 Live from New York City, it's theCUBE. Covering Lenovo Transform 2.0, brought to you by Lenovo. Welcome back everyone. We are wrapping up day one of coverage of Lenovo Transform here in New York City. I'm your host, Rebecca Knight, along with my co-host Stu Miniman. We have a final guest, Peter Hortensius. He is the senior vice president, data center group and CTO in chief of strategy. Thanks so much for coming on theCUBE, Peter. Thanks for having me. It's your first time. I was told I can't believe after all these years it's my first time. It's kind of true. It's my first time. If you're in this industry, you're going to be on a lot more after this, trust me. So, before the cameras are rolling, we were talking about how cloud is an outcome, not a destination. What do you mean by that? And do you think that is your perspective or is that, do you think that that is industry wide? Well, to me it's really, well there are people in the industry who do think of it as the destination. My life will be good when. But the reality is when I talk to our customers and I talk to business owners on what they're really looking for, what they're looking for is a way and a method of working. And they're looking for how do I deploy things quickly? How do I worry more about can my applications run properly? Not how many petabytes of storage did I need for this? Or how many VMs did it take to run that? And so for us, it's all around trying to provide advice and counsel around that. And we found an interesting statistic that sort of justified things we're hearing from a lot of customers, which is while everybody has a strategy of what do they get to the cloud, eight out of 10 customers are trying to think about the things they need to bring back. So it's not just a one way street, right? Which tells you it's definitely not a destination if people are telling you, hey there's a few things I put in there that may not be the best place for it. It's interesting because in general, I agree with you. I think we've said it is more of an operating model and there's processes there. When I evaluate companies and analysts, it's a lot of times it's like, okay, but tell me where your positioning is. If I give you private cloud and public cloud, do you have a real heavy leaning one way or bias towards one or the other? Of course, the big public cloud providers tend to lead that way, even though most of them are shifting, not just all public, but even Amazon is getting deeper into what they're doing in private cloud. One of the things I like about Lenovo is we're talking about hyper scale. We're talking about HPC. We're talking about all the various pieces. So in your portfolio of offering, you're selling solutions into the big 10 cloud guys. So you're not only saying, well, no, public cloud's bad, do there. So you have a measured approach to how that looks and I think pragmatic as to how the customers can be. You're right. I mean, we do sell into six of the top 10 public clouds in the world, right? The enormous volumes and all the things. So we understand what it takes to do those environments well. But we also have this huge business, we sell the people on premise and they want to all move to public clouds and private cloud technology and hybrid and multi-cloud and I can give you 100 other acronyms. And the challenge is, people just want to run their business and this is not running my business. This is a cost of doing business and so for me, it's really around how do we provide them simple ways to get there. And I think Lenovo, because of its legacy free heritage, we don't have a big business tied up in the old way of doing things. We can be a much more simpler vendor to work with because, okay, you want to take that to the public cloud? I get it, it makes sense. I sell to them, they're my customers, so I'm so okay. I'm not hung up that, no, no, no, I really don't think that's what you want to be doing. And then vice versa, when they want to look at private cloud technologies or hybrid technologies or multi-cloud technologies, again, I have multiple ways of supporting that because I'm not hung up on, well, you need to buy this much storage for me of exactly this kind, I'm there. So we see way too many of our competitors have a story with their customers. It sounds really good when the executive talks to them, but the regional sales manager's going like, no, no, no, you don't understand. We got to sell this or I'm done. And so what happens? They don't sell the new thing. Right, and one of the challenges, I mean customers have is they tend to do multiple things. They start out with a simple idea, but new applications and different business units pull things together. So they're looking for partners that can help keep them up to date as to what's happening and help them focus on the outcomes of their business, focus on the applications and help them try to keep up in an ever-changing world. So maybe give us a little bit as to how the portfolio view from Lenovo helps customers keep up. So we look at the, call it the on-ramp to the cloud, right? There is, people want to build up their private clouds and hybrid clouds from all the parts. They're well-skilled, well-capable, or for whatever reason they decide to do that. So we have a portfolio of products that can support you to do that all the way from our think system lines, all the building blocks, and then working closely with partners like Red Hat and so on. And you carry all the way through the continuum of true turnkey solutions. You had Naj and Rod on earlier and they were really talking about a turnkey solution that we've just recently brought out with Naj's company. But Microsoft's Azure and Azure Stack is another example of a turnkey hybrid cloud. We're, as Kirk mentioned in his keynote, four times our regular market share in that market. Because again, we're perfectly happy to sell that. And then the big software to find on-ramp with Nutanix and VMware and a bunch of others that people have, that's another on-ramp to the cloud. It's again another place where we have a lot of growth and we've been growing at, we've doubled our share basically every year, year-on-year share comparison every quarter for the last six quarters. So we're perfectly happy going at it in all three of those paths. And it works very well for us. I want to get back to the idea of, you just started by saying, customers at the end of the day just want to run their businesses. They want, and they want things to be easy and intuitive. So how would you say that customers are thinking that way about the cloud or is there this pressure of, I got to get to the cloud. I've got to have a cloud strategy. I think there is some of that. I got to get to the cloud because it's in vogue. And if I'm not getting to the cloud, my CEOs are going to think that I'm worse than not cool. I'm not confident. That's much worse. But I think we're seeing some moderation. What we're seeing now is people are becoming more mature in how they look at this. And there are things that a public cloud environment is outstanding at. They're things that it's not as well suited for. And likewise, you're seeing that as people looking at private cloud technologies. And the key that really is, one of the things that makes a cloud environment so attractive is I focus much more on managing applications than I do on managing hardware. The hardware just kind of happens for me. And that's really, I think, if you're really going to give people those private cloud environments that do that, it's the same thing. If you look at our CP solution, it's a great example of that. I dial in, or dial in, there's my age showing up. I just connect in. I assign how I want the systems allocated to my applications and the hardware just takes care of it. So that's the cloud. Yeah, so one of the real challenging things for customers is once they modernize that platform, what about the applications on top of it? So there's so much happening in the database world. You talk about cloud native applications, AI, IoT, and Edge solutions are spending a lot of time for companies. Can you talk a little bit about what you're hearing from customers and how Lenovo is- Yeah, I think this is why you're seeing some of that eight out of 10 coming the other direction. If you've written for that kind of a world as the application, this is great for you. This is what you want. There are clearly a lot of legacy applications that weren't written with the cloud in mind. There was no cloud there. So they're much harder to deploy in that model. And so those are becoming, call it the more stubborn and obstinate part of the business. Now, that's still a great business for us to sell to and we're very happy to support customers. And in many of those instances, it doesn't pay to redo it. But there'll be a long, long tail of those kinds of applications where they're just not written with the cloud in mind. But anything new generally is written with that kind of environment in mind. Okay, so are you saying the cloud native apps should run in public clouds or? They've run everywhere. A well-written app will run private, public, or hybrid. How about AI? We've been hearing a lot this year for infrastructure for AI. The big challenge in AI is you have to sort of step back to its core principles. What's AI about? Well, AI is about crunching a lot of numbers against a very large amount of data. So it becomes much more about where is the data than it is about the actual algorithm or computation. That can run on almost anything. But if it's not local to the data, you got a problem. So that becomes more and more of how that problem's defined. So if the data is something that I'm pumping into a certain data center, whether it's cloud-based or my own, then that's typically where that AI algorithm will run. And if it's not, then I've got to figure out how to get the data to where I want it. Yeah, I mean, a little bit of an oversimplification when you say there's usually some central place where you train, but it needs to be out at the edge. Whether, of course, autonomous vehicles, vehicles, for example. Training is a very different problem than you'd call it inferencing. But basically, I've learned how to recognize speech. That takes a lot of computation. To recognize it doesn't take that much. Learning is what takes all the effort. Well, I'm actually interested in the idea of recruiting and retaining the right kind of talent and how the kind of challenges you're having. I mean, this is, as we've discussed, a very fast-changing technology landscape. Are you able to find the right people? Well, this is the biggest challenge in any technology industry. And since every business is getting an IT component to it, it's becoming everyone's problem. And yes, I mean, if you want to tell your kids where to go to school in, this is the place. There's going to be lots of jobs for a long time. So, we face the same challenges everybody else faces in terms of recruiting the skills. Part of that is why having cloud as a deployment model is much better for you, because it is a lesser skill that's required to manage it and deal with it. And the complexities of it are simpler. Underneath the covers, you just need fewer people that really understand that, and that helps your skill problem. Great, great. In terms of the last year at Lenovo Transform, you announced Think Agile. Can you talk a little bit about the portfolio of customers that you have developed and what you're seeing there? Yeah, I mean, we made a very conscious decision last year when we announced, we collected all the brands together, and it was a building block, its thing system, and if it's an integrated system or a cloud solution, it's Think Agile, particularly integrated in our factory and deployed. And so, we announced that, we deployed it with Think Agile Advantage, which is a special service that goes with it that makes it even easier to sort of deal with changes and IT configurations, and we've since then been very pleased with the kind of ramp that we've managed to get out of all our solutions in that bucket. And people really buy the idea of, hey, I'd like to get to a point where Lenovo will configure the thing in the factory, including the rack, maybe all the cables, everything. It's literally wheeled in, it's plugged in, I changed my password, and I'm up. Whereas the old world was, it shows up in 53 boxes over the course of 10 days, then I spent two weeks trying to fit it all together, pray I connected it correctly, and there you go. So it's a totally different model. Peter, I wonder if you could help us connect the dots on some of the edge and IoT pieces. So a lot of people we look at and say, okay, you've got the Motorola phones out there, you've got PC division, but the data center group, how much does the data center group touch and interact with the consumer and edge and other devices? To me, there's multiple ways to look at IoT, and when you're Lenovo, you have our own view of it, just like every other company has. So clearly the internet of things, we sell a lot of things, we're going to do a lot of internet of things, right? That's what the phone and our PC and smart devices and all that stuff is about. But there's also a lot of, you know, we call it, all that data has to get processed by something. Guess who shows up when that happens? That's the data center group, right? So we view that as that's just an energy, whether the rest of Lenovo had all those things or not, that's just good for our business. It's just going to lift us with it. But more importantly, having that insight into what's happening at the edge with all those devices, what's happening as customers are looking at, okay, one of the big things is now I'm starting to see movement of some of the data center to the edge. They're moving the computation, the server needs out and closer to where the data is generated. That's a big opportunity for us. That's a whole new thing. And it's not something that easily moves to the cloud because there's a reason why it moved closer to the data. So for us, it's a big opportunity and it's a huge one. So when you look at Lenovo, we all have our individual business groups view of what this thing means to me if I was an independent business. And then we layer across that then, okay, but here's what I can do with that opportunity because I do know how to make all these things or I do know how to do that and I do know how to do that. So that's our huge, as YY calls it, our third wave. That's our real next key win. So you're all thinking about how as the data center evolves, where your businesses fit in. Right now, the bulk of our business is clearly in the data center. I would expect over time, you'll see more and more happen as these pieces of the edge come together. Great, well, that's what we'll be talking about next year. Hopefully, yes, absolutely. We have a lot of plans in place. I think you'll see a lot from us by this time next year. Yeah, maybe give us a little bit view on that as edge has been a very hot topic. What do you see as some of the impediments and what will happen faster as you talk about that? I think the biggest impediment is, the biggest impediment is, unlike a lot of other problems in IT, there is no formula. So if I want to run a production system, I'm going to go see Oracle, or I'm going to go see SAP, or I'm going to see someone else like that, and they've got lots of consultants and know how, and boom, I just got to kind of pick between ways of doing it. When you're looking at big IoT solutions, there isn't one. Everything is, what am I going to instrument? What am I going to get back is the information on that. How am I going to justify the ROI on this? How am I going to deploy this at scale because I don't know how to do that. All of those are things that are going on. So what we're finding as we work, we work with a lot of system integrators, people who help people understand proof of concepts and testing and studying. So we see certainly some areas, those 20 billion things that YY talked about by 2020, those are going to places obviously, but businesses are really struggling with how do I do this at scale in my business? How do I drive that intelligent transformation that I know I've got to do because if I don't do it, my competitors are going to do it. And that's to me where our opportunity sits and why it's interesting to be a Lenovo in that kind of a context. Great. Well, Peter Hortensius, thank you so much for coming on theCUBE. We've had a great time. Thank you so much. I enjoyed it very much. We'll have to do this again. Thank you. Indeed. I'm Rebecca Knight for Stu Miniman. That wraps up Lenovo Transform 2018. We hope to see you back here next time on theCUBE.