 Live from Las Vegas, it's theCUBE. Covering VMworld 2017, brought to you by VMware and its ecosystem partner. Welcome back to theCUBE's continuing coverage of VMworld 2017, nearing the end of day two. Lots of topics going on, my goodness. I'm Lisa Martin with my co-host Dave Vellante and we're excited to have Ed Walsh, general manager of IBM Storage back on theCUBE. Welcome back. Thank you very much, it's nice to be back. Yeah, so two really strong quarters of IBM Storage revenue growth. Don't let that get out, you know, make my job too easy. But thank you for noticing. You didn't bring your crystal ball for the third quarter? But I do appreciate it. We like to quietly just do it, but thank you. All right, so what are some of the big trends? What's coming down the pipe for IBM? Well, I think if you look at, well, the reason we're doing so well is I think the innovation we're driving the market now, which will take you in the future, but also just how we're approaching clients that are kind of resonating. And it does play into future trends and we can talk about, especially on the show floor, but I think clients are just challenged right now with all the complexity innovation. We can talk about till nth degree or bring in dev option environment, but it's the complexity of IT and all the change they're dealing with. And they're really looking, you know, in fact, if anything, because all the competition, like the Uber of my business coming into my industry and disrupting me, but we find all of our customers are on the heels a little bit in technology. Instead, they need to kind of lean in. And so the trend that we're seeing is people are trying to simultaneously, you know, modernize their traditional application environment, which is how do you free up your people and time through automation and agility so that you can move those people and resource drivers of transforming the business on higher value type of thing. So we see that consistently. So we see a lot of API type of automation tools that just freeze up the quarantine to do other things. You'll see that in our portfolio. So one of our big themes is the modernized and traditional application environment is what we do on true private cloud. Allow you to have all the capabilities of public cloud in a hybrid cloud environment. So bring everything you can do in the public cloud on-prem, the same automation capabilities, same DevOps tools, and use it on-prem and then go to the cloud when you need to in a hybrid cloud. That's all about automation, API type automation. It's all about freeing up your team. So what kills the team as far as the automation around DevOps or test dev? Also things just like backup protection, right? So how do you back up the environment? It can be just a complete manual task that really doesn't add a lot of value. Or if you use a new technology and innovate, you can actually use it to drive newer innovations and drive new use cases for that secondary storage. So we see those trends happening. That's where I would say our clients are kind of responding to the innovation we're bringing to the market and that's where you see us growing above market. You know, I want to pick up on the growth and talk about clearly gaining share. I mean the numbers were high single digits. Seven, yeah, 7% in Q1, 8% with growing margins, right? So expanding margins, that's dramatically over market. And the market's growing at what, low to mid single digits? One percent. Yeah, okay, low, basically flat. Yep. Okay, so that's significant gains, but one could say, okay, well, okay, IBM has been losing share and sort of hitting off the bottom and now it's gaining share. We'll see if you can sustain that. But I'm more interested in the attributes of a leader in the storage business. To me, it's just listing them here. Certainly got to be relevant. I want to come back to that. You got to have a complete portfolio. You got to have strong product cycles. You got to have a great go to market, strong leadership and maybe a little bit of luck. I don't know, I'm probably missing some things there. I would describe it very simply. Not a bad list, okay. So relevance, I want to go back. I said to Eric when he was on that interview you did with Peter Burris at our studio. Sure. And you were talking about digital transformation and data and storage being an active element. It seemed like a very relevant conversation for the C-suite. Sure. And as Eric was pointing out C-level executives they don't like to talk about storage because it's just a cost. So you've got the relevance piece going for you because you're IBM. Sure. Talk about some of those other ones. Complete portfolio and the product cycles have been very important in the past and IBM hasn't had that as an advantage but it seems like you've brought that to IBM. So talk about that a little bit, that cadence, right? So I've talked about coming here 12 months ago to really bring innovation and drive growth for division. I had the hypothesis and we talked about this, right? So I think clients are challenged. They're looking for a partner to help them out and I think where IBM is unique which gets to your questions is one, we have the right vision. How do you talk cloud and cognitive? How do you leverage your data? Whatever metaphor you use to get more out of your data leverage it for decisions. That's what we do both in hybrid cloud and public clouds but we also help people through these multiple years and IBM is very unique. Very few of our competitors actually say they can go through multiple eras and IBM's been through every year in compute and we calmly go through it and clients give us credit for that. You mentioned the broad portfolio. I actually, when I first started here I've been saying your portfolio's too broad and I kind of say if you really want to be meaningful to help people modernize, get from where they are to where they need to get to you need a broad portfolio to do exactly that IBM has the broadest portfolio in the industry for storage and then last but not least, which is innovation I actually think my secret weapon is not because I'm the storage company but if I could ever get the rest of IBM all the innovation, all the capabilities from Watson or analytics and cloud into my portfolio all of a sudden now I kind of distance myself from other storage. In fact, I would say it's a big boy or big girl environment where you need to actually it's not about the next array which I'll provide is actually how do you actually help people get from here to there and a single product company just can't do that although it's easier to market, it's the complexity so I think it is the innovation. In each segment we're in we're either number one and number two in all the segments so number two in overall storage, number one in software, number one in software defined number two in data protection, number one in analytics. Each one of those is highly competitive and you need to drive innovation and what we do is we leverage not only our development expense of developers but we have probably the only company in storage left that has primary research so we have our classic IBM research doing fundamental what's going to be next and that's what we're bringing to market. So what have you learned, second time around at IBM what have you learned about your ability to leverage those other pieces of IBM because every general manager talks about all the great things at IBM but few have been able to bring that in. I mean I remember when IBM bought store wise I was so frustrated like two years before you take this secret weapon you know put it in, do it, ship it, ship it and it took too long. What have you learned about how to leverage those innovations? So I think the power of IBM is you do have I've said it a couple times I'm honored to be the one they chose to help drive this transformation of storage but also I'm kind of blown away by the team so in a very short order we relaunched a contired new portfolio we refreshed the entire portfolio hardware and software late last year that's where you're seeing the growth we're also launching new products that are really hitting these innovation we're also as you said how do we leverage research is think of what we're just doing on flash so everyone's talking about NVMe well because we're already doing primary research we already have NVMe capability so NVMe is a way to do an IO and you're cutting through the IO path and your latencies go down in order of magnitude so everything's faster. Eliminating all that overhead of the scuzzy stack of just to simplify the- So we already have that in all our storage products and also we've just done it in the mainframe so we have an ability to do the mainframe storage it does 12 microseconds access time which if you think about that's NVMe performance but that's exactly what we're bringing from research into our product line you'll see more so we're bringing Watson so the one thing my processors how do you bring Watson to everything you do right so cognition or AI should be in your products hardware software on-prem in the cloud as a service how about how you do services support you call you should be able to chat but should be able to help you out do an analytics on the different data patterns so that's exactly what we're doing and all that's really from either research or from IBM grader I'll give you one just a tactical thing people are trying to back up to the cloud it's just hard how do you get all that data through a little straw well watch around I can either re-architect Spectrum Protect which we did a lot of re-architects we just announced a big product here today but instead I just leveraged a product called Aspera IBM had this company they acquired called Aspera that does a lot of basically file transfer to the cloud by doing an API integration in 30 days my Spectrum Protect clients now do 10 times faster back up to the cloud that's a good example of just leveraging the greater IBM and it was just a little asset sitting there but how do I bring it to bear for the benefits of my clients so how did that happen because that was really if I recall a cloud acquisition to be more competitive with AWS the same thing with the clever safe acquisition really fit into that portfolio round out the the blue mix cloud how did you go about sort of leveraging that I mean was it just knocking on a colleague's door was it as simple as picking up a phone call or did you have to like get people in a headlock and give them a noogie No, so I think it's more collaborative than that so I think in the past there was maybe sharp elbows but I think this is more collaborative if the cloud and the AI team inside IBM is wildly collaborative with me because I bring capabilities I can bring to them as far as what we can do around storage so I think that collaboration is working it's probably me more helping them out initially to make sure I'm building that bridge but then it's reciprocated it's very easy and the key thing is also being able to understand all that capability from research and actually try to bring it into the offering management team so getting my offering management team to be more open to be outside in outside in from the industry but also from outside in from the rest of IBM in and if I leverage these pieces all of a sudden my portfolio and all my development expense just gets multiplied it's a force multiplier that we're bringing in and that's where the clients are really responding to it so that's great Eric Herzog talked about that the outside in as Steve so it sounds like quite a cultural shift has happened shift probably isn't a strong enough word within IBM you talk about and everyone has talked about this message of clients want simplicity so as a GM how are you simplifying this collaboration cross function collaboration what are like the top three things you'd recommend to other GMs to bring the simplicity that clients want internal to be able to get to market faster and iterate yeah so one you have to look what's in the industry the other thing is really listen to clients so clients will talk about simplicity but then it's the nuances it's really the details of what they mean by that right so we use NPS on net promoter score but we actually get feedback on every service call or inside our own offerings so you actually get the feedback but more importantly you actually get detailed feedback of what they want to change so one you can listen to that you bring the outside in that's directly from the clients we use the term feedback as a gift sometimes it's not the but we respond within 24 hours to each and every one of those customers and that gets you into a nice circle of feedback the other thing is bringing in the right team so on my team about 50% of them has changed so I brought in basically a professional storage team from the inside and outside of IBM so that we can actually have our own outside in inside and then really you need to align your organization to be what the clients need to see so if you're for instance I did a reorganization as far as how we did offering management and go to market that they were aligned so instead of being product line driven what people are purchasing so people are doing distributed storage that should be one offering management line one owner instead of maybe three or four because I have three different four product lines and that allows you to simplify what happens in the market so if you can align your organization to what you actually need to deliver that's pretty easy so. Fantastic. I got to ask you so you're a unique executive and I call you a five tool player you got technical chops a lot of people don't know that about you I do you can go toe to toe which probably scares the crap out of a lot of guys that work for you but you got financial acumen you got a really strong network you're a visionary and you can inspire people both with that vision but you can also you know push them hard you know I've seen that and that's kind of your reputation and people have a great deal of respect so you've got that sort of perspective I want to get your perspective on what's happening in the world of VMware generally in data protection specifically you've had a lot of experience in that area you were the CEO of Avamar you sold that company Spectrum Protect is a big focus of your business today what's your sense as to what's happening here why is data protection exploding so much I've been asking this question all week and I'm still not sure I understand why and maybe this is a cloud effect but what's your take on it? So you mentioned simplicity it fits into the modernizing how do you free up your people from all these manual tasks I would say backup is one of those crazy manual tasks it's more of insurance policy and then recovery was always a very big challenge so what you're seeing is new technologies come out that not only solve all the manual processes so what we did in Spectrum Protect is it's really dramatically simplify what you do as far you set up an SLA and it literally self monitors and keeps track and literally it backs up to SLA and recoveries are instantaneous right that used to be hours of work every single day by someone and recoveries would take days or hours days could be a long time and now you're easy be able to come up and running but also now you have the secondary storage which is a cost what else can I do with that which has always been the dream now what you have is scale of architectures maybe all flash now in what you're doing on-prem in the cloud you have this image copy of everything in your environment for recovery purposes availability what else would you do with it one you want to make it easy so that ease thing SLA management for recovery so you can do instant availability for if there is an outage but also what else would you do with it right so now what we will do with orchestration you're able to take that secondary copy it's instantaneous he mountable or bootable copies also you can take a snapshot of that you can do data masking of that now you have this gold copy you can use for test dev or dev ops it could also be the way that you gather on-premises and you get a data copy into the cloud and it's a way backup is a very good way to keep a history of data on a day-to-day basis or a couple times a day so now you actually have an index of how your environment is changing over time that you can use for analytics or other things so what's really happening is it's going from a cost center that used to be a manual headache to everyone and you're taking the exact same requirement you have to do that anyway and now you're making an asset and also you're freeing up your team for doing it so I think you're going to see a huge investment in fact I would say probably the number one area people are investing but it's past dedupe so Avamar was the last well dedupe was the last thing that really changed backup recovery because it was just you can't be moving all that data just change the amount of data you're moving so you can do it faster, easier you know, check but now it's more about the agility and a secret way your backup is now the best way to feed test dev or the best way to feed dev ops it's best way to feed a cloud if done correctly so that's what we announced with Spectrum Protect Plus literally just do a backup and we can give you all these other use cases by leveraging the same investment it's if you're trying to modernize and free up your team and get more for what you already have to do it's probably the biggest low hanging fruit for clients yeah so I mean I think that's the answer backup has historically been crappy insurance that's not cloud like and the industry's demanding their customers are demanding a change and then also how do you do dev ops and test dev and use production data in a data mass format the way you don't want to do that in your primary you want to take a copy backup does that and you want to use that data so it's actually solves another area of agility for the same dollars wow fantastic I thank you so much for joining us and sharing your insight and we'll look for those those next quarter results and hope that trend keeps going up you'll like them outstanding well for Ed Walsh and my co-host Dave Vellante I'm Lisa Martin you've been watching The Cube's continuing coverage of day two from VMworld 2017 stick around we'll be right back with a show wrap