 Live from San Francisco, it's theCUBE. Covering IBM Think 2019, brought to you by IBM. Welcome back to theCUBE's coverage of IBM Think 2019. Here in Moscone, we're talking so much multi-clouds. It's been raining all day, really windy. To help us wrap up our third day, what we call theCUBE Insights, I have our co-CEO Dave Vellante. I'm Stu Miniman and happy to welcome back to the program. It's been at least 15 times on the program. I think our counter is breaking as to how many have been on Ray Wang, who is the founder, chairman and analyst with Constellation Research, also the host of Disrupt TV, who is gracious enough to have me on the podcast earlier this year, Ray. The little reciprocity there, Stu. Hey, we got to get you back on. This is awesome, right? But day three is wrap up and this is going to be fun. Yeah, Ray, as we say, the Cube is everywhere, except it's really a subset of what you and the Constellation Research team go. We see you all over the place, so thanks for taking time to join us. All right, so tell us what's going on in your world, Ray. You know, so what we're seeing here is actually really interesting. We've got a set of data-driven digital business models that are being lit up, right? And you see IBM everywhere in that network and it's not about cloud. It's not about AI. It's not about security. It's not about blockchain. It's really about companies that are actually building these digital networks, these business models, and they're lighting them up. IBM Merks, we saw things with insurance companies. You see it with Food Trust. You see it with healthcare. It's happening and it's the top customers that are doing this. And so it's like we see a flicker of hope here at IBM that they're turning around. It's not just selling services. They're not just selling software. They're actually delivering these business models to executives and companies and the early adopters are getting it. Yeah, so I mean, Ray, that was one of the questions we had is, you know, what's the theme of the show? And I think you're- There is no theme! Yeah, you're giving us the theme here of what it should be because, you know, we've talked digital, we've talked cognitive, we've talked to all of these other kind of, you know, big, thoughty words, you know, because we need to think when we're here, right? We need to think. We need to think. No, but the thing is like this is a themeless show and people can't figure it out. But the main thing is, look, I've got a problem. This digital disruption is happening. My business models are changing. Help me be part of that shift, right? Or I may go away and people realize that and that's what they're starting to get. And you see that in all the reference customers, the people that were on stage. The science slams were like also really great. I don't know if you had a chance to catch those, but the science slams were kind of a flicker into research, IBM research, which is the heart of, you know, IBM is coming up, right? They're going from concept to commercialization so much faster than it used to be. Used to be like, research would do a project. People are like, oh, that's kind of cool. Maybe I'll adopt it. They're now saying, hey, let's get this into the market. Let's get into academia. Let's get early adopters on board. So Ray, what do you make of the Red Hat deal? What does it say about IBM's strategy? Do you like the deal? What's it say about the industry at large? It's a great question. The Red Hat deal to me was overpaid. However, at 20X multiples, that's what PE firms are paying. So every vendor is now competing with PE firms for assets. Red Hat at about 9X, 10X, makes a lot of sense. At 20X, you know, it's kind of like, okay, is this the Hail Mary or is this the future strategy or is this basically what the new company is? I would have rather taken that money and put it into venture funds to continue what they're doing with these network models. That would have been a better strategy to me, but Red Hat's a great company. You get a great team. You get great CEOs. You get great tooling. So you would have rather seen tuck-ins to actually build that network effect that you've been alluding to. Of course, that would have taken longer. You know, it wouldn't have solidified Ginny's legacy. So, you know, it's a big move, a big move in the chessboard. Well, the legacy is interesting, right? Last year the stock, I mean, was down some 20 some percent. It's up 20% since January. So we're going to see what happens, but it's a doubt component. Well, I've always said she inherited a bag of rocks from Palmasano at the peak of 2012. And then, you know, it got hit hard and she had to architect the transformation. It took, you know, five years plus. So, you know, she was dealt a tough hand in my opinion. She had a bad hand, but we've had seven years to play this. I think that's what the market's seeing. So it's on her is what you're saying. It's now on her. Right, she's got to turn this around, finish the legacy. But, you know, you got a great CEO and waiting with the Red Hat guy. She's re-hersed your saying, so. So she's good. Ginny is, what, 60, 61? Is that about right? She's passed the retirement age normally as IBM CEOs would have gone through. 61 to 63, I think is that range. Maybe, hey, women would live longer, so maybe they live longer as a CEO of IBM. I don't know. But she did get a bad hand. But I think, you know, when you execute the strategy, that money, I mean, here's the tough part. Like, investors are saying, hey, we'd rather take your money back away from you through stock buybacks, dividends, and mergers and acquisitions. And we don't trust you to do the innovation. That's what's happening to every company, including all of IBM's customers. The problem is, if you do that, they're hedging against those companies too. The same investors are taking 50, 100 million, giving it to three kids in a startup anywhere in the world and saying, hey, go disrupt these guys. So they're betting against their own investments and hedging. So that's the challenge she's up against. Well, we talked about in our open for the show here, it's developers, though. That's the business model. We saw IBM struggle for years to get any real traction there. There's little pockets there. They've got great legacy and open source, but Red Hat's got developers. I mean, Ray, you go see a lot of shows. You know, who's doing well with developers out there? Microsoft redid their developer network by going younger with GitHub, a whole bunch of other acquisitions. This is a great developer buy in that percent, but the other piece that we noticed here was it's the partner developers that are coming in on force. It's not your average developer. I'm going to build a coding and do a mobile app. It's people that work for large system integrators, large networks, small, mid-sized bars. Those are where the developer's coming from. And now they have a reason. Now they have a reason to build and I think that's been a good turnaround. How about Salesforce with the developer angle? What's your radar say there? It's not about the developer angle on the Salesforce side. What's interesting about the Salesforce side is Trailhead. This is like learning management, meets gamification, meets a whole LinkedIn training program in the back end. This is the way to actually take out LinkedIn without going after LinkedIn by giving them a badge. There's like a couple million people actually on this thing. Think about this, all getting badges, all training each other, all doing customer support and experience. That's amazing. They crowdsource customer experience and learning right there and they're building community and they're building a movement. That's the thing, Salesforce is about a movement. A couple others, SAP and Oracle, give us the update there. I think SAP's in the middle trying to figure out what they have to do to make those investments. We see a lot of partnerships with Microsoft and IBM as they're doing the cloud upgrades. That's an area. The acquisition of Qualtrics is another great example. 20X, 20X is the number people are now paying for for acquisitions and for assets on that end. And then Oracle's going to be interesting to watch post-Korean to see how they come out. They have a lot of the assets. They've got to put them together to get there. And then we've got all these interesting things like ServiceNow and Adobe on the other end. Like ServiceNow is like, great platform, right? Awesome, people are building and extending the cloud in ServiceNow, but no leadership, right? I mean, you've got a consumer CEO trying to figure out enterprise, a consumer CMO trying to figure out enterprise, and they don't know if they're on my platform or on my app, right? You've got to figure that out now. Like people want to work with you. It's a company in transition at the top for sure. You know they can do nothing and still make a ton of money on the way out. And they've kicked butts since Donahoe came on. I mean, just from a performance standpoint, amazing. You can do nothing. And I think it's still going to coast, but the thing is at some point it's going to come bite you. You've got to figure that out. How do you think Curian will fit at Google? What's your take there? You know, early reactions on Curian at Google is good, right? The developers are embracing him. He understands what the problems are. I mean, let's be honest, I mean, I've said this many times to you guys in private and also in public, you know, it was a mess. It was a cluster before, right? I mean, these, I mean, you had three years and you lost traction in the market, right? And it's because you didn't get enterprise. You couldn't figure out partners. And I mean, you paid sales people like on consumption. Who does that? Your sales rep, you're like, I'm not going to do this in consumption. Makes no sense. You know, right, they, you know, Curian has been quoted that, you know, no acquisition is off the table. You know, they didn't buy GitHub. They didn't buy Red Hat. Do you see them making a 10, 20 million dollar acquisition to get them into the enterprise space? Billions. Billions. I think there's a lot that they go after. I know there's rumors about service now. I think the first acquisition, if I were to make it would be Looker. I mean, I love that thing. That's on the end. Buy Snowflake too while you're at it. I mean, you know, but, but yeah, we'll see what they do. I think, I think the strategy is they've got to win back the trust of enterprises. People need to know, I'm buying your relationship. I have a relationship. I can count on you to be successful as opposed to, hey, you know, you can get this feature for less. And if you do this on, you know, a sustained unit or, I mean, people want, I want to know I can trust you and build that relationship. And I think that's what they're going to focus on. Come on, isn't Google's business still ads? I mean, that's still where all their revenue is. It is, but the other category is $10 billion. That other category of devices and cloud and all that, that's still a big category. And that's where all the growth is. I mean, look at this. It's a full frontal assault between Amazon and Google. Amazon Alexa versus Google Home, right? Amazon and ads, $10 billion in ads going after Google's ad business. Amazon doing an AWS versus Google Cloud. Google's under assault right now. Give us the update on constellation. Your conference has really taken off. We get great buzz in the industry. Congratulations on getting that off the ground. The tech for good stuff loved it. Yeah, took it. Yeah, no, we had a great event December 10th talking about the future of the internet, what it means in terms of, you know, digital rights and, you know, human rights in a digital age was really that conference. Our big flagship conference is November 4th through 7th. It's at Half Moon Bay. We get about 250 CXOs together, about 100 vendors and tech folks that are visionaries and bring them together. That's doing well. We're at our healthcare summits. We brought on a new analyst, David Cho. David Chow, and if you've seen him before, he's like one of the top analysts for CIOs and chief to draw officers in the healthcare space. He's at HIMS right now. He's awesome. We know him from Twitter and he's been on, he's great. Yeah, so he's building up. We do healthcare summits twice a year and that's been picking up some of the top thinkers in healthcare. We bring them into Las Vegas. We do a brainstorming session. We work with them. They think about ideas and then, you know, we meet again, so. All right, Ray, you want to give you the final word. We're halfway through IBM. What have you been thinking about this and any final musics on the industry? So I was very upset last year at how it was run. And I think this has run much better than last year. I think they did a good job. February in San Francisco, never again. Don't do that. I know it's May next year is when this event's going to be. But I think the main thing is that IBM's got to do more events than once a year. If you get enterprise marketing, you realize it's at the beginning of the year. It's still sales kickoff and partners. March, hey, you know, March is like closing the quarter. So you do an event in April or May, right? And you do in April or May, but you have multiple events that are more targeted. This seamless approach is not working, right? Partners are a little confused, but they're here because it's once a year. But more importantly, build that pipeline over the quarters. Don't just stop at a certain set of events. And I think they'll get very successful if they do that. All right, well, Ray, next time you come on the program, can you please bring them bring a little bit of energy? We'll try to get you on earlier in the show when you're not so worn down. I know. Appreciate you coming back on, man. Hey, thanks, man. It's theCUBE. I love being on this thing. Always a pleasure. All right, and yeah, we always love helping you who extract the signal from the noise. For Dave Vellante, John Furrier, Lisa Martin, I'm Stu Miniman. Thanks for watching day three of theCUBE at IBM Think. Join us tomorrow. Thanks for watching.