 Live from the Mandalay Bay Convention Center in Las Vegas. It's theCUBE, covering VMworld 2016. Brought to you by VMware and its ecosystem sponsors. Now, here are your hosts, John Furrier and John Walls. Well, welcome back to Mandalay Bay here at VMworld. Along with John Furrier, I'm John Walls. Glad to be with you here on theCUBE as we continue our coverage, what's happening at VMworld, exclusive broadcast partner here for the show. And along with John, we're joined by Eric Herzog, the Vice President of Product Marketing and Management at IBM Storage. And Eric, I just found out, you're one of the all-time 10 most popular CUBE guests or most prominent CUBE guests, most prolific. Congratulations. Well, thank you. We always love coming to theCUBE. It's always energizing. You love controversy and I love controversy. And you get down to the heart of it. You're the hard copy of high tech and I like that. I love that. And we could probably mark each of your appearances by the Hawaiian shirt, I think. What do you think? Either Hawaiian shirt or one of my logo shirts. We could trace those back. First off, vibe about the show. I mean, just your thoughts about, you've been here three, four days now. Just your general feel about the messaging here and then what's actually being conveyed and the enthusiasm out on the show floor. Well, it's pretty clear that the world is going cloud. The world is going cognitive and big data analytics. VMware is leading that charge. They're a strong partner of IBM. We do a lot of things with them both with our cloud division and our storage division. And VMware is a very strong partner of IBM. We have all kinds of integration in our storage technology products with VAI, with VASA, with vCenterOps, all the various product lines that VMware offers. And the key thing is everyone wants to go to the cloud. So by working with IBM and VMware together, it makes it easier and easier for customers, whether it be the small shop, Herzog's Barn Grill, or whether it be the giant Fortune 500 global entity working with us together, allow them to get to the cloud sooner, faster and have a better cloud experience. So you got everybody, cloud and virtualization and big themes, big topics. So why does storage still matter? Well, the big thing is, if you're going to go to a cloud infrastructure and you're going to run everything on the cloud, you need to think of storage as that solid foundation. It has to be rock solid. It has to be highly resilient. It has to be able to handle error codes and error messaging and things failing and things falling off the earth. At the same time, it needs to be incredibly fast where things like all flash arrays come in and it need to be flexible. So things like software defined storage. So think of storage as the critical foundation underneath any cloud or virtualized environment. If you don't have a strong storage foundation with great resiliency, great availability, great serviceability and great performance, your cloud or your virtual infrastructure is going to be mediocre and that's a very generous term. So that's a key point. So controversially speaking, to get to the controversy, the whole complexity around converged infrastructure, hyper-converged or whatever the customers are deploying for compute, they're putting the storage close to that, whether it's a SaaS in the cloud, which is basically a data center that no one knows the address of as we were saying. They're always going to have storage. It has to sit somewhere. What is the key trends right now for you because software is leading the way. IBM's been doing a lot of work. I know in software, we've been covering you guys. We'll be at IBM Edge coming up shortly in a couple of weeks. Where's the innovation on the storage side for you guys? How do you talk to the customer base and say, okay, I got some SaaS options now for backup and recovery or one of your partners earlier on talking about that. Where's the physical storage innovation? Is it the software? What's your thoughts on that? So we have a couple of paths of integration for us. First, software defined storage. Several of the other analysts firms have named us the number one software defined storage company in the world for several years in a row now. Software defined storage gives a flexible infrastructure. You don't have to buy any of the underlying media or underlying array controller from us just by our software. And then you could put on anybody else's hardware you want. You can work with your cloud provider, with your reseller, with your distributor. Enterprises create their own cloud with it. So software defined storage gives you a wide swath of storage functionality, backup, archive, primary storage, grid scale out, software only. So ultimate flexibility. So that's one area of innovation. Secondary units is all flash. All flash is not expensive. Essentially, I love old Schwarzenegger movies. In the 1980s, it was all about tape. He was a spy, he'd go and show what is supposedly the CIA with Schwarzenegger, all tape. Mid-90s, Schwarzenegger, another spy movie. Show a data center, all hard drive arrays. Now, in the next Schwarzenegger movie, hopefully, it'll be all flash arrays from IBM in the background. So flash is just an evolution. And we do tons of innovation in flash. I keep swapping Hawaiian shirts. It's always innovative. I get one from Maui, one from Kauai, one from the Big Island. So flash is where it's at from a system level perspective. So you've got that innovation. And then you've got converged infrastructure. As you mentioned already, where you get the server, the storage, the networking, and VMware, hypervisor, all packaged up dramatically. So we have a product called the VersaStack. We do jointly with Cisco and VMware. We were late to market on that. We freely admit that. But just to give you an idea, in the first half of this year, we have done almost 2X what we did in the entire year of 2015. So that's another growth, and particularly cloud service providers love to get these pre-canned, pre-racked VersaStacks and deploy them. And in a number of our public references, our cloud service providers, both big and small, essentially wheel in a VersaStack when they need it, wheel in another, wheel in another, pre-configured, ready to go, and they get up and quick going. So those are three trends. We just had a client on Scott Equipment, Adam Monroe, Louisiana, went to the VersaStack and singing your praises. But I thought, great example of medium-sized, small-sized businesses, so we keep thinking about enterprises and all this and that. It doesn't have to be the case. They're services that you're providing to companies of all sizes that are gaining new efficiencies and product. Yeah, people, everybody needs storage. And you think about it as really, how do you want to consume the storage? And in a smaller shop, you may choose one way. So VersaStack has converged infrastructure. Our software-defined storage, like Spectrum Accelerate, Spectrum Virtualize, a software-only model. Several of the products, like Spectrum Accelerate and Spectrum Protect, are available through software or other cloud providers. You consume it as a cloud entity. So whether you want to consume it on-premises, software-only, full array, full integrated stack, or cloud configuration, we offer any way in which you want to eat that cake, big cake, small cake, fruit cake, chocolate cake, vanilla cake. We got cake for wherever you need, and we can cover every base with that. A good point about the diversity of choices from tape to flash, and then you've got the multi-integrated VersaStack, so a lot of different choices. I want to ask you about, with that kind of array of options, how you view the competitive strategy for IBM with storage. So, you know, I know you're a wrestler, so is there a judo move on the competition? How would you talk about your differentiation? How do you choke hold the competition? Well, a couple ways. First of all, from a technical perspective, by leading with software-defined storage, and we are unmatched in that capacity, according to the industry analysts and what we do, and we have it in all areas. We got block storage, we got scale-out file storage, and scale-out big-date analytics. We got backup, we got archive. Almost no one has that panoply of offering in the software-defined space, and you don't need to buy the hardware from us. You can buy from our competitors. So, two things I hear, software, and then the array of solutions. All flash, right. What specific on the software are you guys leading and have unmatched that superior already? Well, Spectrum Protect has been a leader in the enterprise for years. Spectrum Scale is approaching 5,000 customers now, and we have customers close to an exabyte in production, single customer with an exabyte. Pretty incredible. So, for big-date analytic workloads, well, and gastronomic research. So, for us, it's all about the application workload and use case. Part of the reason we have a broad offering is, anyone who comes in here and sits in front of you guys, and says, my array or my software will do everything for you, is smoking something that's not legal. Just not true. Maybe in Colorado or Seattle. Okay, maybe. Maybe. But the reality is, workloads applications and use cases vary dramatically. And let's take an easy example. We have multiple all-flash arrays. Why do we have multiple all-flash arrays? A, we have a version for mainframe attach. Everyone in there wants six or seven nines. Guess what we can provide that? It's expensive, as they're all boxes that are six or seven nines, but now they can get all-flash performance. So, on the mainframe and the upper end of the Linux world, that's what you would consume. At the other end, we have our flash, our store-wise, 5030F, which can be as low street price, as low street price as $18,000 for an all-flash array to get started. Basically the same price as our hard drive array. And it has all the enterprise data services, snapshot replication, data encryption at rest, migration capability, tiering capability. It's basically what a hard drive array used to cost. So, why not go all-flash? So, let's talk about the evolution of IBM stores. Obviously they've been a leader in storage in the beginning, but there was a period of time there, and Dave, when I was talking to him in the queue about this, where storage from IBM, EMC, it took a lot of share, but there's been a huge investment in storage over the past, I'd say maybe five years in particular, maybe past three, specifically. I think over a billion dollars has been spent. I think we've got the Jamie Tomlin variety of folks from IBM. What is the update? Take a minute to explain how IBM has regained their mojo in storage. Where did that come from? Just add some color to that, because I think that's something that a lot of people go, hmm, they expect great things from IBM, but they didn't always have it in the storage. So, as you know, IBM invented the hard drive, essentially created the storage industry. So, saying that we lost our mojo is a fair statement, but boy do we have it back. Explain. So, first thing is when you have this cloud and analytic cognitive era, you need a solid foundation of storage, and IBM has publicly talked about the future of the world is around cloud, on cognitive infrastructure, cognitive applications. So, if your storage is not the best from an availability perspective, and from a performance perspective, then the reality is your cloud and cognitive that you're trying to do is basically going to suck. So, in order to have the cloud and cognitive as underlying infrastructure, that's rock solid. So, quite honestly, as you mentioned Dave, we've actually invested over three and a half billion dollars in the last three years. Not to mention we bought a company called Texas Memory Systems, which is the grandfather of our flash systems products before that. So, we've invested well over three billion dollars. We've also made a number of executive hirings. Ed Walsh just joined us, CEO of several startups, former general manager from EMC. I myself was a senior vice president at EMC. We just hired a new VP of sales. So, they're serious. You guys are serious. You guys are all in. Investing, bringing on the right team, focusing on applications, workloads and use cases. As much as I love storage, most CIOs hate it. There's almost no CIO that would ever a storage guy. They're all app guys. Gotta talk their lingo. Application, workload and use case, how the storage enables their availability of those apps, workloads and use cases, and how it gives them the right performance to meet their SLAs to the business guy. What's interesting, I want to highlight that because I think that's a good point people might not know is that having just good storage in and of itself was an old siloed model, but now you mentioned, because we cover all the IBM events, World of Watson, which is called Insights Edge, and Interconnect, the cloud show, cognitive is front and center. There's absolutely the moonshot and the mandate from IBM to be number one in cognitive computing, which means big data, analytics, integrated to the application level, obviously blue mixed in the cloud. Well, Blank was here on stage about IBM Cloud, the relationship with VMware. So, that fails if it doesn't have good storage, right? I mean, or it doesn't perform well, and latency matters, right? I mean, data matters. Well, I had a couple of things there. So, first of all, absolutely correct. But the other thing is, we actually have cognitive storage, okay? If you automate processes automatically, for example, tier data, some of our competitors have tiering, most of them tier only within their own box. We actually can tier not only within our own box, from our box to EMC, our box to NetApp, our box to HP, HP to Dell, Dell to Hitachi. We can tier from anything to anything. So, that's a huge advantage right there. But we tier, we don't just set policy, which is when data is 90 days old, automatically move it. That's automation. Cognition is where we not only watch the applications and watch the data set, we move it from hot to cold. So, let's take, for example, financial data. Your publicly traded company, Cube and SiliconANGLE, going to be public soon, I'm sure. Guys, you're getting so big. Your finance guy's going to say, Dave, John, team. This financial data is white hot, got to be on all flash. After you guys do your announcement of your incredible earnings, and thank God I hopefully get friend of the company stock, and my stock goes way up, as your stock goes way up. What are we smoking now? Come on, hold on. Well, let me tell you, when that happens, the data's going to go stone cold. We see that. You don't have to set a policy to tier the data with IBM. We automatically learn when the data's hot and when it's cold, and move it back and forth for you. You don't have to- So, there's no policy setting. Cognition or cognitive storage. It fits. Understands. It does the work for you. So, some big data module coming into the storage. Right, and that's a huge change. So, again, not only is it critical for any cognitive application to have incredibly performance storage with incredible resiliency, availability, and reliability, okay. When there is cognitive healthcare, true cognitive healthcare, and Dave's on the table, and they bring out their cognitive wand because they found something in your chest that they didn't see before. If the storage fails, not going to be good for Dave. At the same time, if the storage is too slow, that might not be good for Dave, either. But when they run that cognitive wand, A, that hospital knows that it's never going to fail. That doctor says, oh, Dave, okay, we better take that thing out. Boom, he takes it out. Dave's healthy again. Well, that's a real example, by the way, not necessarily Dave on the table, but there was a story we wrote on SiliconANGLE, one of our most popular posts last month. IBM Watson actually found a diagnosis and cured a patient that doctor had missed. I don't know if you saw that story. It went super viral. But that's the kind of business use case that you're in kind of, yeah, illuminating with the storage. Yeah, well, in fact that one of the recent trade shows, what's called the Flash Memory Summit, we went on a board for best enterprise application, commercial developer Spark Cognition. They developed cybersecurity applications. They recommend IBM Flash Systems, and actually Watson's embedded in their application. And it detects security threats for enterprises. So there's an example of combining Cognition with Watson, the Cognition capability of Flash Systems, and then their software, which is commercially available. It's not an in-house thing, they're a regular software. All right, now we're in the big time intoxication mode with all this awesome futuristic, real technology. How does a customer get this now? Because now, back to IT, the silos are still out there, they're breaking down the silos. How do you take this to customers? What's the use case? How do you guys deploy this? What are you seeing for success stories? Well, the key thing is to make it easy to use and deploy, which we do. So if you want the cloud model, we're available in soft layer, IBM Global Resiliency Services uses us for their resiliency service. Over 300 cloud providers use Spectrum Protect for backup. Pick the cloud guy, just pick one you want, we work with all of them. If you want to deploy in-house, we have a whole set of channel partners globally. We have the IBM sales team, IBM Global Services, uses IBM's own storage, of course, to provide to the larger enterprises. So whether you're a big shop, medium swap, we have a whole set of people out there with our partner base, with our own sales guys that can help that end user get up. And then we back it up as IBM is renowned for support and service in all of our divisions, in all of our product portfolio, not just in storage. So they need support and service, our storage service guys are there right away, you need it installed, we can install it, our partners can install this stuff. So we try to make it as brain dead as possible, as easy as possible than being cognitive. And some of our user interfaces are as easy as a Macintosh. I mean, drag and drop, move your lungs around, run analytics on when you're gonna run out of storage so you know ahead of time, all these things are the things people want today. Remember, IT budget cut dramatically in the downturn of 0809. And while budgets have returned, they're not hiring storage guys, they're hiring developers, and they're hiring cloud guys. So those guys don't know how to use storage. Well, you gotta make it easy, always fast, and always resilient. That way it doesn't fail anyway, but when it does, you just go into the GUI, it tells you what's wrong, bingo, an IBM service, or a partner service, comes right out and fix it. So that's what you need today, because there aren't as many storage guys as you used to be. No question, you've got the waterfront covered, no doubt about that. And again, congratulations on cracking the top 10. We consider that an honor, and a privilege to be a part of that. Great, well thank you. Good thanks, sir. We really appreciate it. Thank you. We'll continue the coverage here on theCUBE of VMworld right after this.