 Live from the Frederick P. Rose Hall, home of jazz at Lincoln Center in New York, New York. It's theCUBE at IBM Z Next, redefining digital business. Brought to you by headline sponsor IBM. Okay, welcome back everyone. We are here live in New York City for theCUBE. This is a special presentation. This is theCUBE, our flagship program. We go out to the events, extract the sales from the noise. We are here for IBM's System Z mainframe announcement show. My co is Dave Vellante, Dave, New York City. We're making it happen. Yeah, John, Big Apple, IBM. You know, when IBM does these big announcements in New York City, you know it's bringing in its best customers. It's, you know, very high end sort of production. But when it comes to the mainframe, the IBM System Z, it's even higher end. So the System Z, it's obviously IBM's legacy. It only accounts, John, for about 3% of the company's revenue today. But when you add in all the software and other like storage and services, it accounts for 25% of the company's revenue and 35% of the company's operating profits. So mainframes are exceedingly important to IBM. IBM's got 7,000 patents around mainframe, 500 for this announcement alone. And as you know, we're going to have Steve Mills on later. Steve Mills has a playbook, John. And that playbook is to drop a billion dollars on big bets. And so this announcement, the 13th generation of Z, Z13, culminates a billion dollar investment. And essentially you're going to hear a lot of themes around mobile, analytics, bringing those together for the modern mainframe. So the news broke yesterday. So the New York Times article, Wall Street Journal, we had a lot of awesome press out there. They had press. And mainly it's basically a billion dollar investment that they've made over multiple years with thousands of customers. And it's the mainframe. So to me, the big issue I want to hear today is what is the big deal around mainframe? It's got kind of baggage to it from an old school legacy standpoint. People think of mainframe. They think of Glasshouse. They think about old school. So I got to ask you what you think this modern era is. And basically with cloud computing, the mainframe is back on the table as a relevant piece of infrastructure. So the question is for you is, what do you think that's going to come out of this announcement? Is it relevant? Is it modernized? Can it handle the kind of workloads that they say it can do? Well, I think the operative word there is relevant, right? I mean, you're talking about this legacy and yeah, maybe some of the shine went off the luster, but now it's back. And why is it back? A couple of reasons. One, first of all, IBM Jettison's X86 business and sold it to Lenovo. So it damn well better be back for IBM. The second thing is, I think Paul Moritz nailed it in 2009 when he said VM where we are building a software mainframe. You remember he said that? Yeah. What's a software mainframe? Software mainframe has security built in. It's got virtualization. It's got global capability to do distributed computing. It scales. It's got openness. So it runs Linux applications. That's essentially what the industry wants. The industry has always wanted to build a mainframe. IBM's got the mainframe. Well, the big retail show is in New York City this week as well and mobile is at the heart of this. And if you look at their pre-briefing documents and all the text around there, the news yesterday on the New York Times and these other outlets is they're leading with mobile and obviously big data is a big part of their strategy and the cloud and mobile drive this, Dave. So is this truly going to be the transactional God box as some people call it in California? That's kind of a term used to be the box that handles everything. And is cloud a big part of that? And how do you see that integrating with existing businesses? If I am a enterprise, why mainframe? Why do it again? Well, it is the transactional box. There's no question about it always has been. The innards of the IBM system Z is by far the highest performance, the most reliable, the highest availability, the most secure. It's all sort of built into that capability. The cloud piece, here's my take on that, John. I think that what customers are going to do, they're going to build a back-end infrastructure around things like the mainframe to address these duplicative bursts of transactions. So one transaction leads to two transactions, leads to 10 transactions, like your confetti dynamic. So that's sort of what's happening in the back end. I think customers are going to put their web front-end in the cloud. So I don't see the necessary, I think the mainframe's the cloud back-end. I don't see it as being the cloud front-end. So you got to talk cloud, right? So I think that's a piece of it. What's interesting to me is bringing in the analytics piece. So IBM's tripled the amount of main memory. I think there's 10 terabytes now of main memory. So doing things in main memory, marrying the transaction systems and the analytics systems to make decisions in real time for fraud, for retail, for marketing and things of that nature, that's where it gets interesting in my view. I think to me that's most exciting about this announcement is the fact that IBM can bring all those years of experience around mainframe and recast the new architecture. I mean, all this talk of in-memory is driving a lot of activity. All this talk of open source, scale out open source is really a big deal. So I think IBM has a huge opportunity to take these patents and essentially create that God box, that environment where banks, retail, low latency transactions, this is what mobile's looking for. I think mobile and cloud are a perfect storm for this trend. So I'm excited to hear the announcement. Again, performance will drive everything. I mean, skip right to high performance and that's an awesome thing. So this is theCUBE. We are here live in New York City. We'll be right back at the short break. We're going to be right back. Our first guest here live in New York City. We'll be right back.