 Okay, we're back live inside theCUBE. I'm John Furrier, the founder of SiliconANGLE.com. This is theCUBE, our flagship telecast. We go out to the events and extract a signal from the noise. This is an independent media operation in theCUBE, SiliconANGLE.tv, in partnership with our analyst team, wikibon.org. Dave Vellante, who's with me here to summarize and talk about news around the web and give our opinion and analysis of what's going on in the tech business and general business and tech. And we want to bring that to you. We would not be able to exist. It wasn't for our great underwriters and supporters of our mission at theCUBE. And that's IBM here at IBM Edge. So watch their ads and watch our ads of our sponsors because we are ad supported and that funds the independent analysis. Our goal is to get the signal from the noise and share that with you. We're here at IBM Edge. Dave, what do you think so far about the IBM Edge event and what's happening out of the first morning segments? Well, John, this is obviously a storage event, but I think you cannot talk about an IBM Edge storage event without talking about IBM and the company. IBM is a 100 plus billion dollar company in terms of revenue and it's got over a $200 billion market cap. So it's trading at over two times revenue, which is quite impressive for a company that's largely known for its services, but IBM's investment in software has paid off considerably. Contrast that, John, with Hewlett Packard. It's a $120 billion revenue company and it's trading at about 30 cents on the revenue dollar. And it's a stark contrast. So maybe IBM is high, maybe HP is low, I don't know, but there are two BMs in the industry on two completely different vectors. IBM is like a battleship. When it moves, it moves very slowly, but they have a lot of power. The company is a great company. IBM is professional. I mean, we've heard some of the guests here on this morning articulate. They know their stuff, they're professional. IBM is a great company and they're fantastic. I mean, it's East Coast, it's New York based. It's kind of like the apple of the East Coast, but it's not as flashy, but they have a lot of meat on the bone as we always say. So very impressed with IBM in general as a company. One thing that's very lacking with IBM that I would say is that their marketing is very weak at the solution level. I mean, they do a lot of global marketing. You go and watch the Tiger Woods golf tournaments and whatnot, you see it's smarter planets. Great brand marketing. Great brand marketing, but in a solution area like storage where it's so strategic Dave and there's so much change going on, they don't have a lot of that marketing, but their story's kind of coming together. So that's kind of a criticism of the past, but I see this show as IBM moving out of that, speeds and feeds, storage only conversation to a much broader portfolio as Ed Wall says. I think that's really smart. The customers that they sell to buy from IBM from different divisions. So I think that coordination message that the new CEO Janie is bringing to the table is very strong. I think if they can pull that together and amplify that story and create that umbrella messaging across the different business units, I think they're going to have a winner because they got the packages there. Yeah, I think if you're a partner of IBM, a channel partner or a solution provider, on the one hand, you're concerned because it's a complex organization. On the other hand, you're excited because of the massive install base that IBM has. So what I see happening at Edge is IBM is reaching out to its both customer and partner communities and it's reaffirming its commitment, not only to the IBM solutions oriented approach, but specifically to storage. And it's, as we've been talking about all morning, trying to get its storage mojo back. Well, I'm going to be giving a talk to a couple hundred of IBM's business partners, executive partners, system integrators, channel partners and what not tomorrow afternoon. I'm going to talk about what we mentioned earlier, the four horsemen of disruption within IT transformation, which is cloud, mobile, social and big data. And that really is the ground zero of what's happening with the change right now. And we talk about Facebook going public a couple weeks ago and everyone's watching that kind of as a bellwether of the future, stocks down right now, but I'm bullish on Facebook going forward. But Facebook represents a new generation of infrastructure. And I think the story coming out of IBM Edge here is a validation to our analysis and coverage over the past two years with theCUBE around cloud, mobile and social, but more importantly, that fundamental business opportunities are going to be shaped by the intersection of business requirements and IT solutions. Not just a passing needs back to IT and having that being serviced. A real intersection of the two we heard from IBM's youngest VP ever earlier. She said that these big data requests are coming from business line managers, not IT. So that to me is fundamentally a trend that's been validated. I think IBM's direction with the battleship that's pointing in the direction of the marketplace they're going right down the right track. Yeah, and you look at a company like SAP where it's Sapphire three weeks ago, and clearly SAP has that strategy selling into the line of business. You mentioned the Facebook IPO. I as well was very bullish on that. And I think I miscalculated. I mean, I thought that Facebook would be the next wave. We saw Netscape, we saw Google. I thought Facebook was going to lift all ties. What I miscalculated, John, was the degree to which Facebook was going to price that IPO. And frankly, overpriced that IPO. And most IPOs come out at maybe in the low teens, maybe the mid teens, good ones come out in the high teens. Maybe every now and then you'll see one come out in the low 20s pricing it at 38, was it? I think the market's had a little backlash. And since then, we've seen the exact opposite effect as to what I thought would happen. Now, source, a lot of that, of course, is Europe dragging on the market. But a number of companies have pulled back their IPOs and are really rethinking the public markets right now. And I'm hoping it's short-lived, but I'm not so sure. I think IBM's going to be fine. There's no doubt in my mind from a performance standpoint, business fundamentals, they're going to do well. The challenge that you brought up really was how can they balance profitability in the short term and long-term positioning? And I think you're hearing that investment. But it's an exciting time. I think what's happening right now, Dave, is that fundamentally on a global scale, open source technology, lower cost nips, computing power and storage and networking converging together is creating literally the perfect storm of innovation and disruption where new solutions and new use cases are coming out. And we're covering that, even in the news, related to that, new possibilities are emerging. Good and bad, bad being, depending on how you look at it, I just tweeted about war games, right? War games is happening. We have, for the first time in our history, cyber war officially sanctioned by the government. And today in the New York Times, again, another story about cyber weapons warning, cyber war warning. So there's a warning, but it already happens like a tornado that's touched ground. So that is a real change to how we operate our society and our government, but ultimately that's the same for business' days. Big data is that theme, is that hype term, is that categorical description for the complete transformation of all the value activities within these businesses from how they build products and how they acquire customers and how they service them. Productivity enhancements are changing. Big data is really a productivity boom for the marketplace. And we haven't seen that kind of productivity since the PC industry when the whole idea of putting productivity in the hands of the people. And I think the big difference between now and when we watch the PC industry, we saw a major structural shift in the industry where the industry went from largely competing like IBM had at the time with the vertical integration strategy to one where competition occurred on individual layers of the value chain, Intel dominated chips, Seagate dominated disk drives, EMC came out and did its thing with storage, Oracle with databases, et cetera, IBM and services. And now we've seen that industry recoless, reconsolidate. And you really have five or six major companies that are controlling the chess board. I've called it an oligopoly many times. IBM is one of those companies, but essentially it's IBM, HP, Oracle. I guess I would put SAP and EMC in there, but certainly Microsoft and Cisco and Intel. And those guys control the chess board. So John, what I'm saying is to your point about big data, it's the next inflection point. These companies, you can use their cash reserves. I mean, IBM's got $12 billion of cash on the balance sheet. Cisco's got cash, Intel, Microsoft, they can use their balance sheets to acquire where they have holes in the portfolio. And so unlike the PC era where companies like DG and Wang got totally head faked and got blown away, these existing oligopoly whales, these behemoths, are I think much, much smarter and have many more resources, not the least of which is its large customer base to respond to these industry trends. And it's almost like John when you have two arm wrestlers, and they're of equal strength. And one can't beat the other, but they stay in the middle. And I think that's what you have. You have a balance of power in the industry. On the one hand, I think that's very good for customers. On the other hand, sometimes it's bad for innovation, but that's why we have such a vibrant startup community, of course, in Silicon Valley. Well also, the M&A market is hot too. I'm on news hitting today that the deals confirm that salesforce.com is buying buddy media for $689 million in cash and stock. And what's interesting is that that's a great example of salesforce.com retooling to get a position in the growing, changing dynamics around social CRM, social everything, right? So obviously they're retooling. Salesforce is really not in a position yet to deliver the kind of scale that IBM does, for example, but they're changing. And I think that is an indication that the complete reconfiguration of the architecture of infrastructure, which powers the application market, is all centered around data. And this changes everything. Privacy, compliance, solutions, mobility at the edge. Advertising. Advertising. Talking about buddy media, who is buddy media? Buddy media is a startup that grew around social infrastructure. They started a little bit before the social media trend, so they kind of backed into providing fan page support, YouTube fan page support, but really smaller in comparison from a functionality standpoint than a company that we've been following on SiliconANGLE called This Moment. As you know, when we see a company we like, we like to ride that horse like Millennial Media. So This Moment is super hot, right? Thismoment.com is probably the best social infrastructure company. It's called ThisMoment.com. And what This Moment does is they power social infrastructure for the largest brands. Hunger Games and films, like Hunger Games, they made a huge success, but it's not about a marketing gimmick. They are actually powering with complex technology and solutions to actually provide infrastructure so that marketing people can run targeted ad campaigns using social channels through a diverse set of content types. So the old days of advertising were changing where you had a copy strategy and you had a campaign, you might have had a few versions of that campaign for the different demographics and psychographics, but now with the web, the way it is, you can target people down to the thousands of different campaigns going simultaneously. That's really hard to execute on. And then having the analytics behind it, that's what ThisMoment does. So Buddy Media selling is really a good call for them. I think it's a great move. So I think that they were going to lose share to ThisMoment. So congratulations to Buddy Media for selling. Great exit for the founders. I really like that company, like what they've done. So it's great stuff for them. But again, ThisMoment is a startup. They just got another round of funding. So that's going to be another company that we're going to watch. Skyrockets are the top of the charts. Millennial Media is another hot company in that space. I mean, a little different. Yeah, well, Millennial, we follow when they were startup, now they're public company. They're the number one independent ad firm for mobile and ranked two globally behind Google. And so, you know, they're powering the largest mobile campaigns, install apps, et cetera, for mobile and great, great successor about the entrepreneurship. But again- These are not household names. They're coming out of nowhere and they're getting, you know, billion dollar valuations. Yeah, I mean, and Facebook obviously now growing up, they're public. But the challenging of the status quo really is about the disruption. To me, IBM is vulnerable in this area. So the news that we're talking about today in context to IBM is interesting because IBM has legacy. I said, I used the word legacy early in the cube this morning. Boy, the IBM executive was like, you can just see like, oh, no, no, we don't use that word. Legacy is a fact. Legacy is legacy. Whether it's kind of viewed as negative to IBM, I think that they don't want that term because it kind of has a negative- Now, why do you say IBM's vulnerable? In what sense? Well, they have incumbent solutions, data warehousing. So the customer base is moving everything over to lower cost, higher performance with open source. So for example, it's although it's not ready for prime time, batch processing going real time with Hadoop challenges the solutions for filing, data warehousing, business intelligence. So you could do the same functionality with a lower cost solution with Hadoop using open source. That's the trend in the open source with Hadoop. So that challenges IBM. So IBM is vulnerable there. So I think if IBM's vulnerable, John, I think the vulnerability is organizational because I think the IBM's combination of cash on the balance sheet and R&D gives it a leg up. I think IBM's biggest challenge is it can't move fast enough. Well, I didn't say IBM's weak. I said IBM's vulnerable like all the incumbents. But here's how I see it. EMC under Pat Gelsinger's leadership is doing a fantastic job in this regard. And I see IBM doing the same thing with their portfolio messages. They are absolutely setting the stake in the ground to their customers that we are doing big data. We are the store for you. We can solve your problems. That's a really new approach and that's the right one because what that's going to do is give the comfort to the customer that, look at no matter what the alternatives are, we can do it for you in a reliable way. Yeah, there might be some projects that are done with open source. It's kind of like non-core activities and still has a chance. It's not going to kill open source. They're not going to kill it. They're going to just establish their leadership by using cross functional tools. And IBM's been very active in open source. Years ago, Steve Mills said, I'm going to invest a billion dollars in open source and of course it was a fight against Microsoft but it's paid off in other ways. At the end of the day, customers have a choice where to buy stuff Dave, right? So like public cloud is a great example. Private cloud, which vendor can serve you best? And that's what customers are looking at is IBM the best vendor for me. And the answer is in most cases, it might be yes. Or are they strategic? Or just like going on the cube. Nobody ever get fired from going on the cube and nobody ever get fired from buying IBM. All right, so we got a wrap. This is SiliconANGLE.TV's theCUBE. We're live from IBM Edge. We're in Orlando. I'm Dave Vellante. I'm here with John Furrier and we'll be right back after this word.