 Live from Las Vegas, Nevada. Extracting the signal from the noise. It's theCUBE, covering IBM Edge 2015. Brought to you by IBM. Hi everybody, welcome back to day two at IBM Edge in Las Vegas. This is theCUBE, we go out to the events, we extract the signal from the noise. Stu and I are really pleased to have Judith Hurwitz here to help us do the open today. Judith is the president of Hurwitz Associates, a longtime industry analyst. Judith, always great to see you. Nice to see you too. Thanks very much for coming on and I said to you earlier, hey, you know, I'm surprised to see you at the hardware show and you know what, it's not so much of a hardware show here Edge anymore, is it? Hardware ain't what it used to be. Yeah, so we had a chance to see the keynotes this morning, I was in there for the strategy session. A gentleman from Walmart was talking about their infrastructure, it was good to get a view from the boiler room, you know, and then of course, In-Heat-Chev-Sa gave a great overview of analytics. Very heartfelt story, you know, personal story about what goes on in hospitals and then of course there was a discussion on crowdsourcing, keynotes are actually still going on, we broke free, but Judith, what's your sense of the tone of this conference? How was IBM this sort of former hardware group doing? I think what's interesting to me is the bringing together of the capability, the underlying capabilities of the hardware, which has always been very strong, very compelling with the supporting software and you bring those two together and it really is a very, very interesting revelation because you think about something like security, you know, think about a hospital, the level of security you need to have if you have sensors going off everywhere. Well in a lot of the, you know, if you look at the power platform and the Z platform, there is security built in at the core in the hardware platform itself. So bringing those together and unifying them in a sense really is very transformative and if you go out and you buy pieces of hardware and pieces of infrastructure software and you mesh them together, you don't get the same level of unification and seamlessness and scalability that you get when it's really sort of capability by design. So you know, organizations are important, organizational structures, and especially for these big companies, Stu, you were at EMC and they're constantly shuffling the deck chairs and sometimes they get it right, sometimes they don't. We've seen IBM reorganize a number of times. Ginny just made some major moves several months ago. And I think IBM's still trying to figure it out, right? There's still some changes. When changes happen up top, it doesn't automatically happen throughout the organization and especially the size of IBM. But what do you think of the new organization? You've got sort of the old hardware group but it's got middleware in there, it's got the pieces of Tivoli that have been brought over so hardware and software together. There's a separate analytics group under Pitchiano, there's a whole separate Watson's group, there's a cloud group, there's parts of the services business that remain intact. Do you think Ginny's got it right? And why are we not? I do think she has it right because if you think about technology, where does hardware start and software begin? So you look at something like Internet of Things. There's obviously a lot of hardware sensors and mechanical devices but that's not the important part of that. It's the data that comes out of that. So how do you neatly make a distinction between, okay, this is hardware, this is software, this is analytics, this is data? So I think it is the right move and I think bringing these elements together, unifying them, because for example, can you talk about data without talking about security? Can you talk about Internet of Things without looking at hardware and speed and performance? All of these things are related to each other. In the real world with real customers, they don't think in silos. It was interesting, the gentleman from Walmart who was speaking at the keynote today said that Sam Walton had a quote, he used to say that people thought that we succeeded and grew because we put big stores in small towns and no, what we did is we replaced inventory with information and so infrastructure matters is sort of a theme of IBM. What do you think about that? I think I saw Dave comment on the Walmart was a great case study because they're a big Z user. We really think about technologies we've been talking about. Last year we talked about IBM taking x86 and pushing to Lenovo and many of us thought, well, okay, IBM's just going to use commodity x86 servers. Well, no, there's power, there's Z and Walmart was saying they're getting much better performance, I think it was like 5x performance and the big thing for them was reliability. They said building things off of the x86 just wasn't going to give them what they needed. Z was what delivers for them what they need for, I mean a global retailer that just deals with massive amounts of data and Linux fits into all of it and even containers talk about containers on top of ZLinux, power with little endian and what they're doing, containers fits into there. I'm excited to go into some of the middleware discussion today but we were talking in the wrap up last night about have some of these big trends of cloud and big data, do those make some of IBM's old portfolio go away and I come out of this show saying that IBM's well aware in positioning all their portfolio to take advantage of all of the new things that we're talking about. So there was obviously a lot of talk and emphasis on power. We were talking off camera, we I think we're all impressed with open power. It certainly exceeded my expectations just in terms of the momentum, the number of partners that they signed up but seemingly the number of partners of substance. One of the things that IBM seems to be messaging is that Intel closed, they don't use, they don't talk about Intel, the other. We all know they're talking about Intel sort of closed. They will eat away at the value chain in the ecosystem. We're open and we're bringing in partners. What are your thoughts on that? I know you're not hardware person but there's certainly a lot of software going on in an ecosystem. Is that a significant advantage? I actually think what I would hear from customers and partners before the open power foundation is there was a perception that Intel is the open platform even to the effect of saying Intel is open source and IBM is not and can IBM really have the financial resources to keep innovating on power when we know all of these companies participating with Intel will continue to innovate and that was the argument. So you have the open power foundation that turns that argument on its head. So I think it's the right thing. I wish they had done it a few years earlier but it now, it starts to change the conversation. Well it is kind of a judo move, isn't it? Where Intel was perceived as open and now all of a sudden IBM is saying, oh no, they're closed, Robin. I want to talk about innovation. Speaking of Intel, the industry has marched to the cadence of Moore's law for decades. Doubling transistor density every 18 months, doubling performance and now we know that unnatural acts are occurring to keep that curve alive. Many people feel as though that when you get down to whatever, five nanometers, you're going to hit the laws of physics and that's not going to continue but the interesting thing is and Stu, you and I have spent some time with the professors at MIT who talk about this notion of the next wave of innovation is going to come from combining technology. So the examples are Waze, the self-driving car, Watson, this is an area of your wheelhouse, Stu, that you've recently written a book on cognitive computing. What are your thoughts on innovation going forward? Where's the innovation going to come from? Clearly you're seeing combinations of technologies. What's exciting you? So a couple of different things. One is the data element of this. So what is cognitive computing, what does it do? It allows you to gather more and more data and apply machine learning to start looking at the patterns and the anomalies to start learning from that data. We have traditionally created software that was okay, this is our process, this is what we're trying to do. We're building something but we're also always building based on our problem from six months ago and we finally get it built two to three years later. We have built something based on the world that we knew two or three years ago. The real interesting aspect of cognitive computing is because you're letting the data drive you towards a solution rather than letting your assumptions about the world three years ago lead you to build something. So I think it's totally going to transform the way we build solutions. Well, will Dr. Watson replace Dr. Welby? Dr. Watson will be a great collaborator with Dr. Welby. I think they'll work together quite nicely. The other thing that I see happening is that infrastructure, cloud, whatever you want to say it, the real power is in bringing all these elements together and it's how you manage all of this as though it were one unified environment. In the past, you had your system and you put software on and that was your environment. We are moving to a world where all of the above has to work together as though it is that one integrated system that we had 30 years ago but now it's all done with software and embedded software within hardware. Hardware is different than it was a few years ago. Machines have always, since the Industrial Revolution, replaced humans largely with labor tasks. Machines are starting to replace humans with cognitive tasks. You go to an airport, you're talking to a kiosk, you drive down the highway, you don't see people up there putting billboards up anymore. It's all electronic. Are you concerned particularly about the middle class? Medium income has dropped since 1999 in this country from 55,000 to 50,000. We're seeing computers replace human for cognitive tasks. Is that a concern that we should? Well, I think we have to rethink jobs. I think there are plenty of areas where people can't hire people fast enough or they can't find the people. So there needs to be mentoring. There needs to be education in the new areas. We've always had this since the beginning of time. So I think there's a lot of work that we as professionals have to do to get a new generation ready for the tasks that are going to be needed. All right, Stu, we'll give you the last word. What should we be looking for today? Impressions of day two, what should we expect? So, filling out as IBM's been consolidating some of the portfolio, Dave, digging into more of the storage. I tell you, day one we did a lot of the Z and the power piece. Today we're going to have Herzog on, always a dynamic guest on the program. Spectrum has been one of the buzzes that I've been hearing talking about what's happening on there, digging in the middleware pieces. And it's really, this is kind of the bottom layer of the full stack that IBM's building. So I know we see Judith usually at Insight. That's kind of from the application side. And keep asking, we've got, as the stack puts together, it's these lower layer pieces which storage never gets commoditized and is one of the biggest challenges under there. Power Z and that hardware piece is the foundational layer that we're going to build everything on top of. All right, Judith, thanks so much for coming on. Still appreciate it. What's next for you? Where are you headed? You going to be at Vision next week? Actually, next week I'm going to be at Dimension Data. Looking at what they're doing in cloud. Then heading to Dell, see what they're up to. Lots going on in the springtime. All right, thanks for you guys for coming on to kick this off. Keep right there, everybody. We're live. From IBM Edge 2015, right back.