide data sovereignty as you're operating in different countries around the world and you have to make sure that you have the data in places that you need, these are the attributes, that kind of open up the opportunity for all these other workloads to move. And those are the exact kind of capabilities that we've built into the IBM Cloud for telco, so that we can enable telcos to move their applications into this environment safely, securely, and do it, as Jeffrey described, on an open architecture that gives them that agility and flexibility. And we're seeing it happen real time, you know, I'll just give you another quick example, Vodafone India, their CTO has said publicly and moving to this cloud architecture, he sees it as a universal cloud architecture, so, they're going to run not just their internal it workloads, not just their network services, their voice data and multimedia network services workloads, but also their B2B enterprise workloads, as Jeffrey was starting to describe. Those workloads that are going to move out to the Edge. And by being able to run on a common platform, he's said publicly that they're seeing an 80% improvement in their CapEx, a 50% improvement in their OPEX, and then 90% improvement in the cost to get productions and services deployed. So, the ability to embrace this open architecture and to have the underlying capabilities and attributes in a cloud platform that responds to the specific needs of telco and enterprise workloads, we think is a really powerful combination. >> Steve, the ecosystem, Jeffrey, you brought it up as well. So, I'd like, just to give you a moment to talk about that a little bit, not a small point, by any means you have nearly 40 partners lined up in this respect, from a hardware vendor, software vendors, SAS providers. I mean, it's a pretty impressive lineup and what kind of a statement is that in your, from your perspective, that you're making to the marketplace when you bring that kind of breadth and depth, that kind of bench, basically the game? >> From our view, it's exciting, and we're only getting started. I mean, we literally have not made the announcement, just a matter of a couple of months ago, and every day that passes, we have additional partners that see the power in joining this open architecture approach that we've put in place. The reason that it delivers such values for all the players, you know, one of the hallmarks of a platform approach is that for every player that joins the platform, it brings value to all the players on the cloud. So as we build this ecosystem and we take the leverage of the open source community, and we build on the power of OpenShift and containers, as Jeffrey was saying, we're creating momentum in the marketplace and back to my very first point I made, when the market's moving really quickly, you've got to be agile. And to be agile in today's market, you have to infuse automation at scale, you have to infuse security at scale and you have to infuse intelligence at scale. And that's exactly what we can help the telcos do, and do it in partnership with these enterprise clients. Instinctively >> One of the values of that is that, you know, we're seeing the larger trend in the cloud native space of folks that used to build packaged software services, is essentially taking advantage of these architectural capabilities and containerizing their applications as part of their future strategy. I mean, just two weeks ago, Salesforce basically said, we're reinvisioning Salesforce as a set of containerized workloads that we deliver, SAP is going in very much the same direction. So as you think about these business workloads, where you get data coming from the infrastructure and you want to go all the way back to the back office and you want to make sure that data gets updated in your supply chain management system, being able to do that with a consistent architecture makes these integration challenges just an order of magnitude easier. I actually want to drill in on that data point for a minute because I think that that's also key to understanding what's going on here, because, you know, during the early days of the public cloud and even WebDuo before that, one of the things that drove WebDuo was the idea that data is the new Intel inside and in some ways that was around centralized data because we had 40 or 50 years to get all the data into the data centers and into the, and then put it in the public cloud. But that's not what is happening today. So much of the new data is actually originating at the Edge and increasingly it needs to stay at the Edge if for no other reason than to make sure that the folks that are trying to use it well aren't running up huge ingestion costs, trying to move it all back to the public cloud providers, analyze it and then push it back out and do that within the realm of the laws of physics. So, you know, one of the big things that's driving the Edge is, in the move toward the Edge, and the interest in 5G is that allows us to do more with data where the data originates. So, as an example, a manufacturer that I've been working with that basically came across exactly that problem, as they stood up more and more connected devices, they were seeing their data ingestion volume spiking and kind of running ahead of their budgets for data ingestion but they were like, well, we can't just leave this data and discard it at the Edge, because what happens if it turns out to be valuable for the maintenance, preventative maintenance use cases that we want to run, or for the machine wear characteristics that we want to run. So, we need to find a way to get our models out close to the data so we don't have to bring it all back to the core. In retailing, personalization is something that a lot of folks are looking at right now and even clientelling and that's, again, another situation where you want to get the data close to where the customer actually lives from a geographic basis and into the hands of the person that's in the store but you don't want to necessarily have to go and install a lot of complex hardware in the retail outlet because then somebody has to manage, you know, those servers and manage all those capabilities. So, you know, in the case of the retailer that I was working with, what they wanted was to get that capability as close as possible to the store, but no closer. And the idea of essentially a virtual back office that they could stand up whenever they opened up a new retail outlet, or even had a franchisee open up an outlet, was an extremely powerful concept and that's the kind of thing that you can do when you're saying,'' Well it's just a set of containers and if I have a, you know, essentially a control plane that I deploy it to, then I can do that on top of that telco provider that they sign up to be a strategic services provider.'' There are lots of other interesting scenarios, tourism, if you think about, you know, the tourist economies that we have around the world and the data that, you know, mobile devices throw off that let us get anonymized information about who's coming, where they're going, what they're spending, how long they're staying, there's a huge set of data there that you can use to grow revenue. You know, other types of use cases, transportation? We see, you know, municipal governments kind of looking at how they can use anonymized data around commute patterns to impact their planning. That's all data that's coming from the the telco infrastructure. >> You know, when we're talking about these massive advantages, right, as this hybrid cloud approach about skill ones, build one's, easy management, efficient management, all of these things, Steve, I think we almost, we'd be derelict to duty if we didn't talk about security a little bit. Just ultimately at the end of the day, you've got to provide this as you pointed out, world-class secure environment. And so, in terms of the hybrid approach, what kind of considerations do you have to make that are special to that and that are being deployed and have been considered >> You know, that's a great point. One of the benefits to Comms from moving to an open architecture, is that you componentize the framework of that architecture, and you have suppliers supplying applications for the various different services that we just talked through. And the ability then to integrate security is essentially a foundational element to the entire Premack architecture. We've stayed very compliant with the Nanci framework architecture and the way that we've worked with the telcos and bringing forth a solution, because we specifically want them to have the choice but how is that choice being married with the kind of security you just talked about. And to Jeffrey's point, you know, when you move those applications out to the Edge and that data, you know, many of the analysts are saying now by 2025, as much as 75% of the data created in the world will happen at the Edge. So, this is a massive shift. And when that shift occurs, you have to have the security to make sure that you're going to take care of that data in the way that it should be and that meets all regulatory, you know, governance already rules and regulations. So, that becomes really critical. The other piece though, is just the amount of value that gets created. The reason that data is at the Edge is because now you can act on it at the Edge, you can extract insights and in fact, most of the analysts will say,'' In the next three years, we'll see $675 billion of new value created at the Edge with these kinds of applications.'' And going back on the manufacturing example, I mean, we're already working today with manufacturers and they already had, you know, hundreds of IOT sensors deployed in the factory and we have an Edge application manager that extends right out to the far Edge, if you will, right out onto that factory floor to help get intelligence from those devices. But now think about adding to that the AI capabilities, the video capabilities, watching that manufacturing line to make sure every product that comes off that line is absolutely perfect, Watching the employees to make sure they're staying in safety zones, you know, watching the actual equipment itself to make sure it is performing the way it's supposed to, maybe using an analytics and AI capabilities to predict, you know, issues that might arise before they even happen, so you can take preventative action. This kind of intelligence, you know, makes the business run smarter, faster, more effective. So, that's where we see tremendous service. So, it's not just the fact that data will be created and it will be higher fidelity data to include the analytics, AI, you don't include unstructured data like video data and image data, audio data, but the ability to then extract insights and value out of it. And this is why we believe the ecosystem we talked about earlier, our partnership with the telco's and the ability to bring ecosystem partners and they can add value is just a tremendous momentum that we're going to build. >> Well, the market opportunity is certainly great. As you pointed out, a lot of additional value yet to be created, significant value and obviously, a lot of money to be spent as well by telcos, by some estimates, a hundred billion plus, just by the year 2022 and getting this new software defined platforms up and running. So, congratulations to IBM for this launch and we wish you continued success, Steve, in that endeavor and thank you for your time and Jeffrey, thank you as well for your insights from Forester. >> Always a pleasure. (upbeat music)