 Okay, welcome back everyone. This is the CUBE, this is SiliconANGLE's exclusive coverage of IBM Pulse, live in Las Vegas. This is the CUBE, our flagship program. We go out to the events and extract the signal from the noise. I'm John Furrier. I'm joined with my co-host, Dave Vellante, co-founder of wikibon.org and Stu Miniman, analyst at wikibon.org. And this is the final day one wrap up of IBM Pulse, a watershed moment for IBM as it puts its toe in the water big time, I say whole foot in the water, Dave. With the whole cloud strategy, they have an innovation strategy. Very clear, they're laying out their innovation strategy. Huge news on an M&A deal with Cloudin. Other news all over the web, just overall great, great vibe here. We had a lot of guests on this morning, CEO of Softlayer, ton of news. Before we get into the commentary, we'll just go down. Blue Mix, big part of the past story. Open technologies, you're seeing Softlayer at the core of the cloud. IBM put in their middleware in there. Huge investment software, one billion dollar software investment. You see IBM putting the wrapper around Softlayer to explode it for growth, for their business, $7 billion forecasted in revenue by 2015. I think it's a sandbag, Dave, personally. I think they're going to do more than that. And a lot of other new capabilities. We have yet to talk about Watson, that's going to be tomorrow. We're going to hear that. To me, that's the secret weapon. That's the clean suit. That's the face of the customer. This is cloud meets big data. This is IBM's moment in the cloud. Clearly a major, major amplification of the cloud strategy. Moving from private cloud to hybrid cloud. So quick summary, 70% of first timers are attending this event. 70% first timers. This was a Tivoli show. Turned into cloud. Whole new ballgame. The real focus is on developers and business value in the cloud. It's a quick summary. Dave, I want to get your take on it. Well, first, let's go to Stu. You've been working on the halls, social VIP. What's the vibe of the show? Yeah, so John, first of all, you said it's a big show. I mean, I was kind of shocked. 11,000 people, you know, it's bigger than Amazon re-invent. It's as big as like an EMC world or an HP Discover. And this is just one of the many shows IBM has. You know, the general vibe is people feel that IBM has, you know, a really coherent and good story on cloud. If you were to ask most of us only 18 or 24 months ago, the message was kind of fragmented. You know, typical IBM, they've got 20 different products in 20 different groups. And, you know, what is the whole story? The software acquisition is really the glue that's going to put everything together. It's their infrastructure as a service. You mentioned the cloud and acquisition. Do you think that's the glue or the foundation? Well, it's the foundation and all of the services will sit on top of it. So, I was talking to the founder of SoftLayer and he said clouded. I wish I could have bought them when we were independent. It's great. It sits on top of, you know, our infrastructure as a service. And, you know, so excited that IBM was able to make that acquisition. You know, at Wikibon, we've documented that NoSQL is a huge growth area. And, you know, good to see IBM making some more Massachusetts acquisitions. Let me follow, let's get to Boston Company. So Kudos, also Kudos to Rich Leventoff, who's the angel investor in cloud and friend of ours at theCUBE. Hasn't yet, get them on. We got to get them on here sometime. But I want to get your take. Drill down on SoftLayer. Explain that. I know you've been deep on them. You talked to the CEO. You've talked to IBM in depth about it. Break down SoftLayer. What the hell is it? Is it infrastructure as a service? Is it bare metal? Is it a hosting company? I was super critical of SoftLayer at AWS re-invent calling them just a hosting company. Why would the hell they pay $2 billion for it? Honestly, the picture's very clear now. They're wrapping a lot of stuff up. But go ahead and explain to the folks what it is. John, and you bring up some really good points here because if you look at what they are, they are bare metal and they're built for performance. And we've always heard that applications can get really good performance on SoftLayer. But, you know, is that public cloud? I mean, in the presentation I just went to, they kind of called it, you know, a hosted private cloud. So, you know, when you buy from SoftLayer, it's not necessarily as fast as some of the private clouds because it's not just give me a couple of VMs, you say give me a server. And here's the configuration. They've got, you know, a handful of CPUs and then you choose exactly what storage you want. They've got like four or five flavors of that and what networking. And they could spin that up for you in a couple of hours, which is hugely fast compared to what you could do in-house but not necessarily as fast as what we would think of for the public clouds. And absolutely, there's some analysts that say that SoftLayer is not cloud. But if I look at it, all of the, you know, Watson and Lumix. IBM is cloud. That's cloud. And all of these pieces that they're going to layer on top about it, there's services they're going to be delivered from SoftLayer, they're going to build out over 40 data centers and, you know, you can have, you know, flexible, you know, services that you spin up and you can pay by the hour you can pay by. Power systems is going to be layered on top of SoftLayer. Well, I'm going to have power systems as an option to choose for my components. So rather than just saying, you know, give me my application, they're actually going to focus on that performance and allow you to get, really understand what your servers are. I guess if you look at the, you know, is this cattle or pets? It's kind of somewhere in between, which is why it's a little bit fuzzy. Well, there's also horses too. We go to horses for courses. We go to Dave Vellante, Dave, my co-host. Always great to have Dave weigh in. I want to get Dave's perspective on IBM. Dave, IBM is not Johnny Cumb lately company. They don't just make moves and throw some cloud washing out there. Great company. They have discipline. They have great management practices. Not the most nimblest company in the world. Obviously they're huge like HP, but you know, from a quote IQ standpoint, a lot of smart people that hold a bunch of patents, they're not going to just throw the kitchen sink and cloud and hope that horse comes in. They are really serious. I want to get your perspective on IBM's seriousness in cloud. It's a software group. It's a bunch of, it's a confluence of different divisions coming together. They're laying it all out there. What is your take given IBM's power and the marketplace and also the technology that they're coupling together? So John, Stu's absolutely right. 24 months ago when we met as analysts with IBM and I can guarantee the same thing was happening with customers, same thing was happening with partners. You'd get a briefing on IBM's cloud strategy and it was incoherent. It was not well formed. It just didn't make sense. There wasn't a lot of meat in the bone. You said, this really is not that good. And that was the feedback that you gave. We gave IBM. You're being polite. Yeah, right, we're being polite. But we didn't pull any punches back then. And not just us, everybody in the analyst community and I guarantee the same thing the partner in the customer community. Now it manifests itself. Now inside I also say, Ginny, who before she became CEO was running strategy at IBM. And one of the big areas that she looked at was cloud. She sized that market. Look, it's a classic IBM, right? They spent a lot of time, they're not fast. They take their time, they're deliberate. They spend a lot of time. They do a lot of research. They talk to a lot of people. They amass all kinds of information. They look at M&A strategies and they're very good at M&A. And they started, you know, over a year ago to put together a cloud strategy. And that, you know, manifests itself in terms of the soft layer acquisition and we saw the cloud in acquisition today. But from the outside looking in, it's always worse than it seems. And you saw that with the CIA deal. The CIA deal when, you know, Amazon beat IBM, IBM contended, but that's classic IBM. They know how to dig their heels in and the enterprise and they're not going to give ground. So what's happened now is just like in big data. Same thing, IBM's big data strategy was incoherent and all of a sudden they took their analytics business. They super glued it to the big data theme and bang, IBM becomes number one in big data. They're doing the same thing, John, in cloud. And the soft layer acquisition, IBM's great at making billion dollar plus investments and making those pay off. They're great at acquisitions and now you're starting to see that portfolio come about with a very coherent strategy that importantly involves mobile and they're using their web sphere experience and then bringing that to what now everybody's calling past, the whole development environment because without developers, you cannot win in this game. So IBM now has gone from nowhere, really incoherent strategy, low on the Gartner Magic Quadrant. It's going to now catapult past number two, which was CSC in the Gartner Magic Quadrant. IBM's going to be right there setting its sights on Amazon. Dave, huge market. I mean, here's my take on this. And in my analysis, I looked at this in great detail and following IBM over the years, over the decades. As you look at what they've done in their innovation strategy, it's really well disciplined. If you look at it, they started with private cloud engagement, Dave, a couple of years ago, doing their normal IBM thing. Go there, install base, do some private cloud, get some data center, a lot of large enterprises and that got the ball rolling. Then you saw a ton of M&A activity. They were doing a lot of tuck under over 110 SaaS properties. We're focused in under the portfolio they bought in. And then, boom, the big deal with you have the cloud, right? So you got SoftLayer, $2 billion deal there. That's the M&A front. Then they add the organic innovation. We always ask the question to CEOs, Dave, what's your M&A strategy? What's your organic innovation? Huge patents. Their commitment to organic R&D is unprecedented and that's going to be adding on top of that. We're seeing that with Watson. We've been at IOD and Edge. We've talked to Jeff Jonas, a lot of other distinguished scientists, and they have their share of PhDs working on some great stuff. And then obviously the revenue commitment. They forecasted to the street $7 billion number by 2015. We heard the general manager of the mid-market this morning say they're already at a billion and they're just scratching the surface. So they're well on their way for hitting that number. I think they're going to sandbag it and go well over $7 billion. And then also the footprint with SoftLayer with an international expansion, which brings in the kicker on the data protection side when you look at privacy laws in other countries. We heard that out. So classic innovation strategy, the trend is your friend, cloud, big data with data analytics with Watson and Discovery and the organic and the M&A put this together. And I think this message hangs together. Their story hangs together like a nice suit on the rack as I say at Nordstrom, say people want to buy that. And I think that's appealing to customers. The suit hangs with the scarf, everything goes together. Beautiful, it all hangs on the rack. Now where the mudslinging is going to get interesting is that $7 billion, maybe it's low, maybe it's high, whatever, but a lot of that is services, human services. That's IBM, big chunk of IBM's business. You know what's coming from the competitor and particularly the public cloud competitor of Amazon is oh, we're true cloud, okay? And they've got basically a case to make there. Now SoftLayer comes in, IBM shores that up, they're going after the hybrid. I think it's legitimately cloud. Microsoft's going to do the same thing, they're going to throw the kitchen sink at it. And Amazon's going to be pure play and you're going to have the legacy guys are going to hang on to this business for dear life and they're going to make investments. The great thing about IBM is two things. One is they're going to balance sheet that allows them to make investments. Second of all, they're really good at acquisitions. Juxtapose that to HP. Meg Whitman told me last March, I'm not going to make any acquisitions until we pay down the debt. So HP couldn't do what IBM did. So at somewhat of a disadvantage, I see that as a huge, huge advantage for players like IBM. The love fest is over now. Let's go to critical analysis. Okay, let's go identify where we think it's weak. Okay, where are those soft spots? Where's the kink in the armor? To me, it's SoftLayer. It's not a kink in the armor. I think that's a positive. I think that's going to be explosive. I think it gives them a bully pulpit to bring in new developers and bridge the old school developers into that DevOps mindset. But to me, I think the weak spots this pass. The Cloud Foundry, it feels a little bit like they're groping. I love Cloud Foundry here. I got OpenStack over here. We kind of know what's going on with OpenStack. We'll be at the OpenStack Summit in Atlanta. You don't see Red Hat. I'm not sure Rackspace is rolling, going, doing handstands today. So OpenStack, I'll see an open book, Dave, I think is- Who's got a strong pass? I mean, Salesforce, right? I don't think not. No? Google? Amazon? I think that's a battleground. I mean, who's got a good pass? Who, which pass player impresses you? I'm not, I think they're, it's evolving. I think it's early. Nobody? I think, not really. I don't think anyone's got a good pass. Okay, so that's a key point. But they got their fingers in a lot of pies. Again, this is, again, we're being critical. So I agree with you by the way. We're being critical. No, but I agree with you by the way. I don't think the pass strategy is fully baked out. I don't think anybody's pass strategy is fully baked out. And by the way, SoftLayer, I think we can be more critical about that. You talk to any practitioner or partner that uses both IBM or Rackspace or Amazon. And believe me, there are many of them, right? When you do a deal with Rackspace, you're not going to deploy it on Amazon. When you do a deal with IBM, they're not going to let you resell with deployment on Amazon. So my point is, there's a lot of customers and there's a lot of data on comparisons between AWS and other platforms. And hands down, AWS is killing it. It's not a liability. It's just an observations, okay? So my point is, competitors are getting better, but AWS is still the gold standard and they're miles ahead of the competition. Now, question used to, is that gap closing? And is there clear evidence that it's closing? I'm not sure. Yeah, so one of the critical feedbacks I've been hearing is IBM preaches that they are open. And SoftLayer has a ton of APIs, but it's not necessarily simple and it's not necessarily open. Well, all APIs are proprietary. Yeah, absolutely. But Amazon's not open and they're doing quite well. And the other thing is, we say, IBM has really been consolidating and making a better story. If you look at OpenStack, they still have a rather fragmented approach. They've got a lot of people working on it. 400. Yeah, 400, but from what I hear, it's more than a dozen teams and they're not working on all the projects necessarily. So it's really spotting. Yeah, 400, right. How many people are actually digging in? And it's not centrally orchestrated yet. John, way in here. Okay, so all right, to be super critical, I think the only spot that IBM's kind of covering up, I would call this the scarf kind of covering up that the scar as an opportunity for them as well is developers. And they do not have developer traction right now in Open and in cloud. When I say cloud, I mean real cloud. And I'm not talking about, oh, I have private cloud, real developers. And I think what you see from the messaging and their dev at pulse is the sign that they want to win there. They're making the investment. That's why I think it's, Dave, it's not even the top of the first inning. If you look at the communities that we talk to, certainly in the, in modern web, they just don't have the traction. Now SoftLayer brings that and they kind of maybe can package that. Maybe it's packaged as part of the deal. And the 70% first time attendees, that's a good sign. But still, until developers are actually coding and actually there's an ecosystem to foster those developers, it's really a non-starter. So cloud foundry, the past layer, all that is going to come down to how well they can bring in the developer community because in this market, the old tricks don't work, Dave. The old, hey, we're going to kind of open foundation and install things, fork the market. Hey, at the end of the day, the best solution wins, the consumerization of IT. The new model is the best stuff wins. And I think speed is a game. They're talking speed, but I just don't see any meat in the bone with the developers. There's some talk. I want to see that evolve. I'm not going to, that's not a killer fatal flaw. They're also standing tall saying, we want to develop. But here's what I like about it, is IBM's going after it, right? They're marketing to developers, they have dev at Pulse here. Again, juxtapose that to what we saw at HP Discover where we were having discussions with senior XP executives about how we need to do something. We need to have an event or we need to attract developers. IBM is more, they are doing something about it. So I give them high marks there. And then the second thing is Lance's comment, Lance Crosby, the CEO of SoftLayer. All services in all data centers and we're talking about 40 data centers globally. So their strategy is to put multiple data centers around the globe, deal with compliance issues on a local level. Services by their very nature are local. It's a huge market. IBM understands this. And I think that's a big advantage for IBM. And I think just some glowing points here. I was impressed with Mike Gilfix who's the director of mobile first. He talked about the integrated stack. He didn't call it integrated stack. He basically talked about versioning. Basically just describing the DevOps environments. They aren't just whitewashing it. They're basically kind of, they know what they're talking about, their experience. He's in the trenches. Also Adam Gunther was on with cloud offering. These guys are computer scientists. They both have CS degrees. They know the market. So it's not like they have empty suits running this thing, Dave. They actually have some solid people running it. That's a bright spot. So to try to look for the negative and the critical, I would say that the developer's week in the past is early. But I'm impressed with the guys. Mobile first is a great message. They had the middleware story. Can they pull it off? Will the market let them pull in their IBM software? And how they develop the open. To me, those are the watch items on the watch list here at David Paul. Stu, any final comments from you? Yeah, John, I think real good points there. You know, good progress. Cloud making really good progress. The developer community, definitely I heard the feedback that it needs to grow. But good steps in the right direction. And the other thing is IBM does have a lot of shows. So, you know, I've heard some people say that there needs to be a little bit of consolidation as to what they're doing. Yeah, I mean, I think they're going to pull it all together. They'd be idiots not to do that. I mean, I think they're going to obviously put a theme together. They need a developer show. IBM, they're pretty smart. They should do that. Guys, that's a wrap for day one. And we'll say just on an entertaining note, it was great to have David Pogue on theCUBE, Dave, ex-New York Times journalist, high standards like us, but he's in the new school. He's like us breaking the rules, doing things. He's doing the MC and the keynote. Like theCUBE, Yahoo Tech and David Pogue, you know, making things happen in the future of journalism. So, it's fun to have someone on that was doing the future of journalism like us, who's entertaining. Not afraid to say, I don't know what passes. Yeah, I mean, I like what he's doing. I like their site. I love the fact that, yeah, you know, I like Yahoo's strategy. I like what Marissa is doing, even though she's still coming on the fire. So, great guest, a lot of fun. And I think, you know, what I learned from that segment, I've always believed in, old school journalism is alive. Old school journalists are alive and well. Old school journalism is maybe transforming. It's still about trust. It's still about telling the stories, but doing it in a different way as he pointed out. We're gonna be here all day live tomorrow. This is the day one wrap up. It's all about cloud equals growth, new capabilities, M&A deal being announced, IBM putting some rubber to the road in cloud. It's the real deal for them. Huge investments, over a billion dollars and allocated for investments in software, seven billion in cloud revenue forecast by 2015. And we got all day tomorrow. I think we're gonna hear about Watson tomorrow. So, stay tuned. This is live. This is theCUBE day one wrap up here. Exclusive coverage, SiliconANGLE and Wikibon and theCUBE live at IBM Pulse in Las Vegas. We'll see you tomorrow.