 Live from Las Vegas, Nevada, it's The Cube at IBM Edge 2014. Brought to you by IBM. Now here are your hosts, John Furrier and Dave Vellante. Okay, welcome back everyone here live in Las Vegas for IBM Edge 2014. It's The Cube, our flagship program. We go out to the events, extract the signal from the noise. I'm John Furrier with Dave Vellante, wrapping up our two days of wall-to-wall coverage at 40 segments, Dave. Again, another content acquisition tsunami. We sucked it in, we analyzed it, we spit it back out. It's on siliconangle.tv, with all the analysis, all the commentary, really extracting that signal from the noise. And I want to ask you, first question is, is that what's your take on this? Obviously, we've been close to IBM stores now for three, going on four years. You've been longer. The Cube's been on the ground, embedded, and watching the transformation. For me, at least, it's been very interesting because, you know, you get this old storage division. This is my take now, this is my view. Very relevant, they had particularly invented storage. Emerge and go, wait a minute, we are in the middle of the most important mega trend of our century. Again, it's certainly a storage bubble with flash. And all of a sudden, IBM just like got out the broom, cleaned house, cleaned up the living room, cleaned up the kitchen, brought in new management. And now, this is the awakening and the announcement and the portfolio is pretty comprehensive, pretty impressive. I want to get your take on it. What happened with IBM storage and convergence? How did this all come through? I asked all the top executives, was there a flash point? Was there a Pearl Harbor memo? Was there a moment in time where it was just a continuous evolution? What is your take? You've been on the ground following this. Yeah, I haven't particularly addressed this, but I'll tell you, as you know, John, I'm an observer of, and I like the history of the business. And I go back to Bill Zeitler's tenure. Bill Zeitler was the head of STG and back probably, you know, in the mid 2000 timeframe, he said something. He said, R&D is growing at 9% and the business is growing at 6%. Something's got to give. And what gave was R&D and storage. IBM pulled back on a storage R&D. And just like we saw during HP's herd days, when HP pulled back on R&D, it wasn't able to just flick a switch and turn on the R&D machine again. It was acute within IBM storage. So it's taken a long time for IBM to get back its groove swing on bringing out products into storage, going from research and development into the storage portfolio. This is the first edge we've been at where we've seen a massive portfolio overhaul. And I think that's a huge advantage for the company, particularly on the sales side, right? You want that spate of products to be coming to the market with a lot of excitement in the channel, new stuff. Everyone wants to know, what's new? Oh, that's new. Let's sell the new stuff. Everybody wants to sell the shiny new toys. And I'm very encouraged that IBM's now hit that cadence and it just takes a long time. And it is a lot of biz dab. They do a lot of M&A activity. I'm sure we've talked to some of the strategy guys. It's not like they woke up and said, oh, we woke up from a deep sleep in the frozen tundra out in La La Land. They've been on this. So is it, what made it happen in your mind? Was it flash? Was it cloud early days? Was it Amazon? Can you point to, in your opinion, can you point to an event, a vendor, a trend? What really got them? I think David Fleury got it right when he said, if IBM's going to take it back, now's the time, because there's so many disruptions with cloud, with software defined, with flash. And I think the big one for IBM is open source. And it's true, there's a lack of customers right now, end customers for OpenStack. When you ask people at these OpenStack conferences, stand up if you're involved in OpenStack. Everybody stands up developing an OpenStack, a lot of cloud service providers, a lot of vendors. You say, stay standing if you're an end user organization, boom, everybody sits down. So the uptake in the end user side hasn't been there yet, but we think it's going to happen. And I think that's a big advantage for IBM. I think that their open source affinity is much greater than some of the competition. We've got 40 guests on this, 40 interview segments. We've talked to a lot of end user customers, talked to some channel partners. What's your assessment of the current one indirect channel? That also includes ISVs, business partners, and resellers. What's your take on that? And second part of that question is, what's your take on the end user traction? We heard some really candid conversations here around fully integrated stacks, expectations. What's your take on those two things? Well, a couple things. So the channel, it's interesting to note how loyal the IBM's channel seems to be. I mean, a lot of really blue resellers. And I think one of the things that I didn't hear enough from the channel was what I've been calling all week is that application affinity. I think there really is now going on in the channel of a main emphasis, a shift, a pivot, if you will, to use a Silicon Valley term toward application affinity, particularly around SAP, Oracle, Microsoft, and workloads. Maybe I should say workloads instead of applications because VMware is the other one. So what's happening is channel margins in the channel are getting squeezed, as you know. You're probably only getting, maybe you're getting 20 points if you're selling a box. But what you're seeing is there's more value to those resellers, excuse me, that can actually deliver within an application environment whether it's Oracle, SAP, Honda, Microsoft, et cetera. They might get 25 points, 27 points. Those guys are hard to find. So I'd like to see IBM get aggressive around that. So that's sort of the one thing. The other flip side of that is, from an end user standpoint, it feels to me, John, like IOD, right? When you went to IOD several years ago, it was like, what is this show all about? And all of a sudden, the show woke up and became the big data show. It's probably the premier big data show. I see something similar happening here with Edge where IBM is putting together a lot of the pieces of the portfolio, riding Watson's coattails, bringing in GPFS, getting its act together on SDS. And it's starting to have a much more cogent story that's resonating much better than the customers, which used to be a story of, oh, there's this product and that product and that product and that stovepipe. Have you observed kind of a similar trend? Yeah, well, I was, you know, the first Edge a couple of years ago, I was like, oh my God, these guys are missing the boat. I mean, I was pretty critical of IBM in a positive way. You know, I love IBM, being a co-op student all back in, you know, 20 years ago. But, you know, I'm like, story, it's so obvious. It was so obvious at the time. I think everyone in the company obviously saw that. It was clear to me that they were missing the boat. And what my first observation was, oh my God, they have all the keys to the kingdoms, all different kingdoms, but they were siloed out. And we've talked to a variety of executives from Jeff Jonas as a scientist to top executives that you could take a little bit of Tivoli, take a little bit of that, take a little bit, and just bring it in together and create a new restaurant of value, right? Where you can actually cook up a new meal, the modern era, as they're talking about here. So they've done that. And I think that was clear to me. And I think Edge is the premier show. If these guys can extend out and make it the converge infrastructure show for the modern enterprise and service provider with integrating in big data and these critical infrastructure under the hood conversations. You know, everyone's going to have a hot rod, a large scale system, they're going to have a large scale systems architecture that will look like a hyperscale mega cloud. All the customers were going to go there. It's very clear what version of the hot rod they'll have, what kind of car they'll drive will depend on the engine that they need to build to their business. So I think that to me is the opportunity for IBM Edge and they've gotten there. The other observation I will point out, Dave, is that you're right. The big data moment with IOD is a great example, great reference point. This one can be the same for also the networking side. So, you know, I was very impressed with Jamie Thomas and her interview today. She's a wonderful person. She's so approachable, likable, very transparent, but she is smart. She's wicked smart, as we'd say in Massachusetts. And it's clear from some of the conversations I've had under the table here in the evening, she's been a big part of this retooling. And whatever she's doing, she's doing it right. So we heard of things about VMware today. We heard about virtualization. We heard about big data. So this is not a storage show. It's what storage does as an engine of innovation. So I think Edge can be that show, like IOD's being big data. So clearly IBM needs to consolidate some of their shows. There's a little bit of overlap. I see them going to a handful of shows and then going global with this. So I think Edge has some staying power with that. Other than that, I'm very impressed with some of the customers. We had Brendan McCauley on today, talking about DevOps. DevOps being discussed at an Edge show. That wasn't the case two years ago. Yeah, we talked about big data a little bit, kind of in theory with Jeff Jonas, but here is a tactical conversation about DevOps. That's relevant. Now, the other thing that came out, I'm loving this, I'm on Twitter. Guy from Atachi just tweeted me saying, he tweeted me a register article saying that Hitachi actually has outshipped IBM in the quarter too. So everybody seems to be, sorry, outshipped EMC, not IBM. So according to these numbers, it would be IBM, let's see, according to the projected Gartner numbers, IBM Pure, Violin, Hitachi, EMC. It's going to be really interesting to see because we know that EMC is going to start pumping the numbers. You know you're stirring the pot up when you get some great comments on Twitter. Bill Klein wrote, Lenovo can be a major player in our last segment of the analyst, David Flurry, and Stu, we're pointing out the VMware Cisco war where John Chambers basically came out and called VMware, and hence Pat Gelsinger, the enemy number one. That puts Pat Gelsinger in a position now to see the cards hit the table, and he knows that he's got- So where did he say this? I heard Stu talk about- So five days ago, there was a big public statement article that John Chambers wrote, essentially calling out VMware as enemy number one. According to Stu Miniman of Wikibon, and then Pat Gelsinger apparently on the phone saying, great, bring it on. We'll see you in the battlefield. So the gladiators are going to go at it. So we can't wait for that. Are you entertained moment from Pat Gelsinger? I'll like gladiators, but it's going to be a war, Dave. This is big stakes poker. It's hype, it's big prize fighting going on. The dollars on the table is significant. The comments on Twitter is, can Lenovo be a major player in the server data center? Can no, can now, can not. It's essentially the quote. But I would say Lenovo is just a blank piece of paper in my mind. So I look at Lenovo like a piece of play-doh. Whoever can grab that asset, use that for open source commodity scale-out data centers where people starting to cobble together their own open source and infrastructure systems. That's an opportunity. So there's a lot of stuff going on there, Dave. I mean- Well, you know, we saw, we heard a big emphasis on X86 and Lenovo at this show. And the reason why is because the channel freaked out when IBM made that announcement because a lot of customers said, whoa, whoa, whoa, and held off buying. But it was smart of IBM to do it in Q1, right? Had they done it in the end of the summer or fall, Q4, that would have been a disaster, right? So it was smart. The timing was, it's never good for these things, but the timing was probably better than it could have been. And IBM's putting a lot of emphasis on that. So I think in general, the channel is going to be fine with that. But listen, that kind of disruption needs kid gloves. Big news, part of the show is the breadth of portfolio that IBM announced, Dave, want to get your take on that? And then I want to talk about the flash, okay? So my coon was talking about all the stuff they're doing. Obviously, he's oozing with confidence, basically saying we're awesome, we're number one, we're going to take it to the market, we're going to compete, we're going to be at all the conferences, we're going to amplify, we're going to engage, and we're going to deliver value to the customers in the marketplace. So what's your comment? The news on the breadth of their portfolios, elastic storage, David Floyd is very high on with the whole server sand. And two, flash with attacking the marketplace with folks like PeerStore is making a lot of noise. Well, so first I should clarify this. So David Floyd is high on it because it's a direction that the business is going. IBM doesn't have all the pieces yet to put forth the server sand. And when you talk to people privately, you know, there's still some disagreement as to how they're going to get there, whether or not it's even a viable market. But Floyd has done a good job over the years of making these calls. If you go back, John, when he and I started when we popped out IDC, he did an early forecast of the sand adoption. And we looked back at that, you know, nailed it. And so we think that the end of sand is not going to happen overnight, but it's going to slowly erode and function is going to shift back closer to the host. You know, blah, blah, blah. We've talked about that a lot. I don't have to go into it. So I as well am very high on this because IBM's response to the whole software defined theme or meme, to me, it's not me too. There's real value in GPFS. There's smart in writing the coattails of Watson, bringing their analytics mojo into the storage business, using the hardened stack of the sand volume controller to virtualize the underlying infrastructure, which is critical, bringing out new innovations around object storage and metadata management. And very importantly, open source, open, you know, approach to storage in the future. I think those pieces, while they still have to come together as a solution, and I think they are, will play very well. So IBM has another event coming up. IBM Innovate, we will not be there with theCUBE, but it's going to be in Orlando. So this essentially is the last stop for us on the IBM tour, Dave. What do you take away? We've been to all the shows now. Pulse, Impact here at Edge, variety of briefings with the folks. What's your take? Story hanging together. Steve Mills, obviously looking like a genius right now. Some of his strategies in the software side, STG with their moves. What's your assessment of IBM? Overall, holistically, are they marching to the same beat? Are things cooking? Is it hanging together and is it real? Well, I watched very carefully, you know, Ginny last week on CNBC, and then of course they had the big Wall Street analyst meetings. I thought she came across as very credible, cogent, patient, savvy, measured, and I think the strategy is right on. I mean, as you said, John, you don't just pivot when you're a company the size of IBM. You slowly turn the battleship. And that's what IBM's doing. They identify the markets, cloud, mobile, big data. They see the opportunities, they know infrastructure matters, and so they started to make investments. They started years ago making investments, and those investments will pay off. IBM usually does a good job. They do a good job in a couple areas. Long-term strategic planning and acquisitions. Now, everybody might point to, okay, what happened in the mainframe, as Lou Gerson wrote, IBM's kind of a recovering alcoholic in that regard. So they've really done a good job of riding these big waves. You saw it with WebSphere. I think you're going to see it with Bluemix. I think the software acquisition is really going to start paying off. And I think the infrastructure business, they've got to really show some growth there. And I think it is reversible. I think some of the down drafts that they've had in that business are reversible. So I think it's still, IBM, as Floyer said, their strength is still the software piece of it. IBM's got a very, very strong software, obviously awesome install base. So I think regarding the shows, John, I think there's an opportunity for IBM to continue to rationalize some of them. I think they did a great job with IOD. They're changing the name to Insights. We'll see when you go to these events, not Edge, Edge is pretty clean, but some of these events have some overlap. So I think there's some opportunity there to merge some of those themes. We'll be interested to see how IBM does that. And I think that there will be some rationalization there. So we had a crowd chat with IBM Innovate. So you go to crowdchat.net slash IBM Innovate. You'll get a preview of the open technology, something that's going to be about open source, a peek into the new open technologies. Angel Diaz is going to be there as well. We interviewed him at OpenStack. That's really more of a DevOps kind of focus, more open source. You see a lot of blue mix here at IBM Edge. We have a full documented conversation as part of our new engagement container that we've been slowly improving at CrowdChat. Go to crowdchat.net slash IBM Edge. And you will see a documented conversation sorted by votes. The top conversation is here at IBM. Go there, check it out. The Cube, obviously we have 40 interviews. You go to siliconangle.tv and look for our new video player that indexes the video conversations so you can do deep linking and tweet specific sound bites in all the interviews. That's new innovation. We're bringing it to you SiliconANGLE. And we keep on always wanting to bring the data and data, I would say that we had a very successful extraction of data here at the show. We're clarifying, analyzing, and also sharing our opinions about IBM Edge and their approach. It's been great, thanks to the team. Thanks to the folks watching, and thanks to the home. Great job. Any final comments you want to share, Dave? Well, so we're knee deep into our summer tour here, John. It's not even summer yet. And it's been a very busy year for us at the Cube. I think that, I guess when I step back a little bit and say, okay, what's going on here? So we're seeing big changes in infrastructure, software defined themes coming in, sort of the next wave beyond virtualization. We've seen the sassification and the cloudification of businesses, I think that's something that is another theme that's really starting to take shape and is very real. And we're seeing open source become the force that we fully expected it to be. We're seeing guys like Red Hat make moves in the chessboard, and very interesting, John. I think that we're in for a lot of innovation. I think we're in for a lot of disruption. Having said all that, the cartel, the oligopoly, the rich keep getting richer in this business. IBM, Oracle, HP seems to be turning around, Microsoft, Cisco, they've got so much cash, so many resources, so many smart people. Yes, they're slower. Yes, they're not growing as fast, but they tend to do a really good job of hanging on to the install base. The wild card to me is obviously Amazon and the public cloud. Certainly consolidation is going to happen when you start to see consolidation. You know the money's hitting the table, and I think the disruption about this market is dislocating a lot of efficiencies, and I think there are a lot of opportunities to start with. Look at how Pure Storage came out of the woodwork. Still has some open questions about them. We're going to analyze them further. David Floor, you're going to have a meeting tonight about that. We have a lot of data review around Pure Storage, Violin, and others, certainly Fusion IO, not to be counted out in that business as well. But overall, David, I think there's a lot of opportunity, I think there's opportunity for anyone to shape that revenue from the clients. There's a huge wealth creation opportunity, and this innovation cycle's going to create the next Cisco, the next Intel who's going to come out of this woodwork. So I believe it's going to be a great opportunity. Mr. Cube, bringing it to you live. As always, our next event, look for us. Go to SiliconAngle.tv and look for our next events. We have all the schedules published there now, and of course on YouTube, YouTube.com slash SiliconAngle, and go to Wikibon.org for all the free research. David Floor's stuff's up there. All the analysts are up there. Jeff Kelly, Stu Miniman, all the top analysts at Wikibon. So that's a wrap here, live in Las Vegas, for IBM Edge, this is theCUBE. We'll see you next time.