 Live from Orlando, Florida, extracting a signal from the noise. It's theCUBE covering Pentaho World 2015. Now your host, Dave Vellante and George Gilbert. Hi, everybody. We're back. This is theCUBE. We're live here at Pentaho World. This is day one of a two-day CUBE event. We're going to go wall-to-wall coverage. Kevin Eagleston is here. He's the Senior Vice President of Social Innovation at Hitachi. Kevin, welcome to theCUBE. So, you do a lot of Twitter? Is that the deal? So, I am now tweeting, but I sort of asked to have it done. You know, I looked up on Twitter and was like, wow, it's not a huge social graph. Social innovation, of course, Hitachi. Let me just have a shout-out to Michelle. So, I love this story. I love the acquisition. When it first happened, first of all, I liked it because I thought it was a nice play for Hitachi data systems content, you know, business. But now, having heard you today and start to think about the amazing opportunity, $80 billion company, an industrial giant, the fit that Pentaho has. So, congratulations on picking up a gem. Thanks so much. Really amazing. Yeah, we've gotten a lot of words and congratulations that you bought the right company. That's how we feel. So, let's help our audience understand what social innovation at Hitachi is all about and your internet of things and big data vision. Sure. So, as you saw in my presentation, social innovation is our IoT and big data strategy. The longer story of that is that it really reflects the 105-year sort of motto that we live by at Hitachi and that is that we've always wanted to take what we're really good at and solve big problems and make a difference in the world. And that's the social aspect or the societal aspect of what social innovation is all about. But now it reflects our IoT and big data strategy and we think that delivering IoT solutions solving big IoT problems is the best way to make a difference. So, people think, historically, Hitachi, Hitachi data systems, mainframes, storage, but Hitachi Consultant, you guys got server infrastructure, you've got obviously industrial aspects of your business, medical. Talk about that business and how it's the scope of the traditional HDS team is expanding. Sure. So, Hitachi, historically, has been operated like a conglomerate. So, it's over 900 companies operating pretty independently and HDS being one. We've been around a long time as you guys know. You've worked with us over 30 years independent U.S.-based, Silicon Valley-based company focused globally in the IT space. The Internet of Things has really brought us all together. What it's driving is with us, kind of at the pointy end, especially Pentaho at the very pointy end of this, this new revolution of IoT means that this is the time for the industrial side and the IT, big data, analytics sides to all come together to bring solutions to market. So, move from a pure product in a particular industry to a real solution to an IoT or big data problem. So, I'm very interested in the go-to market. How do you see that playing out? I'm probably still figuring it out, but Pentaho to me is like, I'm reminded of Napoleon Hill. A little lever can make a huge game-changing difference. And Pentaho, you're talking about tip of the spear, how do you plan to go to market with Pentaho and build solutions? Sure, so Pentaho specifically, there are two paths. We're taking this huge sales force that HDS has. 2,000 people globally in the field, plus the Japanese Hitachi sales force to grow Pentaho's organic business. So everything Pentaho does and has proven itself in the market to do, it's going to be a vast expansion. That's what we call synergy, our synergy play. And then, embedding Pentaho and everything we do from a solution perspective. So you see Pentaho over time embedded in the solutions we bring to market. So how did the acquisition come about? Because when I saw it, I was like, hmm, that's interesting. And then I started to understand it a little bit better. So take us back to... Sure, I'll go back a couple years. We've done a lot of acquisitions and our style of acquiring is let's date and then let's decide if this makes sense, if this relationship makes sense. So we had a mutual interest in each other. We internally wanted to make an acquisition that did what Pentaho did for us, in terms of strategic direction into IoT and big data. We looked at over 100 companies, but as we were looking at over 100 companies, we started to build a relationship with Pentaho because it was pretty clear that they stood out to us as a great match for us. So we put an OEM agreement in place so that we would start the process of embedding and in the meantime get to know each other. There was simply no question who the best acquisition was and that was Pentaho. So GE made a lot of noise about industrial internet. They put an investment in Pivotal, which I think they seem to be, you know, on part of it sort of back peddling. Their idea sounds at least superficially like yours where they were going to be drawing sensor data from all their equipment and in some sense adding a service capability back to it all, whether it's, you know, selling uptime for jet engines, you know, or uptime for turbines, you know, for power dams or whatever. How is what you're doing different and the choice of tools is very different that the two companies made. How does that reflect the two strategies? Yeah, so they are two strategies, but they are very similar. We've actually have compared notes with GE because GE is actually a great partner of Hitachi's. So we have a joint venture in the nuclear business. We do a lot of business on the HDS side with a couple of different parts of GE and GE is a great Pentaho partner as well. So they embed Pentaho in a solution that they have. So what's different about between the two companies is, you know, besides the fact that it's an American or Japanese company, is that GE didn't have their own big IT operation, right? It had been sold off some time ago. In fact, I think Quinton has a history with that side of GE. We did. So GE made an investment in Pivotal and partners with a lot of companies and we would expect that over time because our goal in IoT is we just want to make that pie bigger, faster. And it's a very big pie, the IoT pie. We think a partnership with GE, yeah, you know, in many companies will it be some competition, no question about it. We think a partnership also is a good plan. Talk about the TAM a little bit. You threw up some big numbers today. I think I saw one number, seven trillion. Whoa, that caught my attention. That was sort of the value creation. And then I think still, two trillion was the market you're going after. Talk about the TAM, how you look at it. So seven trillion represents the entire IoT market according to IDC for 2020. And then we actually hired a consulting company to take a look at everything that we do commercially and match it to what that market looks like and it's about a two trillion dollar market. And the way we look at it though is maybe a little different. We're a commercial, publicly owned company that we need to drive returns to shareholders so a two trillion dollar TAM gets our attention and all. But we also look at that as that's an investment that people are making around the world in IoT solutions for which they expect they're going to get a return. So that return means that that impact of IoT in the world and the impact that we can have is much greater than two trillion dollars in terms of economic growth and standards of living and health care outcomes, more efficient transportation, so many ways to have a real impact and that's the other way we look at that big TAM. That's potentially conservative. You know, a seven to two ratio. I could see it being a lot bigger. You know, and it's a very long-term market, right? This isn't going to be one of those you know, up and down kind of things. This is decades. Well, I wanted to ask you that. I saw a chart the other day and it showed disruptions in the industry. It showed a mainframe and then mini and then internet, you know, PC and then internet and it showed IoT is lower than those curves. I said, I don't get it. Less disruptive? I talked to the person who did the chart and he said, well, it's the guys who own the things that are going to evolve to dominate internet of things. So value creation, bigger than all of those. But in terms of disruption, it's the guys who, it's the GEs, the Hitachi's who have the infrastructure in place that are going to you know, profit from this. Does that make sense to you? And not only profit, it does, and not only profit, but they're in the best position to actually drive the value for the clients, whether it's cities trying to become smart cities or whether it's hospitals trying to deliver better outcomes or it's other industrial sorts of plays. We're just in a unique position to be able to do that. So that leads me to the ecosystem question. So talk about your ecosystem, how deliberate you will be around IoT. Obviously, you can't go it alone. It takes more than a village. It takes a glow. Talk about your ecosystem strategy. Yeah, so it's huge. It's going to take a huge ego for all of us. And if you're not partnering to deliver value in this space, you can't be successful. You can't be selfish. You can't be a not invented here kind of a company. And so, we're very, one of the reasons that you heard from me that we acquire Pintaro is because we're moving down the open source path. So you see increasingly in our software business becoming more and more open source and as a service model as well. So we incorporate a lot of open source technologies in our solutions and in our stack. We're part of our future, no question about it. And while we're really good at a lot of things, we have tremendous scale in terms of innovation, technology and people. All the 500 data scientists we have, we also recognize we're not good at everything. There are companies who are better at elements of a solution or a stack or however you want to look at it. So we're not at all proud about saying, okay, we're good at that. We will build that. We're going to partner for this. We'll OEM for that. We'll license for this. So just to understand the different strategies just because GE has been somewhat vocal or somewhat articulate at least over here about what their intentions are. So they might say, rather than sell a jet engine, we're going to sell flying time. If you were in the jet engine business and you're packaging up something that includes Pentaho and other things, what would you be selling? So rather than jet engines I'll tell you what we're doing in the train business because that's a business that we're really big in. So we make bullet trains and all of that. So in the UK, we've won a series of train contracts, which traditionally in the old days would be locomotives and carriages and some services and all of that. That's transportation as a service now. So we have a 28-year contract in England and across the UK actually that's purely SLA-driven as transportation as a service, much like your example with jet engines. And so what that means is that we will, we're providing all the investment, the capital investment. We've supplied as a service to SLA levels. We leverage big data and analytics to drive the normal efficiencies, better customer experience, and we're incented to be as good as possible at that. Well, and then the other thing you said in your talk is you've digitized or begun that journey internally and that's huge, right? When you think about IoT you think about digitizing everything. Can you talk a little bit more about that and sort of what you've learned through that process? Sure. So, as we at HDS and Pentaho have gotten to know our colleagues around the different industrial elements or sections of Hitachi, what's clear is one is that they're always known as, no matter what business it is, like you knew us in the mainframe of the storage business as being the best in class, like never break and that's been the case across all of our industrial solutions and products as well. And in order to do that, we've always had to be the most advanced. So we've sensorized everything that we do and we collect data on everything that we do so that we can deliver great reliability whether we're making a compressor or a wind turbine or a gas turbine or whatever it is. And so we've sensorized it and then we turn that into valuable data to just make stuff run better and now ultimately to provide new revenue models for our customers. Kevin, you also said in your keynote we want to be more like Pentaho. We want to look more like them. What did you mean by that? I mean you talked about open source but what did you really mean by that? Yeah, what I meant by that is that like I said before, we've been just an industrial conglomerate so really good at widgets a lot of different widgets but Pentaho is good at is blending data they are the big data future and IOT future for you but that's why all of these customers use and embed Pentaho what they do and their open source and their fresh and young and new to the industry all of that if we were to suck them in and try to make Pentaho look like us, they die they would just sort of dissipate and we'd lose all the power of that what all of our Hitachi colleagues and us at HDSC and Pentaho this is the direction of the universe. This is where business is going, where IT and industry is going they've got a model, whether it's subscription based, whether it's all the things they do technologically and open source, that everything that they do, that's what we want to be and they've figured out how to do it and they've made money doing it. I've followed Hitachi, had a relationship with them for over, well over 20 years, 20, 25 years been to Japan a bunch of times, been to Otawara a bunch, was always cloudy, could never see Mount Fuji, but it was always a company that thought for the long term so I want to ask you, this week we saw an acquisition or announced Dell EMC you've seen companies like Informix go private, you know, DMC Dell went private so that they could take a longer term view as somebody who's been in that business competing against DMC for all these years, you guys must be thinking, is this really how it ends? What does it say about the industry that we're in generally and Hitachi's strategy specifically? Having worked in other companies that were publicly held American headquartered companies, we're very different even though we're publicly held, retreated on the Tokyo Stock Exchange at all, we're still the Japanese long term business culture permeates everything that we do I've always felt as though it's much more like working for a private company, we're certainly driven to produce return to our investors, you know, all of that but the attitude is different there's not that, you know, last two weeks of a quarter desperation to get to an earnings per share number and do unnatural things that are good for the short term and horrible for the long term, we really have worked very much like that as Hitachi and as a subsidiary of Hitachi's, so I think that we've already we have the benefit of that we're super excited for the road ahead we're out of time but I'll give you the last word Kevin so, thinking about sort of the bumper sticker on this event and as a launch pad for the future of of social innovation, what's the tag line, what's the bumper sticker? Well, I'm going to go back to how we look at the Internet of Things and this is what the Pentaho acquisition was all about and that is that we want to play in the we want to be a dominant player in the Internet of Things space, specifically in the Internet of Things that matter, where we can make a big difference, that's what it's all about huge opportunity for value creation and it's not just about as you said before, the profit from the vendor it's about the value that you're creating downstream so, as I say, we're super excited thanks so much for coming on theCUBE, but thanks for having us here yeah, well thanks for coming it's really fun to have you guys here, you've really spiced it up yeah, it's really our pleasure keep right there everybody, we'll be back to wrap we're live here at Pentaho World 2015 this is theCUBE, right back