 Live from Las Vegas, Nevada, it's theCUBE at IBM Edge 2014. Brought to you by IBM. Okay, welcome back, everyone. Live in Las Vegas, we're IBM Edge. This is theCUBE, our flagship program. We go out to the events and extract the signal from the noise. I'm John Furrier, the founder of SiliconANGLE. I'm joined by Coach Dave Vellante, co-founder of Wikibon.org. And our next guest is Jamie Thomas, general manager, software-defined systems and storage for IBM. Welcome back to theCUBE. Thank you. Great to see you. You're smiling, you're talking to customers. It's your show. Lots changed in the past year at IBM. So, tell the folks out there quickly, what's changed and why is IBM different this year than last year? Well, I think we've arrived here with a perspective of what does infrastructure really mean to our clients on this new journey that they're embarked on? We've talked a lot about the new initiatives in the marketplace, particularly around cloud, analytics, mobile and social. And really, what does that mean to clients particularly from a storage perspective? It creates this opportunity for all of our stakeholders and the various accounts to deal with this new data explosion. And I think that presents new opportunities for them, new challenges. And so a lot of what we've been talking about this week is how do we enable our clients to tackle those challenges? We talked to Sebastian earlier in the result, which, you know, Pontificale, we were right last year predicting all this stuff, but the pace of change has been massive. We talked about the portfolio refresh, pretty significant, the speed of what's happened. So, and obviously now you're in command, that's the new change. He wouldn't put his finger on it, but was there a flash point internally with IBM? Was it years ago? He said five years organically they decided storage, but how did all this come together? Was it just a continuous rallying cry? Or was it more of continuous innovation? Well, I think there was a combination of things that led to the announcements this week. Clearly, the announcements we made are really a combination of innovations that we've invested in over a number of years, both from IBM Research and in our laboratories. We also fundamentally needed to address, we believe, this new generation, next generation of applications and workload that fundamentally are changing infrastructure needs. And it's requiring organizations to have much more intelligent infrastructure. So I believe the announcements we made this week are really founded on those two different premises. What do clients need to drive benefits from their existing storage environments which requires a lot of this innovation? And what do they need to do to capture this next generation of opportunity? Intelligence, obviously great. We saw the announcements here with Watson who bought an AI company, the brains of systems. We talk about this is a trend where you start to see reasoning kind of come into the equation. And that's my word, but AI kind of implies, computers doing some thinking, obviously cognitive computing was a theme. Now translating that down into storage and systems, it's a software driven world. Yes. As the person in charge, how do you take that and rally the troops? What's the message that you do internally and then how does that translate to the customer? Well, this week we spoke about three main tenets from a storage strategy. We spoke about software defined storage. We spoke about optimization and performance through flash innovation across the product line. And we talked about the infusion of next generation virtualization into environments to allow clients to optimize their resisting storage environment. When we look at software defined storage, what we really believe that brings to a lot of our clients is a unique ability to automate their infrastructure perhaps differently than what they've done in the past. So it brings ability to better manage the infrastructure, to better apply policy and data governance. It allows us to more intelligently tear storage to the most effective media and not only achieve the needs of new workloads, but also tap into the back office expertise, if you will, that we can get through things like flash, through disk integration and through tape integration. So it really opens up a lot of opportunities for our clients. So Jamie, you're a software person by background. Software development, middleware, you really know that business well. Now you're coming into a division that the world sees anyway as hardware group. I guess the first question is that a sort of misnomer is software sort of eating the world, as Mark Andreessen would say. And what does your software background allow you to do with the storage division that somebody made me without that background might not be able to do? Yeah, well, I think first of all, we see ourselves as a provider of solutions for our clients. And even within, quote, the hardware division, clearly many of our offerings don't operate without software. Just as Tom Rosamilia said yesterday, software does need hardware to run somewhere. So it's really about optimizing the combination of software and hardware to the benefit of the clients is my perspective. And that's something we've been doing for a long time. If I look at my experiences that I had with WebSphere in the early days, the real secret there to success with the optimization of the middleware and tying that more intelligently to the hardware layers in which we believe we effectively did with both power and the mainframe in those days. So in the storage arena though, I think what software allows us to do allows us to have more agility. It allows us to meet client needs in some of these much more dynamic environments where the requirements are evolving much more quickly. It allows us to do that effectively. And it then gives clients a choice. So you can buy certain solutions as a software form factor. You can choose to buy them as an appliance form factor. And frankly, as we give clients a choice about building out on our cloud infrastructure on software, it gives us flexibility in being able to run those assets out there in different pricing schemes on top of software. So let's unpack your three pillars here a little bit. Let's start with software-defined. You announced Elastic Storage. There's a lot of components that people are talking about. So talk a little bit about the software-defined products. What can I buy today? What is in there? Well, as part of our software-defined strategy, we announced two main offerings. One is our new offering, codenamed Elastic Storage. And that is really focused on these next generation workloads, predominantly driven by unstructured data sets and analytics, the need to apply analytics to that unstructured data. I can talk a little bit more about Elastic Storage in a minute. The other key offering that we announced as part of our software-defined portfolio is our storage virtualization capability, which has been around for a while and we updated in a major way at this conference, allows our clients to virtualize a very large set of IBM and non-IBM hardware, over 260 different footprints, if you will. And that is a software form factor that we've had available in that environment for a while. From an Elastic Storage perspective, this is an offering and capability we've invested in over many years. And it was originally the technology, the storage layer that powered Watson and other supercomputers. And now what we've seen in this shift that's occurred in the last year and a half is more of our clients are assimilating unstructured data, particularly around social mobile context because they're trying to personalize experience in different ways or they're trying to use this data for things like risk analysis or fraud analytics or other industry-relevant problems. They need a different way of deploying the infrastructure. And this capability allows them to achieve both flexibility and economics around this deployment. So the strategy is to bring those pieces into the storage solution, make it a fundamental part of it. Now, I have a question on the next generation virtualization. So what is NextGen about what you guys announced? Is it just bigger, faster, better, or is there some other secret sauce in there? Well, I think the main innovation that we announced within the virtualization capability is our real-time compression. And this innovation around real-time compression allows our clients to store five times the data with the same storage footprint that they already had deployed. So we think this really helps our clients. And we're really trying to help clients understand more intently, when they use this kind of virtualization capability, they're able to achieve better parameters around continuous availability and mobility of their data. Gives them a lot of flexibility about how they manage their hardware, how they do maintenance of that hardware, how they upgrade it. And a lot of the software to find agenda to me is about flexibility. It's about flexibility of how you use your hardware and how you manage it, ultimately. And of course, the other big disruption is Flash. Guy's made a big announcement. Let's see, last year, last April, Steve Mills announced a billion-dollar investment. He likes billion-dollar investments. A good number, nice round number. So talk about what's going on in Flash and what's new there. From a Flash announcement, you're right. We did also share this week that we've shipped over 2,000 Flash systems, as well as we've shipped now over 100 petabytes of Flash-related storage. The other thing is we announced that we've infused our DS8000 product line, our high-end product line, with Flash enclosures. And that gives our clients in that space some improved economics. 3.5 times performance improvements, 50% space improvement, and energy conservation as well. So it's just another step along the journey of infusing Flash into the larger product line. And in Boston last week, you guys had an event. It was great, and it was good because you had talked about the products, but you also gave a little direction and you had some guys come in from Haifa, from the labs. They talked about things like storelets and sort of new object stores. And so some of that is directional, right? A lot of that is directional. Maybe talk about that direction. You know, I'm Bush Goyal on last year. Sort of set the record straight. As I didn't say I didn't like object, I think it's the future. But so what about object in terms of the direction? So what we really are doing with object is we plan to improve our integration with OpenStack Swift. We've already done quite a bit of testing on that front with our Elastic Storage offering. Through the integration of OpenStack Swift and Elastic Storage, we can achieve object support. Really, that just has to be a maturity of testing and then putting the finish on that particular scenario. Here at the expo, we're demonstrating the use of OpenStack Swift with Elastic Storage and using our Enterprise Content Management solution as just a workload example of how you could take advantage of the storage layer. So what if I could summarize the strategy? So you've got your software-defined storage products and vision solutions. You've got the flash capability. You've got the underlying virtualization capability, which is fundamental to any software-defined. You have to virtualize the underlying hardware. And you're allowing the existing product suite, the portfolio, to play so that your customers' data services don't have to rip them out. That's different clearly from some startup who says, hey, I'm new and I'm just going to go software-defined and don't have to worry about the old stuff or just worry about the new stuff. You don't have that luxury or it's two-edged sword, right? But how are you different than, say, some of the other large, the storage cartel, I often call it, some of the large suppliers? So some of them are doing the same thing. What's different about IBM? Well, we do believe that there's a different approach to software-defined storage. In the next generation space where Elastic Storage plays, we're really focused on a software-agnostic offering that can run on multiple types of hardware. It runs on X86 today, it runs on Power. We believe that this software layer also can be effectively integrated with these other storage mechanisms and we already have that in place today. So as you said, the integration with tape and flash and things like that, that is there today. We believe that that data governance capability that provides us the unique availability to achieve economics without maintaining multiple copies of data, those are unique characteristics of that storage layer. And we're really keeping that much more focused on next generation while allowing our clients to tap into those existing storage environments. And how about open source? Where does that fit? Well, from an open source perspective, we really think that it's very, very important that we, first of all, we've integrated all of our storage with OpenStack. So in the past year, we've integrated all of our storage products, including Elastic Storage, XIV, StoreWise, into the OpenStack sender and Swift now with the object work. We've also are integrating Elastic Storage with Hadoop, creating a Hadoop connector so that we can also integrate more effectively with that community. And we've continued to drive a lot of innovation into OpenStack. We contributed over 200,000 lines of code to Icehouse to support the infrastructure needs that we have across IBM. So this is a collective effort between our server unit, our software group, our services unit, because we're using OpenStack holistically across the different units. And that brings up a lot of the questions around doing stuff out in the open, innovating in public. I was the open source. We also heard from the practitioners here. It's about trust, right? They need IBM to be a trusted partner at the channel level also, at the practitioner level, at the customer base. I've got to ask you about virtualization. We've heard some folks talking about VMware earlier and that they love IBM's tool chests because they can come in and work within the different countries to build large-scale infrastructure. So with that in mind, there's some stuff on the web here saying IBM's number one in Flash optimized solutions from across the portfolio around virtualization, caching and training and management. Is that true? Is that number one? Is that a stat that you guys put up there? In terms of Flash? It says IBM's number one with the $1 billion investment, 12 Flash centers of competency, 82 petabytes. What does that mean? Was it part of the executive edge presentation? Well, we do believe that from a Flash placement perspective that we are the leaders in Flash technology delivery into client base today. So yes, we absolutely do believe that. I think it's a combination of the innovation that I spoke about, the investment and things like the competency center. So you have to have the ability to not only deliver innovation but make sure that your field is successful with that and clearly the partner channel is a critical part of that for us. What is the $1 billion investment? Dave and I always joke, consumerization of IT. The $1 billion investment is really the base acquisition price of Texas memory systems along with the ongoing investment that we've made in Flash from an organic perspective. We were joking the other day because someone stole one of our quotes on theCUBE on the, I think it was Business Insider, but I said 10 billion is the new one billion. Yeah, joking on the old, these dot com companies getting 10 billion users. We have been talking about numbers a lot this week, right? Head of Bytes, Yotta Bytes. One billion's kind of a yonder, I mean, what's more? Give us, is there a $10 billion number in your future? Maybe they do. Okay, next question. Well, so. No, kidding aside though, that's a significant investment but put that in context. I mean, you're spending that internally and we brought this up at OpenStack HP so they put a billion dollars in. You guys have a billion dollars in with the BlueMix. Is that really a billion dollars if you factor in what's inside IBM, what's outside IBMs? Because ecosystem is a big part of what you're seeing. Yeah, I think that clearly one billion is just the IBM investment and we really, there's a tremendous amount of a partner investment around these products and as you say, we don't really include that in the total number. So that's a very good point, I think. So we're seeing a lot of hubbub about things like pure storage and all flash arrays. Is there one silver bullet we, I certainly don't think so. We've been trying to analyze that. I want to get your perspective on that because you have a portfolio of a lot of different use case, got transactional, high-ups, intensive environments, then you got big data. Is there one tool fits all or not really? What's your view on the all flash approaches? Well, clearly all flash is an important play for us. We've chosen to combine flash with virtualization because we think that has a lot of benefits. We also believe that flash infusion of these other product lines is really critical. So we're not going to have one single flash recommendation for every workload. I think right now we see different use cases that require different offerings. But as things change and as flash becomes more prevalent, our product offerings will reflect what customers need and desire. Well, and there's a practical situation there too is a lot of the flash startups in particular and even the flash products from existing players don't have a stack. You drop it behind an SVC, it's the stack. So you have a robust, rich stack, 10-year history of whatever service storage services you want, you get it in your flash today. And I think as you said earlier, I think as the stewards of a large client base, we're always focused on how we allow them to innovate but how we allow them to progress forward with the investments they've already made with us. We have that obligation, right? We have to do both. So my final question for you is what's your agenda for the year? Honestly, you have a lot going on, portfolio refresh, you're talking to customers, is it to continue the portfolio expansion, grow the customers or any specific priorities you have you'd like to share with the folks out there? Well, I think I stated the priorities earlier, right? The software to find a storage agenda, the flash agenda, the continued journey with storage virtualization. There's much ahead on the software to find front that I'm not going to necessarily share here all of the conference, so there's more to come. You can tell us who you're going to buy. So, yeah, Dave always gets that out of you. Gross margin, too. That's the space of stuff. But this is a very large agenda for us. I think that there's a tremendous amount of opportunity to integrate the portfolio more effectively that we've started to talk about some of that, but I think there's more to come on that as well. Final question, share it in your own words to the folks out there. Why is this time in history so important for this industry? You see Watson getting more AI, you got cognitive computing, seeing storage, and you're saying you're going to look at storage and have software integrate into storage, vice versa. Why is this point in time so important for the folks that aren't on the inside of the ropes in the weeds like us? What's important? Well, I think there's an inflection point right now that really benefits those of us who are part of infrastructure, part of the storage infrastructure, because this significance of data, right? The infrastructure, we're the stewards of the, I said yesterday, data scientists, right? We're really the stewards of the data for many organizations, and the choices that we make, IBM is a vendor and the clients that work with us, I think fundamentally we'll set a foundation for workload for years to come, and I think that's an important responsibility to next generation of workload that we're responsible for. Fifty years ago, the mainframe was doing information processing. It sounds like we're back at the data processing, MIS department, D-P, data processing. Well, we appreciate you taking the time, I know you're super busy. We really appreciate you supporting the Cuban coming on and sharing your insights. This is the Cuban side, getting all the action, talking to all the thought leaders and the executives, here at IBM, live in Las Vegas, theCUBE with John Furrier and Dave Vellante. We'll be right back after this short break.