 Live from Boston, Massachusetts, it's theCUBE, covering Red Hat Summit 2017, brought to you by Red Hat. Welcome back to theCUBE's coverage of the Red Hat Summit here in Boston, Massachusetts. I'm your host, Rebecca Knight, along with my co-host, Stu Miniman. We are joined by Kirk Scougan. He is the executive vice president and president of Lenovo Data Center Group, Lenovo. So thanks so much for joining us, Kirk. Thanks for having me. I want to start out by talking about Lenovo's commitment to open source, we're hearing a lot about this in this summit. It's the real deal. Yeah, I was with Intel for 24 years and had a long partnership with Red Hat there. So as I moved over to Lenovo on that, open source is a key aspect of our strategy. It's kind of foundational for us and where we sit with the data center company because we don't have this legacy. We're not someone who's trying to protect an old router business or an old storage business. So as we look at open source, it's another part of our kind of open partnerships commitment. So it's pretty foundational to what we're doing. Could you help us unpack that a little bit? We heard in like a keynote this morning, they talked about open source hardware. I know you guys have been involved in OCP. How much is software? How much is hardware? Where do you guys put commitment in? How much of business partners? Yeah, so I think we're in about over 30 different standards bodies now committed to open source. It really happened after our acquisition of the IBM X-series server business. So now we're the third largest X86 provider of servers in the world and we're expanding that in the data center. So we're participating in about 30 standards bodies. We have about 12 open source projects going on with Red Hat. And we're really at the base level announcing today something called Open Platform at Lenovo. It's something we said we would do a year ago at this conference and now here at the Red Hat Summit we're showing it in our booth actually there. It's a base open platform with kind of an optimized stack which can put NFE and other solutions on top of. So that's one example of things that we said we were going to do a year ago today and then are doing today. But it's really about, from our perspective, optimizing the base hardware for all of these platforms. Yeah, so we're interested. We look at things, I hear people look at open source and there's more transparency. It's not like, oh wait, there's this secret project we're working on and here it is. You know, you worked at Intel. Everybody kind of understood the TikTok that went on there. How does the open source influence the planning that you guys go into and, you know, do you feel that the roadmaps of a company like Lenovo are more transparent since you're part of open source? Yeah, well I mean, again, I think what you should expect from us is we're a leader in X86 system technology but we've also acquired assets like Blade Network technologies in the past as well. So we're expanding as a company out of our server roots into networking and storage. So we think containerization is going to be the future. Today we're sitting with something like 32 world record benchmarks and our theme is kind of different is better, which means it's the little things that we're doing with all these partners to tune out the best performance of these systems working with our partners. So we're not trying to go far up the stack and compete with our partners. I think that makes this a little bit unique. We're in trying to be the best X86 system provider in the world, expand that from servers into storage and networking as we get the software defined. Great, and yeah, absolutely. Maybe it would be useful to kind of explain your role in the data center group itself. As you said, you've got some pieces, some came from the IBM, there's various acquisitions. Let's lay out a little bit more what you guys do and what you partner to do to work. Sure, so I think a lot of people know Lenovo as being number one in PCs. This is the 2050 year of ThinkPad and we look at our Think Server brand today and our X-series brand that we acquired from IBM. So we're again the third largest server provider but expanding that into storage and networking. And then we acquired the Motorola phone business so we just crossed to be number four in the world outside of China with a presence in India. So we have basically three businesses within Lenovo but data center group we believe is a big growth driver for the future. A lot of people I think 25 years ago would have never thought Lenovo would be number one in PCs worldwide. I think we're kind of sitting there as a server provider with number one in customer satisfaction, number one in server reliability, number one in quality by all these third party measures. And our biggest issue is people don't realize we acquired this amazing asset from IBM. So we're here at the summit basically showing and promoting our brand but also promoting the proof points underneath that. This event is very global, multicultural. Lenovo is also a global company. Maybe speak a little bit to that, where your teams live, where development happens and what your customer base looks like. Yeah, so I think I live in Raleigh. We have a dual headquarters in Raleigh and Beijing but we operate in over 160 countries. We have over 10,000 IT professionals now within the data center group. We have manufacturing in the United States in Mexico and Hungary and in China so we can basically globally ship ship everywhere. So I think when I looked at moving from Intel to another company, number one, this enabled me to get one step closer to the customer but I thought Lenovo was one of the best companies I saw that were partnering. I think in the data center group, if you look at our list of partners, it's unprecedented. Partly because we don't have a legacy business so almost every startup and everybody who wants to do something new ends up wanting access to our presence in China being number one in China but also because we're not protecting a legacy so they see us as someone kind of interesting and unique to partnership with. So open source is one of those areas where I think, now that we separated from IBM, we're clearly an X86 provider committed to open source and the way we're getting into telecom where we hadn't been competing with our big customers is because we're open and ideally we're more agile and partner better. I wonder if you could comment on the culture of these various places. As you said, you've been in Portland for a long time. You're now new to Raleigh. Your company is Beijing and Raleigh and you do business all over the world. How do you experience how these engineers are they different in different parts of the world or is open source really transcending that and there is a much more of an openness and a transparency? Yeah, I think, you know, I thought I'd fit really well into Lenovo culture. I think six months into the job I feel like it succeeded my expectations. So if you look at the executive staff of Lenovo there's something like seven different nationalities on there from Italy and Switzerland and Australia and the US and China, Hong Kong, Singapore, India. And that's by design. Yeah, by design. So I think it provides a really unique perspective as you're looking at market trends and customers and things like that. When you look at the engineering aspect of it you could get kind of, I'm looking at the sufficiencies of the PC, the cost economics of the PC, having some of these factories where we're actually one of the last companies who's designing our own systems and putting them in our own factories. So from that perspective we get the efficiencies of being part of a larger PC company but listen, data center is very different, right? We have a completely autonomous data center group now but we get the efficiencies of that. So we kind of get the best of all the cultures that we participate in with development in Romania and India and China and Raleigh. And again, we can manufacture in any place that customer wants us to manufacture pretty much. You mentioned that you're one of the last companies that's designing your own systems and putting them into your machines. I mean, is that going to go by the wayside? We're one of the last. So all these other companies have decided it's just not sustainable. So can you comment on that? Well I think consolidation is absolutely key. If you look at the PC industry and I managed the PC business and Intel the last three years absolutely been consolidation in that market. If you look at some of the Japanese suppliers going away but that's enabled Lenovo to continue to grow in a multi-hundred million unit market. Today we ship about a hundred servers a minute. I think there's going to be considered a hundred servers an hour rather, about one a minute. And if you look at the consolidation trends I think there's still going to be a lot of consolidation in the market around that. So I think we believe we can grow in that market. PC's through consolidation, even if the PC market flads out but even in the data center space where I think there'll be fewer and fewer players that will be able to compete. It really gets down to just Uber efficiency. When you're running in a factory that's building as the number one PC company you get manufacturing efficiencies that other people can't do that are subscale. So as an example when we look at things like supercomputing we can now we're one of the fastest growing supercomputing company on the planet with 99 of the top 500 supercomputers but that's because we can build very, very efficient products in a market that typically runs on razor thin margins, right? So. Kirk, when you talk about that huge just volume of servers can you speak to where Lenovo's playing in the server frider and cloud marketplace? Sure, I think we just reorganized into kind of four customer centric markets. So first is in hyperscale. You know we participate with Baidu, Alibaba, Tencent and we're expanding across some of the largest hyperscale providers in the West Coast and we believe designing our own board, putting in our own factories gives us the cost economics to compete with the largest data centers in the world just because we can make money in PC desktop towers which is a pretty commoditized business. We think we can make money there. Software defined I think what we're seeing is because of our lack of legacy hardware whether it's a legacy sand or a legacy routing business we can leap ahead there both through our own stack but also our partner stack. Third is supercomputing. So you know this is something where we brought a lot of that application knowledge over from IBM through the acquisition and our goal is to continue to be the fastest growing supercomputing company on the planet and right now we're number two in the world so we're building out Barcelona's supercomputer right now to be 12, I think 12 times more powerful than what it is today, we did University Adelaide 30 times more powerful than their last computer so supercomputing's the third and then the fourth is just traditional data center. So there you look at things like SAP HANA or something where we were solutions led. We're trying to not just ship the hardware but deliver optimized solutions so we feel like it's the little things don't mean a lot little things mean everything so why does Lenovo have 32 world record benchmarks because we're tuning things with SAP and now for example SAP just went public that they're running their own internal HANA on Lenovo. So I think it's a testament to it's the fine tuning of the application so it's hyperscale, software-defined, supercomputing and then legacy data center infrastructure led by solutions, those are our four segments. Kirk, I want to give you the, you talked about it was 25 years for ThinkPad. So as I look out towards the future the data center group, what's kind of the touchstone what are people going to really understand and know that group for in the future? Well I think we want to be most trusted from a data center provider, right? We're not trying to contain anyone in a legacy thinking we want to leap ahead into software defined. We think we have the base hardware customer satisfaction and reliability to do that so I think number one we want to be most trusted. Number two we're trying to be incredibly agile much faster than companies that are larger than us. That's been an innovation culture that's led us to number one in PCs not through cost but through innovation and we want to be known for innovation and being faster to deploy innovation both with us but as well as with our partners. So if you go in our booth you see we're showcasing with Intel, we're showcasing with Juniper, we're showcasing with Red Hat, right? So that's a very decent foundation. So I think we can leap ahead not being covered by the past and be trusted, innovative, cost effective and make a lead to software defined. What's interesting to me is I think when I joined Intel in 1992 there was something like 100 gigabytes a day. When I joined Lenovo 24 years later it was like 250 million gigabytes a day of data if I have my numbers correctly and it's going to leapfrog up just in a massive way over the next 10 years with 5G and the whole internet build out, right? So you hear that from almost every keynote speaker but what it means to me is we're just at the beginning of cloud transformation so a company like Lenovo can, we didn't invent the PC, we just became number one in it over 25 years. We didn't invent servers but we've acquired amazing people that can then leap us ahead over the next 25 years. Well Kirk, thank you so much for joining us. It's been, thank you for your time. Yeah, thank you for the pleasure. It's a great event, so thank you. I'm Rebecca Knight for Stu Miniman. We'll be more with the Red Hat Summit after this.