 Okay, welcome back everyone, we are here live at IBM Pulse, IBM's premier cloud conference. This is Silicon Angles theCUBE, our flagship program. We go out to the events, extract a signal from the noise, it's our exclusive coverage of IBM Pulse. I'm John Furrier, the founder of Silicon Angle. I'm joined by Coase, Dave Vellante, co-founder of wikibond.org, and our next guest is Steve Robinson, the general manager of Cloud Platform Services Division, in charge of all the greatness of the cloud here in terms of Bluemix, platform as a service, all the middleware, big software investment. Congratulations. Thanks John, I appreciate it. It's been a great show for us, and we had an exciting day yesterday. Great event, the cloud messaging, the messaging is great, it's all hanging together as we said, it's like the suit at Nordstroms, everyone wants that, wants to wear that suit, looks good, great wrap around of the IBM software, and the open message, open technologies is really, really fundamental to all this, and the cloud boundary announcement, Dev Pulse going on, four floors at the nightclub, all hacking away, partying, really kind of an ingratiation, not so much a hard sell, but more of an open... No, just kind of bringing the community to the new technologies here. Bringing the community, and with Q, we always talk about this modern era, kind of like to bring the baseball analogy, modern era of sports and technology, but this modern developer, the modern enterprise really is about agile, it's really about speed, it's about cloud economics, blending the services, having on-premise, it's complicated but also this demand, so speak as a general manager, your take on that, you look at that, the messaging is all in place, you're on a vector, the strategy obviously is in the middleware, soft players, the foundation, is that how you planned it, all coming together, is that part of the plan? Well, we've had it in the works for a little bit over a year now, and it's had a little bit of an organic path as we've gone through it, but we had to make some very fundamental decisions around it, what are we going to base it on, and then as you mentioned with community, I think nowadays with software, you've got to say what community groups are you going to have constituency with, the cloud foundry group brings a certain one, we've got a long standing relationship with OpenStack, that brings one as well, you'll see some popular third party services, they bring community at the same time and then of course IBM, we've been building middleware and software for many, many years as a very large, profitable chunk of our business, we want to appeal to that programmer as well. So yeah, we made some key decisions along the ways, but the goal was is could we build a good solid open platform that was attractive to the borne on the web shops as well as kind of show a future path for our enterprise developer at the same time. So that's why you'll see the hooks back to the enterprise pieces as well as some of the new stuff as well. So how much do the consumerization of IT play into this? Obviously the consumer cloud, all those players are well known, B2B is wide open as we were talking about earlier. You have consumerization which is, if the app's good, it works, if not, it doesn't, right? So there is a clear vote of confidence from the adoption side, but now you have the developer aspect of it. So the API economy is very fundamental in all this. With that in mind, the old tactics of competing, both from client adoption sales for you guys and also winning the ecosystem is about having a good product that the lock-in spec is kind of a thing of the past as we see in terms of proprietary. Talk about that openness. We're covering alcoholic. The strategy of open and into this cloud era, how you guys are going to plant and compete. Yeah, well, I think the interesting thing is, like you said, the lock-in, we used to do lock-in by having a proprietary stack all the way down and then we'd argue with you about every year when we renegotiated the enterprise deal over getting off the APIs. That doesn't play anymore. I think customers want to make sure they've got an angle that they can move should they want to. And of course, the challenge to us comes up is can we offer a better value, better hosting experience, better support experience, give them the 99.5 SLA and a platform that they can't get from somebody else, but the quality of experience that they have with the platform would be better than elsewhere as well. So the bar set. And this is going to be a little bit of an experiment with IBM. We're kind of breaking some of the old ways that we've done stuff and moving to more of a self-service type sales model with BlueMix and changing our support policy, even kind of how we engage with customers is going to open up some new ground for us. Obviously, composite applications, web services, service-oriented architectures, things, old buzzwords are still relevant part of the equation. So I want to ask you about the customer impact. And you, as you guys talk to customers, you guys are actually putting on a number of $7 billion by 2015 in revenue that's clinically cloud-related. So you've got P&L to deal with, so you've got some business to do. What is the customer demand right now from your standpoint? Well, I think the customer demand, they see the opportunity that both the cloud itself and cloud is a very loaded word, whether that's private, whether that's hybrid, whether that's public. But it is impacting the data center. I think most of the corporate accounts that we're talking to today are going to be looking at leveraging those resources in different mix going down the road. Now, the public cloud, I think, is very appealing to them. We've kind of reached the stage where data and elasticity and even the type and style of application that can be built with some of these public services are far beyond what could be imagined before. So they see the advantages, but I think they're trying to figure out, how do I transition my development team to get to that? And how can we fully take advantage of it as well? How peak are the developers out there? I'm asking you, you announced a deal with cloud and databases asserts there's no sequel. You guys have DB2, it's the bellwether within IBM. Will DB2 run on clouds as well in the future? You guys envision things of that nature? I mean, is this a sea change within IBM? And how much of a change do you see this kind of being a lever within IBM? Well, I think it is going to be a future direction for us. So part of the challenge will be, are we going to simply take DB2 and throw it into Bluemix as kind of the way it stands today? No, we're going to, we will have to do some API front-ending of that, and we may actually do some gateways so that you can bring that MRIs asset forward. There's strong demand in, how do I take what I've built today and extend that out? You extend it to the mobile community, extend it to a public community. Et cetera, and it doesn't mean you take that full asset into a free, full relocation of it, but there's various ways that you can either be bursting with it or actually move that asset forward this way. So I wonder if we could talk about just some of the basics. We had David Pogue on yesterday. He said, yeah, he's a technology guy. He said, I don't really understand pass. Okay, I said it, right? I've been around a long time so I get a lot of this through Osmosis, but let's go back to sort of the web sphere days, right? The whole middleware space. What is middleware? You got hardware, you got applications, you got an operating system, and you got this stuff in the middle. What is the function of that stuff in the middle? Well, for most data centers, they're having to provide a kind of a base set of services around all of their applications. So you end up having to build a kind of a multiple platform approach to how do I do consistent data across the board? How do I do consistent system management and measuring the environment across the board? How do I lay out a consistent security policy across the board? How do I lay out a consistent way to do transactions and my business applications as well? So these are all services even with traditional middleware, they've always been kind of layers that I would put in my data center to really kind of build out my overall I.T. policy. Like peanut butter and across the. That's right. So it's services that would be used across multiple applications and also kind of be a foundational architecture for all the software that they would either support or put out as well. Okay, so that's kind of the broad view and definition if you will of middleware. How has that evolved into pass? Is it really different? Is it the same? What's different? What's similar? Yeah, it's funny. I've seen for a little over 30 years now and some concepts are identical and then other areas are brand new as well. When you get to the pass, the platform has a service and there's all kinds of debates going on right now. I said whether that's a popular term or even a few analysts here, so that's a fading term already. But basically is a capability to help you get an application framed out, get the services wired into it and then take the step that we never did with traditional development. Also handle the deployment and the management of that application out on a public cloud domain as well. Right, so there's a DevOps angle there. Very much so. I don't have much. And actually the lifecycle is extending now all the way to, we've done a lot of work on user-centered design all the way back to the DevOps piece as well. Traditional development always started with basic requirement through performance testing and then you tossed it over to a CIO to actually do the deployment of it. A guy today has to see the whole spectrum. He's got to go from the initial use case all the way to managing that application or watching that application run on the back end. And just to clarify for the audience, so when that gets tossed over to the fence for the deployment, oftentimes things have to change because it doesn't quite work, it doesn't quite fit in with the infrastructure requirements, so the infrastructure team hacks the code and then all of a sudden something breaks. Well, that's the old job. You've got to dedicate the hardware, you've got to put it in the release plan. Maybe they're doing an SAP upgrade that year so you fall off the calendar, you've got to make sure that it wires in with the pieces you have to wire in, such as the data specs, et cetera. You know, it used to take anywhere from six to nine months to plan from end of development to full production. So a lot of finger pointing. Oh, hey, it was working when I gave it to you. Well, it's not working now. You got to fix it. Well, it's not working because you messed it up. Okay, so what's the modern paradigm? Well, the modern paradigm actually, and the BlueMix demo itself, you say create an application and we actually take a base instance based off your language of choice and build pack of choice. It runs immediately. So we're pushing it directly out on top of a software platform through the Cloud Foundry pieces. You can buy and services to it directly. Then you can start adding your customization to it, et cetera, but it's a live program from second one. So you essentially are coding the infrastructure as part of the application? That's correct, that's correct. Steve, talk about the priorities now, obviously. And no, first, let's talk about the billion dollar software investment because that was news yesterday. You guys are going to invest a billion dollars. And we've kind of seen this before at Linux, right? I mean, you have a game changer. We've taken these big initiatives and we've put the muscle behind it. Yeah, you do the muscle, not only a code, but you're voting with code, as I say, and with the source community, but real money, that attracts attention. Certainly, there's a marketplace, the value exchange going on with dollars, right? That's a good benchmark. That really helped the Linux market kind of solidify. Now, with this market, talk about that billion dollar investment. What's the priorities of that and how you guys see that going forward? Definitely, well, we definitely see Cloud as kind of a critical part of IBM's overall transition. Earlier this year is, you know, part of it is, okay, if we're going to play heavily in the public cloud space, how big is that infrastructure going to be and where is it going to reside? So earlier we announced an investment to take the software and expand that out to 35 to 40 ponds worldwide. So a lot of countries- On top of the existing footprint, you guys had like 12 data centers. They had like 13. That's correct. So right now we are blasting this thing out and getting it into a lot of countries that, you know, you don't see a lot of public cloud infrastructure. And with the data policy rules, et cetera, you got to be local, you got to be in those countries as well. With the Blue Mix Announce, of course, we've named a whole new focus. We have almost every group within software group now focusing on how do we turn existing technologies into services. We have new initiatives like our mobile services that we announced yesterday as well. Coming into that, you see our contribution of participation at the Cloud Foundry Award yesterday. So we have a team focusing on open standards and participating in that community as well. You'll see our acquisitions of companies like Cloud and et cetera to show we're putting money behind this new technology, not simply morphing our old stuff forward, but we've got to have the popular services out there as well. And then even with our, we have a huge portfolio as more traditional software as a service that we are going to be extracting APIs from that as well and putting that into the environment. So I want that layer, you mentioned all the IBM software groups. That means essentially you're essentially creating that API economy within the groups. Yeah, if you hear Robert LeBlanc that runs the bulk of it at Cloud First. And I think we're going through that mental change within IBM is what does it mean to really expose these services out on the web? Yesterday we announced 31 services with BlueMix, which compared to some of the other passes in the market was almost a logarithmic ramp up compared to some of the guys out there. And it's been a, and we'll keep adding to it. The coin term has been IBM as a service, the whole company. And is that a cultural change? I mean, IBM has always had a good DNA going back to the early days of the management team that founded it. It seems to be of that same cadence through the culture. It's never really lost its soul over the years. The new modern IBM now is an API. What is this culture like now? Explain to the folks out there this culture and how it keeps that soul of the original IBM and the new somewhat structural change that the APIs has affected completely. It is a transformation to us. It could easily say that we just kind of keep doing what we're doing and we naturally fall into new technology spaces, but it doesn't work that way. IBM does bring its core competency. Excellent management environment. We do have a very aggressive business outlook. We do buy companies. We do shift resources. We do get into new areas. You do business. We do business, and we're very cautious. We can't sit on the laurels and we have to watch all new trends as they emerge. And Mr. Rometti's been very aggressive to say, Cloud is going to be a key transformation that we will not miss. And I think we're hitting this one as aggressive and more aggressive than we have had some in the past. So mentally, you'll see us, if you go down to Austin, Texas, we've taken three floors of our huge lab down there and have turned that into a design center simply focused on UI, how we build our apps, completely changed that, et cetera, we have. Energize the company. Of course. She said, this is a mandate. We're not missing Cloud. That is it. And big data too. I know she's one. We've got a handful going, right? Big data mobile and Cloud, those are almost impregnated in our head right now as well, but the money will be there. The culture will be there. The hiring will be there. The merger and acquisition piece will be there. And it will be a transformation completely. It's not just promises, promises. This is real. This is the real deal for IBM. Talk about the patents and the technology. We've always been impressed with the fellows we've had on with distinguished engineers. IBM research is well-known around the world, obviously, from just non-applied, just an applied research. Talk about the patents and how that's going to play into this, in the balance between doing business as IBM, solving customer problems, but also giving back to the open side of the community. How are you guys going to handle those patents? That's always kind of a delicate balance. We do maintain the largest patent portfolio in the world and we actually did it again last year. And a lot of it is really in kind of brand new spaces. Now, just because we do a patent doesn't mean that we can't donate that to an open community, et cetera. And I think you'll find also with the open groups, IBM does more than simply participate and consume from an open community. You'll see us putting board seats in place. We're helping do the governance around these. Cloud Foundry, we were working directly with the Pivotal folks on how to set up an open source type of group and also teaching them from our experience that we had learned from Eclipse, et cetera, through that as well. So I want to go back to that notion of IBM as a service. So you mentioned Jenny. Her predecessor, Sam Palmasano, said, no matter what business you're in, you're going to get commoditized. And of course, it's coming from a service, this guy. So this idea of IBM as a service and this idea of IBM, an API into IBM, is that a realistic vision with that massive portfolio and how do you make that happen? Well, we think we have to make it a vision. So, and I think for us, if we decide that IBM is a service, it has a very long tail to that decision as well. You're moving more to where we have done B2C, business to major customer. And as we look forward, we see IBM maybe having to transfer into B2U where instead of dealing with small organization and one of our major banks or financial institution insurance company, et cetera, maybe I'm dealing with 20,000 employees within them that are dealing directly with IBM. So I think you'll see, we updated our IBM Cloud pages yesterday, which shows us kind of bringing together our total story. And also, how do you see IBM? How do you discover with IBM? How do you purchase from IBM? You'll see soon the capability of just swiping a credit card that could, that was very difficult to do within IBM prior. How do we support you now more online? How do we get you sales advice, demo, even how we do free trials, et cetera, is going to shift with us as well. So, obviously a lot of difference between IBM and competitors generally, but specifically, I want to talk about Open. And I want to talk about this notion of API. Amazon turned the data center into an API. We're talking about this vision of an API into IBM. You guys are playing very strongly the open card. Yes. And, but what's the difference? If there's an IBM API and say an Amazon API or any other API, what's the difference between that conceptually and in the context of Open? Well, I think at Open, it's almost table six these days. I think to attract anyone to your platform, to attract anyone to your software, the programmer community today is getting more and more picky. One of the things that they fear the most is lock-in. And it's not fear from being set with a single vendor, but should their projects, it should their technologies really take off. They want to make sure that they can grow with that. So, I've got a video game that I launch and it's 101 week and it's nine million the next week. Am I picking the underpinnings that allow me to scale to that? It's almost consumer grade scale that we have to be able to branch out into. So, I think we look at Openness by multiple levels. So, with Bluemix, almost any language of choice you can bring in. You can bring in any development tooling that you want to have as well. And then with the Cloud Foundry as the underpinnings, should you decide to go somewhere else so you can actually pick your application up and move it to any of the other Cloud providers. Haven't forbid that happen, but it also raises the bar. We want to keep you on the platform. We've got to do it by more than just API lock-in. Steve, I want to talk about Cloud equals growth. I've seen some, I've seen some scientists that's a key part of your message. You're a GM, so you're either to look at the business, all aspects of it, which are the profit loss and which is the profitable. You guys have pushed down some good numbers. Talk about the opportunity for folks out there in Cloud. What is the real growth opportunity for your customers, customers, developers? Why are you guys so bullish on Cloud? I mean, I've seen some obvious reasons. But like, you know, deep down, this is a change. And fundamentally it's an opportunity for growth. And we're seeing mobile first, obviously it's a key fundamental piece of the new generation and businesses that go like mobile apps, changing retail, transactions. Why is Cloud such a massive growth opportunity? Well, I think you look at it, it's, you know, Cloud and the variance of Cloud has really dropped a lot of boundaries out there. And, you know, you can look at it to say it's dropped competitive boundaries now. You know, three guys in a garage can now compete with what it used to be. You know, I had to have racks of hardware and racks of data used to be a high entry point to be able to get into that. So the barriers of entry are tremendously low, but the barriers of reach now have extended significantly. I can now get to customers in ways that are just were completely unthought of before. And that's what we see the opportunity. And I think also technology used to be kind of in the corner of major corporations. You know, it was the CIO's domain and the raised floor and where the mainframe was, et cetera. I think nowadays every single line of business, technology is one of their key investment areas and it's in the forefront now. It's in every corner of the business and the mobile, the reach, the cell phone, the push, et cetera, is how they're starting to reach their customer. And how hard is it to get there? I mean, it's easy to get into a business as a startup, but scale's a hard thing, right? You got, at some point there's a barrier to entry once you have certain scale. Talk about that competitive strategy that you guys have. What is the core thesis on the competitive strategy? Well, I think what we bring to the table, of course, is we've been in software for many, many years, going on our fourth decade around it as well. Our customer base, of course, looking at IBM to help them lay their overall strategies out and also bring the brainpower to it as well. And the breadth of IBM, as we pick a new initiative, like I said, we launched 31 services yesterday. We'll probably multiply that significantly by the end of the year. The smaller company, just the ability to pull that together would be a challenge for them as well. So, I think there's many things we have to come to the table with. And IBM's going to have some challenges as well. Some of these communities are very tight. IBM coming in saying they want to be the tool or platform of choice for the new millennial programmer. It's a little hard. We don't know you guys, we've never used you before. You're not some of our favorite tools. So, we're going to have a challenge as well. Just give away some of that free Watson. I mean, you can get him win him over. Yeah, well, Watson's got him going in. We have a service soon coming into Bluemix that you can ask your questions as well. Yeah, the past layers of battlegrounds, certainly the middleware software is a key part of the value proposition. It's exciting for computer scientists, developers, and businesses. My final question to end the segment is, what's your goals for the next six months of the year? Now that Bluemix is out in beta, what are you talking to your teams about? What's the marching orders? Well, what we'll be doing next is, we just kind of opened the door yesterday. So, it's called Open Beta, so we've had it closed. And now we're, we had several thousand just join up on the platform last night. So, we'll be building the community around it and the base around it as well. Adding more services to it, of course. And I think the trick that I think none of the passes I've tried to attack yet is how do we make this attractive to the enterprise developer. For the new millennial, you know, they can use lighter weight tools, they can move fairly quick. But when the rock band breaks up, what happens to that application? If we're really gonna bring this over to the enterprise developer, we've got to have a richer set of dev-op tooling. We've got to have the hooks and connectors that helps them bring their existing environment forward into this and hopefully we'll be able to bring much more integration in that makes us a more seamless experience. Okay, the general manager of the cloud services here on theCUBE, breaking it down. It's the premier cloud show, IBM Pulse, notable 70% of the attendees are first timers. Real good transition, great story. You guys have a good strategy. And you know, David and I were commenting. It hangs together, it's legit. You guys are putting some muscle behind it and it's obvious the vibe is pretty energetic here. So, congratulations. This is theCUBE's exclusive coverage, Silicon Angles coverage of IBM Pulse Live in Las Vegas. We'll be right back after this short break.