well you're watching the cube and I knew that you knew that I'm John Walls we're here in Las Vegas it's re invent 22. Big Show AWS putting it on the Big Show here late in 2022 that's going really well we're at the executive Summit right now sponsored by Accenture and we're going to talk about that relationship between Accenture and AWS um kind of where it is now and where it's going you know even bigger things down the road to help us do that two guests Andy Tay who's a senior managing director and the Accenture AWS business group lead at Accenture Andy thanks for being with us thanks for having me and Sarah whose last name was one of my all-time favorites all good because it is it's all good right okay it's all good Sarah all good worldwide leader of accenture's AWS business group for AWS and thank you both again for being here so let's talk about the relationship just in general high level here 30 000 feet a lot of great things have been happening we know a lot of great things are happening but how's this all you think evolved how did how has this come about that you two are just inextricably linked almost here in the cloud space Sarah why don't you jump on that yeah I'd love to um I think one of the the strongest factors that causes that Synergy for us is we both work backwards from our customer outcomes and so just by consistently doing that taking those customer signals um really obsessing over our customers success we know what we're marching towards and so then we kind of extract those themes and really work together to think about okay when we look at this holistically how do we go bigger better faster together and accomplish and solve those customer problems yeah Andy yeah John let me just maybe add and you know to amplify you know what Sarah just touched on um we both have common to our culture this notion of working from the client's perspective first so really delivering to the clients values or um you know in aws's parlance it's you know customer and so that's at the core and when we keep that at the core everything else becomes really easy where we invest what we build key clients we focus on what our team structure is et cetera Etc that's really easy so that sort of core core pillar number one in terms of our sort of you know success factors the second thing that I think really helps us is our sort of scale geographically you know certainly from an Accenture standpoint as you know John we're north of 800 000 people globally um couple that with aws's strength we really do have you know a field depth and breadth across the board that allows us to sort of see and feel what's happening in the market and allows us really to see around the corners as we like to think and say um and and that helps us be intentional on what we do um and then the third thing is really us we might know what we do but we sort of need to then play to our strengths and as you know we're two very different companies one focus on the technology side the other you know focus on the technology Services although we'll touch on you know some of the changes we're looking at as we go forward but that sort of playing to strength is key as well for us as a third pillar of success and so keeping those three things at the core really helps us move you know day to day and year by year and that's what you see in this continued partnership so what are you hearing from your customers these days we've talked a lot already today and it's kind of the buzzword you know modernization right everybody's talking about this transformation I don't care if you're in Mainframe or where you are everybody wants a modernized right now um you know what are you hearing from customers in that regard and I'm sure everybody's in a different state different yeah frame of mind you know some are embracing some are dragging uh what what's your take on the state of play right now well and I think it's like especially in these macroeconomic moments that we're in um time to value is critical for our customers um and then we have the talent shortage but even with those our customers still need us to solve for sustainability and still focus on inclusion diversity and equity and so we can't lower the bar in anything that we've already been doing we need to just keep doing more and building with them and so I think um for us really getting to the to the meat of what our customers need modernization is a big one but we're still seeing just so many of our customers look at basic transformation right how how do I dip in how do I start to move my environment move my people and get ready for what I need to do next for my business and so that that is a challenge and like we said with with the markets as volatile as they are right now I think a lot of customers are just trying to work with us to figure out how to do that in the most optimized and efficient way I just want to kind of rub people on the head and say it's going to be all right I mean it's so volatile as you pointed out Sarah right yeah I mean the market up and down and we're worried about a recession and companies and their plans they want to be Forward Thinking yeah but they've got to you know keep their powder dry too in some respects and get ready for that rainy day you know John it's funny um because you would think you know you've got the one hand you know rub that you know it's gonna be all right and and then on the other end you'll you know maybe clients should sort of hold temper and you know sort of just pause but I think clients get it they see it they feel it they understand the need to invest and I think you know there's a recent study back in 2008 those clients you know Sarah and I were reading the other day those clients who didn't invest ahead of those you know major if you remember those macroeconomic downturn times they came out really on the bad side um and so clients now are realizing that in these times these are the moments to invest and so they get it but they're faced with a couple of challenges one is time Sarah touched on you just don't have time and the second is Talent so we're working in a very intentional way on what we can do to help them there and and as you'll hear later on from Chris Wegman and Eric Farr um we're launching our velocity platform which really helps to compress that type and and get them faster you know time to Value we're also being very intentional on talent and how we help their talent so you know rotate so that we're not just taking the technology Journey but we're also having the people journey and then the third thing Sarah and I really focus on with our teams is figuring out new ways new sources of value for our clients and that's not just cost that's value the broader set and so we find that in moments like this it's actually an opportunity for us to really bring the best of AWS and Accenture to our clients well you hit value and I always find this one kind of tough because there is a big difference between cost and value my cost is X right whatever I write on my chat that's my cost so but but how do you help clients identify that value so that because it's you know it can be a little nebulous right can it not I mean it's uh but you have to validate you got to quantify at the end of the day because that's what the CEO wants to see it's what the CIO wants to see yeah you've got to identify values so how many how do you do that yeah yeah I mean we we have many different ways right velocity which Andy kind of touched on I think is is really um it's our foundational approach to help customers really kind of enter into their Cloud journey and focus on those key factors for Success right so we've got ISB Solutions built in there We've Got Talent and change built in we've got kind of what we're calling the fabric right that foundational technology layer and giving our customers all of that in a way that they can consume in a way that they can control and you know different modules essentially that they can leverage to move it's going to be tangible right they're going to be able to see I've now got access to all these things that I need I can move as I need to move and I'm not constantly you know looking around figuring out how to lock it all together we've given them that picture and that road map on how to really leverage this because we we need to be able to point to tangible outcomes and so that's critical yeah proof's got to be in the pudding and and you know to Sarah's point I think sort of we're entering into this sort of new dare I say new chapter of cloud and then you know sort of the first chapter was sort of those outcomes were around cost you know I've moved you into the cloud you can shut down your data center but now we've sort of got other sources of value now Beyond costs there's news new sources of revenue how do I become a platform company on top of the AWS cloud and then you know eke out new Revenue sources for myself how do I drive new experiences for my customers yeah um how do I maybe tap into the sustainability angle of things and how do I get greater Innovation from my talent how do I operate better in a Sarah said how do I become more Nimble more agile and more responsive to Market demands and so all those areas all those Dynamics all those outcomes are sources of value that were sort of really laser focused on and just ensuring that as a partnership we we help our clients on that Journey so what do you do about talent I mean you brought it up a couple of times UTP has um in terms of of training retaining recruiting all those key elements right now it's an ultra competitive environment right now yeah and there might be a little bit of a talent Gap in terms of what we're producing right so um you know how do you I guess make the most out of that and and make sure you keep the good people around yeah Talent is an interesting one John um and we were just touching on this uh before we got here um you know sort of from an Accenture standpoint um we're obviously focused on growing our AWS Talent um we've now got I think it's north of 27 000 people in Accenture with AWS certifications north of 34 000 certificates you know which is absolutely fantastic a small City it's just I mean it is very intentional in building that um as AWS rolls out new Services Adam touched on a whole bunch of them today we're at the core of that and ramping and building our talent so that we can drive and get our clients quicker to their value and then the second area of focus is what do we do to help our clients Talent how do we train them how do we enable them how do we you know get them to be more agile and you know being able to sort of operate in what we call that digital core operate in the cloud how do we do that and so we're focused um in in capabilities in fact our Accenture head of talent and people and change Christie Smith John is is here this week just for that and we're exploring ways in which we can get tighter and even more Innovative Around Talent and so I ultimately that that bleeds over to where the partnership goes right because if you can enhance that side of it then then everybody wins on that in terms of what you think you know where this is going yeah yeah it's already you know pretty good setup uh things are working pretty well but as the industry changes so rapidly and and you have to meet those needs how do you see the partnership evolving as well to meet those needs down the road we we have a very fortunate position in that our CEOs are both very engaged in this partnership and they push us think bigger go faster figure it out let's ride and there are definite pros and cons and some days I'm flying this close to the Sun but um it isn't a it's an absolute privilege to work with them the way that we get to and so we're always looking I mean Auntie said it earlier this is the relationship that helps us look around corners we've raised the bar and so we're constantly pushing each other pushing our teams just innovating together thinking it all through on where are we going and like I said reading those tea leaves reading those themes from our customers like hey we've just had five customers with the same similar feeling problem that we're trying to solve or we ran into the same issue in the field and how do we put that together and solve for it because we know it's not just five right we know they're more out there and so um I think you know it's it's leadership principles for us right at Amazon that guiding think big um you know insist on high standards that that'll always be core and Central to who we are and then you know fortunately Accenture has a really similar ethos yeah quick take on that Andy yeah I think as we look out you know I think um we're going to we've already seen but we're going to see this continued blurring of Industries um of um you know sort of clients moving into other Industries and yeah sort of this sort of agitation Market agitation um and so I think disruption you know disruption and and we're being you know focused on what do we need to be to do in order to help our clients on those Journeys and and to continue to you know get them you know faster Solutions is an area that we you know we are um really looking at and these are solutions that are either industry Solutions you'll hear a couple of them this week um you know we've got our insurance solution that we're we've developed as an intelligent underwriting capability leveraging AWS AIML to sort of be intelligent and cognitive um you know we've got other Solutions around the around Industries energy and Life Sciences but then also intelligent applications that might be touching you know areas I think earlier today Adam talked about AWS supply chain and that's an area that we are focused on and and proud to be a part of that and we're working very very closely with with Amazon on that uh to help you know our clients move ahead so I think we're going to see this continued blurring and we're going to obviously you know keep addressing that and just keep iterating well it looks like a relationship of trust and expertise right and it's worked out extremely well and uh if this is any indication where the interview went uh even better things are ahead for the partnership so thank you thank you for chiming in I appreciate your perspectives yeah thank you it's been great we continue our coverage here on thecube we're at re invent 22 we're in Las Vegas and you're watching thecube the leader in technical coverage foreign

>> Narrator: Live from San Francisco it's theCUBE covering RSA Conference 2020 San Francisco brought to you by SiliconANGLE media. >> Welcome back, everybody. Jeff Frick here with theCUBE. We are at the RSA 2020, a really special segment. As you can tell it's really quiet here, it's not like normal CUBE action, we are here before the expo hall even opens on Thursday morning with a very special guest, we pulled them away from a crazy busy week if not more, it's Rohit Ghai the president of RSA, Rohit great to see you again. >> Always a pleasure, thanks Jeff. >> Absolutely, so I was really looking forward to this, I was really impressed by the opening keynotes, first it rolled out George Takei, that's a pretty bold move even more bold is to try to follow him up. >> Totally (laughing) >> So congratulations, and you know, that was pretty brave. >> I appreciate it, thank you. That was quite a, you know, quite a hurdle to got to follow George Takei. >> Right, and I just want to get kind of these other things that were kind of bubbling above the surface out of the way you know, a big piece of news, I think a week it came out before the show is that RSA was sold to Symphony I believe? >> Rohit: Symphony Technology Group. >> Right, so give us a little bit of the story there. >> Absolutely, so you know we entered into a definitive agreement, Symphony Technology Group acquiring RSA from Dell Technologies. What this does is this it basically clarifies the swim lanes for Dell Technologies to focus on intrinsic security and RSA can focus on managing digital and cyber risk, and you know, we are excited about the opportunity to become agile and independent and you know, kind of play in a smaller company setting to pursue our future, so we are super excited to be part of Symphony. >> Yeah, that's great, and the other thing that's kind of a pall, I mean just to put it out there is the corona virus thing. And you know, Mobile World Congress, a completely different show but a big show, probably the first big show of our industry this year was canceled. A hundred thousand plus people, so I just am just wondering if you can share kind of what were some of your thoughts and the team's thoughts 'cause we were all curious to see well how is this going to happen, there was a couple of drop outs but I think it's been a very good week. >> It has been a great week, you know what I'll say is it was a demonstration of resilience on part of the attendees, you know when we analyzed the situation what we noted was about 82 plus percent of our attendees are from the Americas right, so there was a core set of attendees that were perhaps not as impacted in terms of travel, et cetera, so we decided to move forward, we've been in close collaboration with the CDC and the mayor's office right here, Major London Breed's office right here is SF to make sure it's going to be a safe event for everyone and you know, the team put together a great kind of set of measures to make sure everyone has hand sanitizer. >> Great, great. >> And you know, we made sure we did what was needed to manage the risk and ensure resilience through this sort of you know very global risk that is playing out, so very proud of the team, and we garnered 40 thousand plus attendees despite you know, despite the coronavirus issue. >> You know, good job I am sure it was touch and go and a real sensitive situation and I can tell you a lot of other people and event organizers you know, were getting ready to head into a very busy event season, it's what we do and so, you know nice kind of lead indicator from you to execute with caution. >> I appreciate it, thank you. >> So let's jump into the fun stuff. So your key note was not really talking that much about bad guys and technology and this and that, you talked about story telling and you got very much into kind of the human element, which is the theme this year, but really the role of stories, the importance of stories, and most importantly for the security industry to take back their story and not let it get away from them. >> You summed it up really well Jeff, and you know what I said is hey if the theme of the conference is the human element, let's explore what intrinsically makes us human and the point, you know you've all know that it is stories that makes us human and I feel we've lost control of the narrative as an industry and as such we need to take that back and make sure we clarify the role of all the human characters in our story because until we do that, until we change our story we have no shot at changing our reality. >> Right, but you're kind of in a weird spot right, it's the classic spy dilemma. You can't necessarily tell people what you know because then they'll know that you know it and you might not be able to get more or better information down the road, so as you said in you keynote you don't necessarily have the ability to celebrate your wins, and a DDoS attack thwarted doesn't make the news. I keep thinking it's like ref in a game or like a offensive lineman in football you only hear about them on that one play when they get the holding call, not the 70 other plays were they did their job. >> Rohit: Totally, totally. >> So it's a unique challenge though >> It is, it is a challenge, it is not an easy problem and you know, there is a couple of recipes that I put out there for us to consider as an industry is you know, recipe one is we can celebrate our successes at a collective level right so, just like we put out breach reports, et cetera, in terms of what the statistics are, where the breaches are animating from we can talk about defensive strategies that are working at a collective level as an industry and share that sort of best practices recipes to win, that would be a fine start. I think another area, another point that I made was that we don't have to win for the hacker to lose. 71% of the breaches were motivated by financial gains, right, and as such if we, despite breaches, which is not a win for us, if we deny financial gain to the hackers we make them lose and they are subject to the same laws of economics, they have a profit and loss statement, they are spending resources for gain and when we deny them gain we make them lose, so those are a couple of ideas on how we can begin to change the narrative. >> Right. So the other piece of the human part is the rise of the bots, right, and the raise of AI and the rise of these increasingly smart and sophisticated machines. I think I saw one of those reports that we talk about on air was you know that people are an increasingly targeted group we hear it all the time, we hear about social engineering. As that gets more complicated, how does the role of people change? 'Cause clearly they can't monitor tens and tens and hundreds of thousands of concurrent attacks all the time. >> Absolutely, so you know the bad guys are using AI you know I cited the example of a deep fake audio clip that actually duped the CEO into initiating a wire transfer so they are using all these sophisticated attacks so to your point, we cannot rely on the end user to discern through these very sophisticates. It's unfair for us to think of them as the first line of defense, we have to on the IT side, we have to bring in technology, make the technology more usable, so you don't have to pay attention to this one millimeter by one millimeter lock at the corner of the browser to realize whether a web interaction is safe or not. We need to make more usable software, we need to do a better job of managing and reducing vulnerabilities to reduce the attack surface so IT has to step up in that regard, and then on the security teams I think they have to step up to use AI to detect bot initiated attacks so we are not leaning on the human to discern what is an anomalous interaction and what could be a phishing or a smishing attack, et cetera, you know we need to bring AI to fight the good fight on our behalf. >> Right. So the other kind of angle on that I thought was really interesting, Wendy's keynote, a couple of keynotes after yours from Cisco talked about, you know, a theme we see over and over in tech which is really kind of the democratization of security and get it out of just the hallowed halls of the super billion CSOCs and technologists that are just security and open it up to everybody so make them part of the solution and not those pesky people that keep clicking on links that they are not supposed to. >> Absolutely. She did a great job of kind of making that point and you know the way I think about it is again we need to move from a culture of elitism to a culture of inclusion. Until we really get the steaming going, not just within the security professionals which we are doing a better job of certainly in the industry, but we have to team with the user, the IT and the business teams in order to have a shot at tipping the balance in our favor. >> Yeah, it's really funny 'cause that kind of democratization theme is something that we see kind of across many levels of technology, whether it's in big data, can get away from the data scientists, in doing your own reports, in having access to your own marketing material and you know, so it's kind of funny that now we are just hearing it here I guess the last bastion of we're the smartest people in the room, no no, you need to use all the brain power. >> All the brain power. I use the phrase let's stop being STEM snobs and let's be more inclusive, and you know garner the entire spectrum of the diverse talent pool that we have available and you know making the point, perhaps a provocative point, that the cyber talent gap, a bit of it might be actually self-inflicted because we have been in this sort of elitism mindset. >> Right, and I think one of the themes that you talked about in you keynote was because of kind of the elite mindset we only want to focus on the elite challenges and in fact it's not the hardest challenges that are necessarily the most dangerous or the ones that are more frequently used, it doesn't have to be the craziest hardest way in. >> It absolutely does not. The point I made was preparing for the worse does not prepare you for the likely and the statistics are overwhelming. 60% of the breaches were on the back of six stolen credentials. That's a pretty table stakes basic issue that ought to be just taken off the table, and if we take care of the basics then we can focus our energy on the corner cases but let's first prepare for the likely before we get to the worst situations. >> Right. So Rohit I'm just curious to get your take as you have been here for the last couple of days, you know you did a whole lot of work getting into that keynote and getting this thing up and off the ground but you've had a couple of days to be here walked around, talked to a lot of customers and clients, partners, I wonder if there is anything that's kind of come up as a theme that you either didn't expect or kind of reinforced some of thoughts that you had coming into this week. >> Absolutely. I think if I would've net it out Jeff what I'm sensing is there is a whole movement to shift security left, which is this whole idea of IT stepping up as the first line of defense, reduce cyber exposure, take care of patching, multi-factor authentication, reduce the attack surface intrinsic security right so DevOps and SecDevOps take care of it right up front before the apps even get built right, then there is another movement to shift things right which is take care of the new aspects of the attack surface right, what the hacker always take advantage of are the areas where they sense we are unprepared and for a long time they've seen us being unprepared in terms of reducing the attack surface and then they go after the new aspects of the attack surface and what are those? IT, IoT, OT, data as an attack surface and the Edge right, so these are areas were there is a lot of activity, a lot of innovation, you know, on the floor here if you walk the corners shifting left shifting right as in all the new aspects of the attack surface. I am seeing a lot of conversations, a lot of innovation is that area. >> Yeah. Well, there's certainly no shortage of innovation in the companies here and in fact I think it's probably one of the biggest challenges that I think of from a virus perspective is to walk this floor and to figure it all out 'cause I don't know how many thousand of vendors there are but there's really big ones and there is lot's of little ones like you said tucked in the corner in kind of the cutting edge of the innovation. What advice do you give to people who is their first time coming to RSA? >> Yes, I think you know, it's a huge challenge for customers, there's 14 of every category. I think the customers what they have to see is they have to think about the recipe rather they have to focus not on the tool but the concept behind the tool, and think about the architecture right and they should seek out vendors that take this platform approach. It is, you know, the market hasn't consolidated that much where they can just go to a few vendors but when they build that architecture they should choose vendors that behave well as a puzzle piece in the jigsaw puzzle that our customers are having to assemble together right, that they are investing in the API integrations on the edges so they can slot in and be part of a broader solution. That's a key, key criteria that customers should utilize in their selection of the vendors. >> Yes, that's good. That's good advice, and they should be listening. So Rohit, thanks again for your time. Congratulations on a week and I hope you get that weekend of absolutely nothing coming up in just a couple of days that you talked about. >> I absolutely do. The joke I made was, you know, the only time I'm okay being labeled as useless is the weekend after RSA conference. So, I fully look forward to being useless over this weekend, it's been a great week and thank you again for having me. >> All right, two more days, 48 hours. All right, thanks again. He's Rohit, I'm Jeff, you're watching theCUBE. We're at RSA 2020, the year we're going to know everything with the benefit of hindsight. We're not quite there yet but we're trying yo get a little closer. Thanks for watching, we'll see you next time. (upbeat music)

>> Live from San Francisco, it's theCUBE! Covering IBM Think 2019, brought to you by IBM. >> Welcome back to intermittently sunny San Francisco, this is theCUBE, the leader in live tech coverage. We're here at day four at IBM Think. My name is Dave Vellante. I am here with Stu Miniman. John Furrier is also here. Wall to wall coverage Stu. The second Think, first big show really of the year at Moscone. The new Moscone, Armando Ortiz is here. He is the vice president and partner from Mobile & Extended Reality Leader at IBM iX. An interesting part of IBM that you may not know about. Armando, welcome to theCUBE, thanks for coming on. >> Thanks for having me. >> So tell us a little bit about iX. >> So IBM iX is a part of IBM services. We focus on user experiences, whether it's a consumer experience or an employee experience. And the we look at user experience it really kind of sticks together and allow you to unlock the value of all the technology investments that companies are making. >> So, you guys are not making headsets, or are you? >> No we don't make hardware, we just put hardware to work. >> So talk a little bit about the sort of state of whether its augmented reality or extended reality. Lay out the terminology for us if you would. >> Sure, sure. As part of the role I have I lead our mobile practice as well as the extended reality practice and this kind of all related together. We use the term extended reality to kind of encompass all of the different technologies along that spectrum from augmented reality to mixed reality to virtual reality. Of course there are a lot of technologies whether it's the glasses on your face like the wearables or it's in your hand as a lot of mobile platforms today like Apple's ARKit and Google's ARCore allow you to have AR experienced within your mobile apps. >> Yeah, I wonder if you can expand a little bit on that? We're all ready for the role out of 5G and that's going, holds the promise at least for a lot more band width and a lot more applications and that's one of the lynch pins we understand kind of make your world more of a reality. When do we see that role out? What devices are going to happen? You got a preview of the next iPhone for us? >> I certainly don't have a preview of the next iPhone, even though I do lead the Apple partnership for us in North America, the Apple IBM partnership. When you look at 5G, obviously some of the use cases for extended reality in enterprise are around field services and 5G will have an amazing impact on the ability. Not only because of the band width but also the low latency that you have for 5G. So we're excited to see that role out in the different markets around the world and you know the pilots and things that are starting this year. There are going to be a lot of great devices and I think for handsets all the way to the wearables. It'll really allow us to put more use cases on these devices. >> Can you walk us through some of those use cases? Any specific customer examples you have that may make our audience understand a little bit more what's really available today. Sure, I mean in the XR space or in the extended reality space there's a lot that we learned through what we've done in mobile for years. I mean, even our Apple partnership for the past five years and things we've done across the 16 industries we work on. But the initial sort of wave one use cases that we're really seeing today kind of follow along these categories of work related use cases that are like in field services, training related use cases that go all the way from virtual reality immersive training like teaching someone how to do something in a dangerous situation where you want to simulate that. All the way to on the job sort of training and step-by-step guidance that you can get with AR. Step one attach the cable here. Step two, check this over here. Those kind of use cases and then into use cases related to shopping and retail. If you look at what augmented reality is going to do for shopping and retail allow people to assess sort of fit and purpose of something they want to buy. Does it fit in my home? Does it fit in my life? And then also even in the stores as people in retail sort of navigate a store they can use AR to help understand. Add all that metadata to the in store experience that we're gotten used to in our online experiences. And the last broad category we sort of call it share ideas or sharing of ideas, which kind of expands the game from collaboration to even having AR brochures and augmented realty tools to help people understand a product or a service that you're offering. Imagine that we can just kind of expand a piece of equipment here on the table, walk through it and help understand how that piece of equipment is going to help your business. >> You're giving me flashbacks. I remember IBM had a huge initiative in like Second Life and it was like come build an island and we're going to do recruiting and things like that. So, tell us why this generation is, going to be better for business and not have everyone put some money in and have it stolen by you know. >> Not as goofy. >> It's funny you should ask that, the Second Life topic actually came up with someone I was speaking to yesterday. It's come up before. I think there is a significant difference between what Second Life was trying to be and what extended reality is going to be and it already is. I mean when you look at extended reality today, I think one important thing to think about this is not future tech, this is not some sort of dream of sort of Ready Player One type of situation. But more, it's looking at real enterprise use cases that are already driving a value; time savings on inspections, productivity enhancements for people assembling, consistency and increase safety. All the key performance indicators and value drivers we have for mobile. So there's a real path to business value and the uses are much clearer than it might have been in the days of Second Life. >> Less mistakes, less rework. Armando, what kind of infrastructure would a consumer need? You gave the example of retail for instance, what kind of infrastructure would I need? Am I just, is it just my mobile home? Am I going to wear headsets, what does that look like? >> So when we talk about extended reality, we tend to keep one foot in today and one foot in the future cause its changing so fast. When you talk about retail there is a sale associate side of things that might be helping you decide an automotive. Maybe you're looking at configuring a car right in front of you or in a retail store maybe you're looking to look at a piece of furniture or something that's not on the show room floor. Now those experiences can start today with tablets and iPhones and other devices. But we see also as well devices that people be wearing wearables that are available today and that trend moving that glass kind of from your hand to your face is going to be something that is really going to be accelerated. >> So, this is maybe how a piece of clothing will fit or what a couch might look like in a particular room, is that right? >> Yeah. >> And you would envision that people will purchase this infrastructure for a variety of uses. Not only to see how things look but maybe there's gaming. So it's a multi-use kind of environment or not necessarily? Is it more specialized to use it? >> No absolutely, it's important, it's a good thing that you brought up sort of gaming as well. Because, obviously we all know that gaming has been kind of at the fore front for virtual reality but when you look at gaming and entertainment those are also going to include many use cases. When we look at the enterprise side we're kind of focused on those other wave one use cases. But I also expect in the sort of share ideas category I spoke of marketing and sales activities will also include AR experienced to help people understand the product or service that you're positioning. >> What's the state of adoption? We always joke about google glass. Remember the movie The Jerk with the Opti-Grab and the guy was cross-eyed? So that didn't take off but what's the state of hardware and hardware adoption today? >> So I think what's unique about this technology and what's happening now, the technology we already all have in our hands on our mobile phones is already there and that's where you're going to see it happen first. I think the numbers by next year are like 3.4 billion phones will have an AR capability so the technology is already with us. The next sort of technology set that we're talking about is getting to the wearables and of course we see things today in the VR space that's much more available in the consumer side, things like the oculus go. In the enterprise space you also have headsets from many manufacturers that maybe grew up doing things in the military that are now more commercially available. Things like someone trying to repair something that needs to be hand free. We're seeing those technologies readily available in the enterprise. >> Tell about how AI fits into this new world? >> That's a great question. If you think about it its really kind of a really great combination. You take XR, extended reality, so whether its AR or VR and you add AI to it you can kind of give AI the ability to kind of enter the 3D space. So as you think about AI solutions that we had in the mobile world where you might be using AI to solve a problem, diagnose a problem, visual diagnostics, acoustic detection AI can kind of give sort of super powers to an employee. At the same time we see that the experiences that we have in the extended reality space get really enhanced because you now have the ability to democratize expertize with AI. You take all of the expertize of your organization and that one technician whose only been there for 10 days now has the power of your entire collective knowledge. >> What about privacy? Anytime you hear some of these and I think about you can have wearables out there, there is concern about you know with facial recognition is going to be everywhere my privacy is going to be invaded. What's IBM positioning? Where does that fit in this whole environment? >> Of course we take privacy very seriously. When we talk about our AI and Watson you know your data is your data. If you look at some of the things, I mean, you'll make decisions, enterprises will make decisions on the same way they do with mobile devices. Is it okay to have a camera in this environment? And if I do have a camera in this environment, what's my cloud strategy and where am I going to host this data to make sure that I have not just privacy but also IP concerns, considered? All of the same things we've learned in the mobile world are going to apply to this and it'll get even a little more important as you think of the different types of sensors that are required to make these experiences happen. >> I wonder if you could help us understand about the pre-requisites to do things like technician actually trouble shooting a problem. Many of us have seen, we put on the glasses you walk around a show floor and you look at a new system or something and its really very cool. You can look inside and inspect the different layers. What has to be done, I'm inferring from what you're saying that a technician would be able to inspect live, real time a device and identify problems on that device. So what has be done? It has to be instrumented? It has to have cameras installed? What does the infrastructure build out look like? >> Sure, when you look at. Lets take the technician scenario for a moment and unpack that. When you look at that there are a couple of things that are already happening like a lot of major pieces of equipment are instrumented. So you have the internet of things data, sort of the data streams coming off of that. How do you make that available to that technician in the moment, sort of the vital signs of that piece of equipment that you might be operating on? So, having all that information like temperature and all the things from an IOT perspective, that's one angle of it. The other side of it really is when you think of failure of equipment usually at some point there's a situation that technician may not have encountered before but maybe someone else has. Maybe you've already had a bunch of closed tickets on that three years ago. So having all that information available and using cognitive processing to kind of navigate that unstructured data, that will let you navigate that. Voice will be part of this interface as well. I think voice is an important part because you're going to be hands free and you're going to be having a dialogue with Watson, let's say to help diagnose a problem. >> How about healthcare? It's not something we've really talked about a lot. Just in terms of applications, whether its for the operating room of the future, remote guidance from doctor, training. Do you see those kind of use cases emerging? >> Yeah absolutely, all the way from training through execution of surgery and other things. This is where the 5G topic really comes into play because low latency is really required if you're talking about surgery and things like that. >> Give me a few minutes. >> You get that round trip of that signal going back and forth. I think when you think about the VR side of things for training is immensely powerful. The AR side for during execution of procedures will also be powerful as well and it comes back to that general theme od democratizing expertize. One expert that's physically on this part of the world can serve many people that need their services around the world. >> It sounds like there are a lot of uncertainties in terms of how this is going to evolve. First of all od the a fair statement? Given that, not withstanding that can you give us a sense of expectations for how it will evolve and the adoption levels that you expect over the next two to five years. >> Five years is a long horizon for this technology. >> Too long, too long perhaps so what's more fair, 18 months? >> Lets talk more immediate. I think when you look at, there may be some uncertainty in terms of which use cases will drive the most value but there are already many use cases that companies are probably sharing information out. Like some companies, especially inspection use cases, you know there is a company that published 96% savings on time because really you are using AR to document. Okay inspect this point, this point, this point, this point. Assembly use cases, diagnostics with AI and AR are working together. All of these are already happening, so what I think is going to happen is enterprises are going to be able to more and more easily justify the spend to make these investments because the RY is rapid. Just like the RY in mobile was rapid for enterprise, the RY in XR will be extremely rapid. >> Armando for people who didn't come to IBM Think, give them a little taste of what they missed from an iX stand point. Some of the conversations that you've been having. >> Yeah, when we look at, I mean iX across the IBM Think we've had a lot of conversations and a lot of sessions around how experience is really driving the business value and also around marketing technologies and marketing services and all of the things that relate to experience on the consumer side and the employee side. We're really enjoyed some great show casing of our client stories and the works we've done. Everything from mobile to commerce to marketing platforms to sales floors across everything we do in the IBM services part that we're in. >> How long has this been around? >> IBM iX? >> Yeah. >> IBM iX has been a part of IBM originally since the 96 Olympics in Atlanta. I've been with IBM about 25 years and this space is kind of like really evolved in terms of the position of user experience and design. IBM has become really a design focused company and you look at enterprise design thinking in everything we do so this is really a part of our business that's really become focal point as companies start thinking more about design. >> Wow, it's been a long time but it's certainly not mature but it's a revenue generating business obviously. >> Yeah and a very high growth part of the company. >> Awesome, well Armando thanks so much for sharing this part of IBM that's not well known. Really exciting futures and I really appreciate you coming on theCUBE. >> Thank you very much, I appreciate being here. >> Alright, keep it right there everyone. Stu and I will be back. Day four, IBM Think, we're at Moscone. Stop by, we're at Moscone North. I'm Dave Vellante, Stu Miniman and John Furrier is here. We'll be right back, you're watching theCUBE. (techno music)

from Boston Massachusetts it's the cube covering LIBOR X 18 brought to you by ptc welcome back we're at the Seaport in Boston at live works PTC's big IOT show this is the cube the leader in live tech coverage I'm Dave Volante with my co-host to minimun Doug Smith is here is the CEO of Tech's market he's joined by Linda Salinas was the VP of Operations folks welcome to the cube great to see you happiness you're very welcome having us so what do you think Big Show here the first time we've been at live works a lot of good energy keynote this morning was like an Olympic you know opening ceremony how's the show been the show has been fantastic and again thank you for having us here for us at texmarq being able to see all the different technologies that are being employed here in the United States and around the world has just been fantastic for us that's been really exciting I enjoyed the keynote speakers in the opening session and I I got a lot of inspiration from that I just wanted to go right back to the planned and use some of the things that we saw early on already so we do a lot of these tech events as you know and we talk a lot of tech but people process technology it's the process and technolon process parts that we don't spend enough time on we kind of give it lip service say hey those are really important but let's talk tech let's talk about people and culture maybe the start yeah from an Operations standpoint how do you get people to think about change well we don't think of it as change we think of it as we are doing something now and we need a tool to do whatever it is that we're doing it better and early on when we partnered up with HPE and they said hey we have some IOT solutions to introduce you to I thought oh that's great and I said well why don't you and Doug come out to the our innovation laboratory and Tomball and take a look at the lab and see some ideas and I said well that's great can I bring some friends and they said sure said can I bring 15 friends and they said sure so we rented a party bus and we loaded up people from our ops and maintenance and engineering and lab and admin and we went there and we first sat in on a lecture about what IOT was and then when we saw the lab in the smart city and the medical applications and so forth that all of these all look familiar but then we saw the demo of the censored pump and that just saying to everyone they said wow we have a hundred of those in the plant let's go do that tell me about that and so it wasn't about us implementing changes saying hey here's this new thing go use it it was it was about them seeing what they wanted to do and bringing it back to the plan saying this is what we're going to do boss yes so Doug you guys are actually heading out to discover shortly right yes sir so I've talked about your relationship with those guys it sounds like it's it's growing how is it going sure so once again it's all about people and as Linda said this this journey began with a conversation with HPE and now we have a collection of 13 different ecosystem partners who are helping us with these five different use cases that are built on top of this technology foundation that was supported by HPE so we have CB technology we have a Deloitte we have Flo serve we have any number of people that can help PTC I mean this is a PTC event certainly how they are helping with these different use case solutions and so going out to Las Vegas Nevada we are going to continue this story about people I think the strongest part of this story is that it has been we have encountered bumps along the road where we've had to work together it isn't like the movies where the IOT saves the day we have to deal with it and struggle with it would you agree yeah and that it has been a journey but going back to the people it is about having the partners come to us and say this is what we need to do to implement it we need to install these sensors we need to install the antenna we need to have line of sight to the wireless access points and so forth but from the beginning it wasn't about a contractor or two or three or all of the partners coming in to texmarq and installing everything and then giving us the key and say turn it on we included our employees in the installation process so they know how the sensors went in they know how to adjust the antenna they know on a first name basis all the tech contacts within all of our ecosystem partners so this is not a Linda and Doug project it is their project they have ownership and what's been fun to see evolve over time is that now you know the refinery of the future has become a noun or a verb so they will say hey let's ROTF this problem how can our OTF help us make this process better more efficient so it's really been exciting to see that come back at us yeah so wonder if you could bring us inside a little bit I hear 13 partners and worried a little bit there's the integration there's the training there's the support it sounds like you're happy with it but for for those that haven't gone through it what what did you learn and you know how does that work sure and this is kind of colloquial talk here but what we say at text mark is the first thing that we've learned is you have to get nekkid you have to say here are the problems that we have how can we all work together you have to have this honesty and you have to feel comfortable with the partners and we have set a standard from the get-go of here are our expectations clearly stating those expectations and we have had some partners that have come in and it just hasn't worked out so this clear communication setting achievable goals and when we encounter problems address them immediately and I think that's one of the things that's made us successful did it can we talk about the refinery the future paint a picture for us what's what's the refinery of the past and what was the for finery the future well I think the refinery in the past and the future at its core is still refining we have at texmarq chemicals where a petrochemical manufacturers so we primarily produced through distillation and reaction but at any refinery or petrochemical entire your distillation tower your crackers your reactors loading tank storage and so forth so that's a refinery past present and future but the future one I think employs IOT and technology to do what we're already doing today better you know I think about when I get a coupon in the mail and it's like hey you know one buy one get one free on potato chips so I don't even put a tow chips but that coupons gonna make me go buy potato chips well it's not that way with IOT we don't see a solution to go let's go start doing this in the plant because this IOT thing is really cool it's just the converse we're already have connected workers we're already using two-way radios and clipboards and spreadsheets and whatever but the refinery of the future uses IOT to connect us with technology so that we're doing it better and faster and safer how about the data agenda yeah 13 partners as Stu said you've got a desire to capture the data and analyze it make things better your partners do how do you guys approach the analytics side of this and the data side so I like to think of data I one of the meetings that we had when we started down this road I was sitting in my office and we had three different groups in there and there was one gentleman I was watching you is shaking his head and he goes this is a goldmine and I immediately focused in on them and said what what is this goldmine of what you speak here and and just being able to have for example our one of our main processes is for a chemical called dicyclopentadiene tea DCPD as we move along in this project we want to be able to censor the seven pumps that are involved in that process from putting it into the feed stock tank to put in it out on a railcar and being able to tweak it and find that sweet spot and to monetize that Linda could you go in yeah I think also too from a contract manufacturing standpoint we'll have one of the super majors that are that are that are refiners or chemical manufacturers themselves and want us to produce product for them on their behalf and I think that the data part part of our competitive edge is to be able to offer an IOT adder kind of like would you like fries with that to add IOT on to the project that they're approaching us with and say hey would you like IOT with that supersize it yes exactly yes and so and they're like oh tell me more and in fact we had a one-on-one meeting with a potential client when we discovered Madrid and and so now we're having commercial conversations with them about contract manufacturing but because they're so interested in IOT they want to add an IOT element to that and so then we can either surcharge or up charge for that contract manufacturing by the pound we will learn to optimize our processes on their behalf and then we share or sell the data to them they become the owners of it that's a that's a direct monetization as a value creation for the customer that they're willing to pay for yeah yeah that's cool well I think one of the altruistic aspects of what we're trying to do at texmarq is within multiple industries you have this this grain of the population so of the workforce is retiring out and with them they're taking years and years of tribal knowledge so you may have an operator who knows when you're doing this process you need to turn the that you need to adjust that valve this much and to be able to gain that information and pass it to the younger people coming in and then to show with in the petrochemical 'ti that we are utilizing technology this isn't the technology excuse me the refinery of the past this is a job in which you can use cutting-edge technology use this this feels like I was talking we were talking earlier one of our guest it but this whole IOT space it seems like it's not I mean it's disruptive in this in the sense that you seem to be doing a lot of things differently but as you were saying Linda refiners still a refinery so the ecosystem of that refinery to me anyway seems to like largely stay intact it's just a matter of embracing these new processes and changes in culture and obviously technology so the incumbents it feels like they're in a pretty good position is that a reasonable premise or am I missing something no I think I think I think you're right yeah yeah I think about one of the things that I heard in the keynote was that we are one of the early adopters and so I feel like it's part of our responsibility to share our story and to share the lessons learned right absolutely Linda and so she hits on something that humbles me is one of the things that we offer are these showcase tours where we have super majors come to texmarq and we have to censored pumps and there they are so enthralled about us showing it to them that to us we just say we want to show we want to be inclusive we want to be leaders and and so it's a great feeling so anytime we talk about IOT security something that comes up and you know in your line of work also we think safety for your workers but something that also of wonder if you could talk about those dual lasses paramount would you yes my eyes get big and that's where my heart is and I've been in with techsmartt for 23 years and I spent about 18 years doing environmental health and safety compliance and the thing about our five use cases is I can in my mind anyway tie them all back to reducing risk and improving worker safety and reducing our risk our environmental risk and impact the community so connected worker they're connected we either know where they are we know what they're doing we provide them information to make informed decision we have safety and security to be able to direct them in case of an emergency either to go towards emergency if you're a responder or away from it if you are not or if there's a person that fell from a height we know exactly where they are so we can go render aid because they can't raise their hand and say I'm hurt so all of these use cases advanced video analytics to know if we have a hydrocarbon leak or if there's someone crossing our property line whether it's a coyote or a person or someone that doesn't belong on our side of the fence they each have their own application but they all have some sort of tied to reducing risk and improving safety so it's sensors that can detect that type of movement you're not instrumenting humans right it's no no that's right same activity yeah what about now you've got everything connected now is there any concern that rogue agents could you know somehow do something malicious so we take a great deal or we pay a great deal of attention to security of data because that's our secret sauce that's how we are profitable within the world so we have we have put in all sorts of security measures from the sensor to the I walk to the the compute and what I continue to learn is it's a constant battle and so we have to it is something we have to be vigilant about so so what's next what should we look for from texmarq this whole space what are some of the milestones maybe that we should be paying attention to in terms of milestone I'm really excited about the the connected worker tool which allows different personas to approach for example an asset like a pump and Linda could be the CFO and I could be a millwright and we'd be looking at the same piece of equipment and I as a millwright would be getting data what type of service that pump needs and then Linda is the CFO could get financial information about when that pump fails or we're predicting failure in three months that pump will cost X number of dollars in the downtime will cost homesman exactly to the whole production procedure so and the other thing is I'd like to see us develop this use case to the video as a sensor we're working with Intel on that one and so they're excited about testing their equipment as well so and that's another area because we're looking at putting on our railcar loading area involving our railcar loaders on exactly where we should put them what we should look for what they think are the risks in the railcar loading area and so it's really just more of the same kind of continuing to involve our employees and having these projects and become theirs great well Linda and have a great trip to Vegas say hi to our friends from HPE and thanks so much for coming back in the cube really please so much you're welcome I keep it right there everybody stew and I'll be back where the next guest from Boston at live works we'll be right back [Music]

>> Narrator: Live from Las Vegas, it's theCUBE. Covering IBM Think 2018, brought to you by IBM. >> Welcome to theCUBE, we are live at the inaugural IBM Think 2018. I'm Lisa Martin joined by John Furrier and Dave Vellante. Guys this is first day of three days of coverage from theCUBE but this is a combination of six different IBM events from the past. Tell me a little bit about your perspective about what you think that means or they're projecting to have about 40,000 plus people here. Big change. >> Yeah, I mean, this is, we've been covering IBM how many years? Was since 2011 we've been to? Pretty much every single event they've had. They had IOD, information on demand on and on and on but really. >> Impact, pulse edge. >> All coming together. I mean this is IBM looking at the market saying, it's better to run a big tent event as a kind of coming together, a global celebration global information gathering a global sales partnership ecosystem development, and I think it's finally IBM's taking a play out of what others have done. Sales Force does it, Oracle's done it, Amazon does it with reinvent, they pull all their resources into one event. Now here's the problem, IBM is massively huge so, you know the cube goes to all those events now it's 5x the demand for cube content, 5x the demand for keynotes so, they're here at the Mandalay Bay, they're probably going to have to, need to a bigger job next year. But it's a good move for IBM and I love the fake logo, I love the Think branding. That's a throwback to the old Tom Watson generation which the roots of IBM were all about, just think, solve problems and really market the best solutions to customers. To me, if they can bring back those old IBM ethos and the roots and really get back into the cloud game which they've been falling behind on but their last earnings were up Dave. So they've had a nice little break of the negative streak, but AI is a tailwind for them, IOT is a tailwind, blockchain is potentially an enabler down the road, I mean Dave your thoughts on just that the business aspect of that. >> Well, so first on Think they have consolidated six shows they used to have really deep dives into things like infrastructure or analytics, et cetera. Now, they've said okay, let's make the big ched, as John was saying. What's interesting is every one of those drill down events Lisa you had big themes whether it was cognitive or cloud or digital transformation so, I think it's a smart move. Michele Paluso, Bob Lord came in, said, hey, we're going to change things up a little bit and we're going to play in the big leagues with, as John said, Sales Force, et cetera. You're right John, IBM sort of finally after Jenny Rimetti came on in 2012 and had some number of the trade press reports and number of quarters of revenue declining. >> It was double digit like 17 consecutive quarters. >> But remember IBM we've said it for years IBM's got to shrink to grow and in the growth they eat down one percent growth in constant currency. Currency is finally now a tailwind for IBM. It's a $79 billion company, a lot smaller, remember, IBM used to be well over a $100 billion company. And its got a $140, a $150 billion market cap. So it's trading at about 2x, almost 2x revenue and it's because IBM has an eclectic mix they've got mainframe, they've got other hardware. They got rid of their x86 business which was a low margin business. They've got services, which is a great business for them, huge cash flow. You get a $120 billion services backlog right now. So amazing potential future earnings but service is a lower margin business. IBM has this huge software business, you know 10s of billions of dollars in software which is a very high margin business. So put it all together and IBM's trying to get back to a 50% gross margin model. They're throwing off a lot of cash. They threw off $13 billion in free cash flow last year. Interestingly, about 80% of that went back to shareholders in the form of share purchase and the like. And that's how IBM, sort of, kept the stock price up and continues, and now we'll see what happens next year they're being very conservative about growth, so tepid growth. Huge advantage from the tax reform. IBM is one of these companies that is going to benefit in a big way from tax reform, gives it a lot of flexibility. >> And I would also, if I was advising IBM, I'm not, but if I was advising Michele Paluso I'd basically, look at, you're too big to have one big show. I would do one big business show, like Think, then also have a separate event on technical. Because one of the things we look at their schedule here it's business and AI, cloud and data, modern infrastructure, security and resilience. That alone could stack the deck for three, four days of business conversations business transformation, digital transformation, future transformation with blockchain among other things, power of the data and IOT. That's a full packed set of content. IBM's got a huge R&D organization Dave, they have a huge services organization and technology's the enabler for them to get those margins up and I think they should have a separate technical Think. Now. we're going to ask them directly with try to get Michele Paluso on but. >> I want to make some comments about the Jenny Rametti tenure because I first met her around 2007, 2008, when she was running strategy actually. She had run a large business for Palmasano so this is a while before she took over in 2012. And she was running strategy and then she came on in 2012. At that time IBM had no cloud really clear cloud strategy. They were talking cloud but they didn't have any cloud, public cloud options so they had to go out and pay two billion dollars for software. And then they put in Blue Mix, John you're hearing some changes on Blue Mix so we're going to talk about that. But she's had to architect a massive transition. But when you look at IBM's core business cloud is really one of the new drivers. So, $17 billion business. But the drivers' profitability are mainframe, storage, services, a lot of the same without a large cloud business which they've taken a lot of different components and pushed it through the cloud and done with Blue Mix what they did with Websphere, their middleware piece. Kind of what Oracle tried to do and has done with Fusion but a different strategy. All done sort of in the cloud. Now, the big question is okay is that going to drive growth for IBM in the next 10 years? The other big question is, what about Watson? You hear a lot about Watson. They don't really clearly breakout, okay this is how much business we do with Watson and Wall Street has been clamoring to see that, so. >> Well I mean to me cloud is the big story I think their opportunity is data. That's where Watson kind of ties in. They have a huge client base, the digital transformation style, I think they're going to do really well there. But the at the end of the day the cloud story has always been weak for IBM in the sense of, comparing it to what Amazon web services has been doing. So you know I really want to see how they're differentiating their cloud story because they have to. They cannot compete with Amazon head to head. Google's differentiating, Microsoft's differentiating. IBM needs to be in the same league as Microsoft and Amazon. They got to beat Google out for that third spot. To me if I was marching giving marching orders as a theme, said, we got to be in the top three cloud providers, and define it in a way that adds values to customers, and they're not in that top three today. That is a huge story. That's going to keep dragging them down on the Wall Street numbers, in my opinion, unless they do something different. >> Well, I got to counter that because the big difference between IBM cloud and Amazon cloud is IBM's got a giant software portfolio. IBM's as a service software portfolio's many 10s of billions of dollars. So they have a ratable revenue model and a very, very, software's, 85%, zero marginal cost business. Amazon doesn't have that yet and they may they're going up the stack. But that's huge. The other piece to watch is IBM calls strategic imperatives, which is cloud and security and IOT and the new stuff basically which is now just under 50% of the revenue model. But that's where companies like IBM and Oracle differentiate from Amazon is they have the deep software. Now the challenge for IBM is their software is very bespoke. Their software business is very, very fragmented. They've been trying to bring it together through middleware for what, John, four or five years? When did they announce Blue Mix? We were there. >> It seems like five years ago, I mean yeah, maybe even six. >> Dave: Yeah. >> Blue Mix was a great approach I think soft layer might have been, to me at least, the one I think the thing that held Blue Mix back. Just soft layer, to me, just it's just infrastructure didn't really kind of make it blend in the Blue Mix the way I thought it would and hoped it would. We'll see what they say this week. >> Yeah but that was the right move. The two billion dollar acquisition of soft layer, had they not done that, they would be like Dell EMC, no cloud. They'd be Dell EMC with a huge software business on prim software business. >> Well Dave the market share numbers on cloud, I mean shows, IBM not making it so like, to me, that story has to be >> I disagree with that I disagree. So you got the big three, right? And then you got Oracle and IBM. There sort of a distant, I don't know what order I guess IBM would be a little ahead of Oracle but you got one, two, three and then distant four and five, excluding Alibaba and the China cloud which is huge. But IBM is-- >> In China, not the U.S. though. >> In China, but IBM's strategy to me is the right one. Drive software revenue as, Oracle as well because that's the ace in the hole relative to the infrastructure clouds. They don't want to compete head to head in infrastructures and service. That would be a disaster. >> I mean look at, I'm tracking the cloud heavily you know that so, I look at IBM a little bit differently than you. My view is simple. In the cloud game right now they're not making it. However, we know that everyone's defining cloud differently. I mean Microsoft throws Azure in there the software included. Amazon doesn't. Oracle does so again that's just-- >> Dave: It's a $17 billion business. >> Hold on, hold on that's just mangling the numbers. >> And granted they may be >> So, so they. puts some hosting in there. >> They have to have to have it's not about the cloud story it's about the cloud value. IBM has a lot of piece parts that they can actually put together for a cloud package. Infrastructure instead of software services. Blue Mix tried to do that. So I think, they, if they can look at cloud in a way that's helps IBM, that gives them a way to move the goal post the way to change the game to me that's what I'm looking for. Because IBM should not be out of the cloud business. If they don't go down-- >> But they're not out of the cloud business, it's a $17 billion cloud business, how can you say they're out of the cloud business? That's an insane >> I'm not saying that they're. insertion to make. >> I'm not saying they're out of the cloud business but look what happened to VM ware, they were in the cloud business and-- >> Yeah but VM ware was BS, we all know that. They had fake cloud, at least IBM's got a real cloud built upon softlayer and yes they transformed a hosting business in bare metal cloud into what is ultimately come the IBM cloud where they're now rebranding. It takes a long time. This is kind of the point I was making about about Jenny earlier. There's it's a little messy. Seeing that sausage made. But at least they have strategy around that. They're in the cloud game. Dell EMC isn't in the cloud game. HPE isn't in the cloud game. I'm talking public cloud. These were companies that both VM ware all three of those companies announced they were going into the cloud, they're out. At least IBM, Oracle, obviously the big three are in it. That's my contention. >> So let's talk it. Do you disagree? >> No, of course they're in the cloud game. They're tracking the market share numbers but again they're not winning in the cloud Dave, okay? So like in relative to other players. >> Dave: Alright so let's define winning. >> Well, I mean >> Define winning. it depends on how you look at the marketplace. So, right now, by quote, today's standard, there are the top three are Amazon, Microsoft some say Google, Oracle and IBM would be below that. That's defined by a bunch of stuff so IBM counts it I mean Microsoft counts it differently than Amazon. I look at cloud as simply this. How many sets of services do you have? And how many people are using those services? So it's kind of two dimensions of access there. Plus the breadth of services and how many people are using those breadth of services so it's kind of like a quadrant not a magic quadrant but like Amazon blows away everybody okay so that's like, they're so far ahead. IBM, if they try to compete that way, my point was that I was trying to make was if you compete on trying to match Amazon you're not going to win. Google's already tapped out of the cloud by that standard. They're going in all in on cloud scale, sensor flow, AI targeting the developer community. They're not out of the cloud game. They're taking a different path. That's not their cloud story. That's their cloud plan. They're executing it. Oracle, it's just, everything's cloud. They'll count anything that moves is cloud right? So that's Oracle. Microsoft throws 365 in there to bump their numbers up but what do they have? Azure and it's doing well by quote Wall Street. But some people criticize the technology with Microsoft. So, it's kind of a rat race. It's fundamentally at the infrastructure it's the number of services and who's using those services and then above say the Kubernetes line if you will, it's what applications are driving value. So if you separate applications from under the Kubernetes line orchestration, then you got two different pictures. You can't blend them in. That's my contention that the blending of apps revenue and infrastructure revenue really makes it a real messy way to squint through who's winning. >> So let's define leadership, although that was good, good analysis. I'll give you, I'll add some color to that. To me you've got to be in the cloud game because in order to succeed in the digital economy you got to have cloud economics. You got to have you got to have the ability to to do analytics and data you got to have AI and you got to have cloud economics. What does that mean? You got to have, you know, an API platform. You got to have zero marginal costs. You got to have network effects is scaled and you got to be able to track startups. Okay, so those are the sort of components that I look at as a cloud momentum. The question I have for IBM is if the strategic imperatives are now almost 50% of the business and their higher margin and you're achieving those cloud economics why are gross margins under pressure? Right? They should be showing gross margin momentum and that's something to look at. >> Well, I mean-- >> Alright guys. >> Because cloud should drive huge gross margins. >> Hold on I got to add one more point because this fundamentally frames it. If you look at cloud and what DevOps has done where you can actually have programmable infrastructure that's changed the game. Would you think DevOps has changed the game? >> Changing? >> Yeah, changing. Yeah, sure. >> The notion of programming It certainly has for the cloud native guys, absolutely. >> So the ability to program the infrastructure takes away the infrastructure being the dependency of what applications can do. >> Dave: Agreed. >> Okay, okay, great. So now that the infrastructure's programmable the apps kind of are running the show. The successful people that are using the cloud today are the ones that nailed the business model logic. So that's what the application does it's due diligence. Whoever can come up with the applications and nail the business model that's where the switching costs are extremely high that's where the risk is. The risk is no longer in the plumbing because the plumbing, switching costs of the plumbing are a lot lower because there's a lot more technology and sets the services you can provision in and out of that so you're starting to see the entire strategy chain where it's the applications that'll be driving the value and that's where the mistakes if made there that's where the cloud game ends. >> And machine intelligence is going to drive that value and that's where Watson versus you know the consumer guys and IBM Jenny, I guarantee tomorrow will make the point that we're not trying to collect your data and sell you ads. You will make that point. >> Whoever. >> I guess unless you go to the weather company's website. >> Whoever can build the application, it builds value. The business logic is now the new devops because everything else is programmable. That's my contention. >> Dave: Alright. >> Alright guys wow. As you can tell lots of passion for all things cloud, AI and now you're going to hear all of it today on theCUBE. This is day one of three days of coverage as John mentioned. We've so many great guests on over the next few days and hopefully a few more with our pop-up CUBE. Keep watching, I'm Lisa Martin with John Furrier and Dave Vallante. We're going to be back with our first guest after a short break. (funky digital music)