 From the noise, it's theCUBE, covering VMworld 2015, brought to you by VMware and its ecosystem sponsors. And now your host, Dave Vellante. We're back at Moscone, everybody. This is theCUBE, SiliconANGLE, Wikibon's continuous production of VMworld 2015. We're riding the data wave. Eric Herzog is here. He's the Vice President of Marketing, IBM Storage. In the Hawaiian shirt, great to see you again, my friend. Thank you very much. As I keep telling people, it's not about data lakes. People have oceans of data these days. That's right, oceans of data. Joe Kerr here, we love that. Oceans of data. Oceans of data now. So what's the story? You got the Hawaiian shirt on? What do you got going on across the street? Well, our big thing really is oceans of data. So between all the solutions we have from a storage solution set, our platform computing environment, our joint deal that we do with Cisco with what we call the VersaStack and our Spectrum family of software. You know, our customers are saying everything's going digital. And it doesn't matter whether you're a global enterprise, a mid-sized company, or even an SMB. With everything going digital, it isn't about lakes of data, it's about oceans of data. So let's start maybe at the VersaStack. The hyperconverge has sort of taken the world by storm. You're seeing VMware is obviously talking about it. You got a bunch of startups talking about it. When you guys made the move to sell the server business, the x86 server business to Lenovo, BNT, the acquisition of BNT went with it. It opened up whole new opportunities for IBM from a partnership standpoint. And one of the first guys you went to was Cisco. So talk about that a little bit. Well, we've had a great partnership with Cisco. We deliver the VersaStack through our mutual channel partners globally. So we have channel partners in all of the GOs that are selling the VersaStack solution. We started originally with our V7000 product which allows us to not only provide a strong mid-tier offering, but because of our integration of our spectrum virtualize actually will virtualize heterogeneous storage. So over 300 arrays from our competitors can be virtualized giving any data center or cloud deployment single way to replicate, single way to snapshot and of course a single way to actually migrate data which is a huge issue obviously in big deployments. Well, on the same volume controller was really the first platform to do that. That was sort of the gold standard that hold the original tier one, tier two storage sort of was defined by the sand volume controller capability. Now you've built those capabilities into the... Into the array. So we started with our V7000 store-wise was the first with the VersaStack. We announced last week two new versions. One our V9000 which incorporates that same value of the sand volume controller, but an all flash array. Okay, that product is been incredibly successful for us. We have thousands of customers. We have deployed more petabytes than anyone in the industry and more units than anyone in the industry for some of those analysts that track the number side of the business. We've done more than anyone. So you're pricing it right, is what you're telling me. We are definitely pricing it right. We do not. More petabytes? More units? More petabytes than more units than anybody by far. But not the most revenue. Second most revenue because, well we're a fair price for a fair job as opposed to a high price for a okay job. That's what we believe in. Delivering more value for the money. So we've got that so that opens up heavy virtualized environments, heavy cloud environments, big data analytics. All those applications were all flash. High end oracle deployments, SAP HANA configs, all of those sort of things are ideal. Same time you brought in the V5000 at the lower entry place of the mid tier and it's with the UCS Mini from Cisco. So it gives you a lower entry price and allows a couple things. One, you can go into departmental deployments of big enterprise. Two, you can go into remote office deployments that also have large enterprise. But three, it allows you to take the value of a converged infrastructure down into smaller customers because it's a lower entry price point. It's got all the value of the virtualization engine we have in all of our V family of products, the V5, the V7 and the V9 all flash, but it's at a much lower price point with a lower cost UCS Mini and a lower cost switch infrastructure from Cisco. So it's a great solution for those big offices, but again remote and department level and ideal though to move converged infrastructure down into smaller companies. So Cisco has been incredibly successful with that space. When Cisco first came out, I misunderstood, I said, oh, they're going to fall flat in their face and servers and I was totally wrong about that because I didn't understand that they were trying to change the game. What's it like partnering with those guys and how has it added value to your business? Well, it's been very strong for us. One, they've got an excellent channel. Two, they have a great direct sales model as does IBM. Three, we've been partnering them for ages and ages and ages. In fact, in the 90s, we sold a bunch of our networking technology to Cisco and is now deployed by Cisco. So some of the networking technology that Cisco puts out there to their end users, to their channel partners into their big telcos, that actually came from IBM when we sold our networking division to Cisco in the mid 90s. So strong partnership ever since then. So let's talk more about the portfolio. Particularly, I'm particularly interested in the whole TSM piece. TSM came over to the storage group, which thrilled me. I think there was a great move by IBM to do that. Whoever made that decision, smart move. How has that affected having that storage software capability embedded into the storage business? How has that affected your ability to go to market? Well, it's been great. So that's our Spectrum family. There are six elements to that. Spectrum Protect, which used to be TSM. Spectrum Control, which used to be the TSC product. Spectrum Virtualize, which is a software version of the sand volume controller. So you can get it as a software only solution. Spectrum Archive, Spectrum Accelerate, which is a scale out block solution. Think of it as a software version of our XIV platform, but software only. And Spectrum Scale, which gives an incredible scale out NAS capability. In fact, Spectrum Scale has a number of customers in the enterprise side, not in the HPC market, but in global enterprises, over 100 petabytes. And we even have one customer that has one exabyte in production under Spectrum Scale. Exabyte. One exabyte in production, and not an HPC customer, not one of the big universities, not one of the think tanks, but a commercial, large, global Fortune 500 company with an exabyte with Spectrum Scale. So talk a little bit more about the strategy. I think people, all the time, they misunderstand IBM's approach. They say, okay, IBM's getting out of the hardware business, which they think infer, oh, it must be getting out of the storage business. You're not getting out of the storage business, obviously. They hired Zog and Store. So talk more about the strategy and how you're pursuing that. Yeah, well, I'd say a couple of things. So first of all, our commitment to storage is very strong. We're investing a billion in all flash technology and a billion in Spectrum software, in addition to our normal engineering development for our store-wise family and our other members of our products that we've already had. So a billion extra in flash and a billion extra in our software family. In addition to that, we've got a method of consumption that we're looking at. So some end users want a full storage solution. Our DS8000, our flash systems are store-wise. Some customers want to move to the software-defined storage. And in several cases, such as XIV, software-only Spectrum virtualize. Okay, we've got a number of different ways that you can consume the product. And then lastly, in several of the products, such as Spectrum Scale, Spectrum Accelerate and a light version of Spectrum Control that we call Spectrum Control Storage Insights, available through a cloud consumption model. So if the customer wants a comprehensive solution, we have it. If the customer wants software-defined storage, we have it. If the customer wants integrated infrastructure with our VersaStack, we have it. And if the customer wants a cloud storage model of consumption, we have that too. And quite honestly, we think in bigger accounts, they may have multiple consumption models. For example, Core Data Center might go for a full storage solution, but guess what? The cloud solutions would be ideal for remote or branch office. So talk to me more about the cloud. You're talking about the soft layer. We go to the IBM shows, soft layer, blue mix, you know, there's really a lot of momentum there, the DevOps crowd, what's going on? Spectrum Accelerate, Spectrum Scale, and Spectrum Control are all available as a soft layer offering. They are not targeting test and dev. They are not targeting just the blue mix crowd. These are targeting Core Data Center. They could be test and dev, or they could be remote office, branch office opportunities for large enterprises that want to spend a full storage solution and spend that money on the Core Data Center. But for the remote office, have Spectrum Scale delivered over soft layer, an ideal solution, and various consumption models which ever fits their need. So David Fleury just wrote a piece on wikibon.com talking about latency and capacity storage at a very high level, sort of segmenting the market those ways and sort of sizing it up and projecting some of the trends. And obviously latency storage, he's thinking more flash oriented capacity storage, more spinning disk and tape. Is that a reasonable way to look at the business and how does it apply to your portfolio? So we do think that's a reasonable way to look at it. You have, if you will, a performance segment and a capacity segment, depending, the number of things that people need to really look at when they buy storage. First of all, I'm a storage guy for 30 years. No one cares about storage. It's all about the data. It's all about the data that your storage optimizes. It's about the workload, the application and the use case. I do too, but unfortunately almost every CIO is a software guy. So it's how does the storage optimize my software environment? And that's what's critical to them. So we see certain applications that are very performance-sensitive, certain SLAs they need to meet. We have some that are medium sensitive and we have some that of course are very capacity oriented, which is our spectrum scale. One exabyte with a single customer. Now that's capacity. That's an ocean of data. But we also have solutions. We're able to put it together. So for example, in a lot of data analytics workloads that would run in spectrum scale, we actually sell a lot of our all flash flash systems. Use the flash to ingest the data. Use flash to manage the metadata. Use the flash to run the search engine in a big giant config such as that. And when you're running an analytics workload, you run the analytics workload on that flash. Yet you're really doing a very large deployment, hundreds of petabytes to an exabyte with our spectrum scale. So we see, if you will, a continuum. And the key thing is IBM offers all of the various piece parts to any level of the continuum. And in that example I just gave, combining high performance and deep, high capacity software in a single solution to meet a business. So I mean, IBM is an unbelievable company. You think about Watson, Cloud, BlueMix, the analytics business, deep, deep, heavy R&D, Z mainframes. We got all the pieces. How is the storage business? How can it better leverage those other pieces? And is it relevant or is it just take the storage hill? So we see our storage products as integrating with our others. So for example, we do a lot of deals where they buy a mainframe in our DS8000. We offer integrated infrastructure, not only with Cisco, but actually with the Power family as well. It's called Pure Power. And that has an integrated V7000 with a Power server. And we're looking at deepening that relationship as well. A lot of analytics workloads there. A lot of analytics workloads go on spectrum scale. So whether they buy the big insights, whether they're using Watson. We've got several customers that use Watson, but by Flash systems because it's obviously very compute intensive. So they use Flash systems to do that. So we fit in at the same time. We have plenty of customers that don't buy anything else from IBM and just by storage. So we are appealing to a very broad audience. Those that are traditional IBM shops that buy a lot of different products from IBM and those that don't. In fact, one of our public references is General Mills. They had not bought anything from any division of IBM for 50 years. And one of our channel partners in Minnesota, we were able to get in there with our XIV product. And now not only do they buy XIV and some spectrum protect for backup, but they've actually started to buy some other technology from IBM. And for 50 years, they bought nothing from IBM from any division. So in that case, storage led the way. So again, in certain accounts, we're in there with the DS8000 and Z or we're in there with Watson and Flash systems. In other accounts, we're pioneering and in some cases, we're the only product they buy. They don't buy from IBM. We will meet whichever need they have. Now, in periods in the last, I mean, it's been an ebb and flow in the storage business for IBM. In periods of the last decade, IBM at deep R&D, but the products couldn't seem to go to market. Now you shared with me under NDA so we can't talk about it in detail, but shared with me the roadmap. And the product roadmap is accelerating from, at least maybe it's just my impression from what I'm used to. Should we expect to see a much more steady cadence of product delivery from IBM going forward? Absolutely. So keeping in our spirit of oceans, we ride the wave, we don't fight the wave. And in today's era, in any era of high tech, not just in storage, doesn't matter whether it's storage, whether it's servers, whether it's web 2.0, whatever it is, it's all about innovation and doing it quickly. So we're going to ride that wave of innovation. We're going to have a regular cadence of releases. We released four different members of Spectrum plus two versus stocks. And next quarter, you'll see five major product releases in one quarter. And then in Q1, you're going to see another three. So we're making sure that as this trajectory of innovation hits all of high tech in all segments, that IBM storage is not going to be left behind and we're going to continue to innovate on an accelerated pace. Yeah, that pace is really important. You know, IBM again, spends a lot of money in R&D. It's key to get that product into the pipeline. Let's talk about VMware and VMworld. Obviously we're here at VMworld. So VMware, a very important constituency, a lot of customers. You got to talk to VMware if you want to be in the data center today. What is your strategy around VMware specifically, but also generally as it relates to multi-cloud environments, whether it's your own cloud or other clouds, open stack. I wonder if you could talk about that a little bit. So let's take virtualization first. So we support a number of different hypervisors. We support VMware extensively. We support Hyper-V. We support KVM. We support OVM. We support open initiatives like open stack, Cinder. We support Hadoop. We have Hadoop connectors in many of our products. So whether it's a cloud deployment or a virtual deployment, we want to make sure we support everybody. For example, Spectrum Protect was announced last week with support for SoftLayer as a target device, basically a tier. Well, guess what? In one H, we're going to support Amazon and Azure, not just SoftLayer. So again, we want to make sure we support everything. With VMware specifically, for the first time ever, VMware has invited IBM storage on Stave at three sessions. IBM has done things in the server world in the past, but we have never, ever, ever been invited by VMware to their technical sessions. In fact, one is at five o'clock today. It's called Project Capstone, which they publicly announced last week, and it's about deploying Oracle environments in VMware virtualization. That's a partnership with VMware, with IBM Flash Systems All Flash, and with HP Superdome servers. And that's going to be on stage at five o'clock today here at Moscone Center. Awesome, so we're starting to see a tighter relationship with VMware, building out the portfolio. What do you say to the customers? It says, yeah, I hear you, but VMware's doing all this sort of interesting stuff around things like vSAN. What do you tell a customer? What about that? So we see vSAN, in this era of behemoths, everyone is your partner and everyone is your competitor. We work with Intel all the time. Other divisions of IBM think Intel's a major competitor. Some of our server division work with some of our storage competitors. So we think we will work with everyone, and while we work with VMware in a number of angles, so if vSAN's a little bit of a competitor, that's fine and we see an open space for all of the solutions in the market today. We got to leave it there, Eric, but last question, so take us through sort of your objectives for IBM storage over the near and midterm. What should we be watching? So our big thing is to make sure we keep the cadence up. There's so much development going on, whether that be in software defined and integrated infrastructure, in all flash, in all the areas that we are going to make sure that we continue to develop in every area. We've got the billion dollars in all flash and the billion dollars in software defined. We are going to spend it and we're going to bring those products to market that fit the need so that the oceans of data that everyone is dealing with can be handled appropriately, cost effectively, and quite honestly, that oceans of data, it's about the business value of the data, not the storage underneath. So we're going to make sure that for all those oceans of data, we will allow them to drive real business value and make sure that those data oceans are protected, meet their SLAs, and are always available to their end user base. I love it. You got the Steve Mills billion dollar playbook. Obviously you worked in Linux. It was well over a billion in the analytics business. IBM's the leader there, applying it to flash, great acquisition of Texas memory systems. You've become a leader there, now going after the software defined. Eric Herzog, thanks very much for coming to the cubes. All the pleasure. Great, thanks very much. We love to have. Keep it right there, buddy. We'll be back with our next guest right after this world we're live from VMworld in Moscone. Keep it right there.