 Hi everybody, we're back. This is Dave Vellante. I'm with Wikibon.org and I'm here with the storage alchemist. I've convinced Steve Keniston to hang out with me a little bit and do a little co-hosting, something that he's used to. And this is theCUBE, SiliconANGLE's continuous production. We're here live at Edge. We're at the Mandalay Bay Hotel. This is date two. We've been bringing you wall-to-wall coverage. What we do at these events is we go out, we look for the absolute best guests that we can find, the people that are running the businesses, the interfacing with the customers, the customers themselves, and we try to basically unpack the key issues and present them to you. I'm at Dave Vellante. You can tweet me with questions. Wilfredo Sinalongo is here. He's the Vice President of Worldwide System Ex-Sales. Wilfredo, welcome to theCUBE. Thank you. Good to meet you. Yeah, nice to meet you too. So Edge, you know, is doubling in size. We're very excited to have theCUBE here. We were at the inaugural Edge last year in Orlando. And I love the fact that IBM is sort of bringing together different disciplines, not just the storage show or not just a server show or just a software show. You guys are showcasing the entire STG line of business and even bringing in the software capabilities. So I would imagine that's an important part of interactions that you're having with the customers today. Talk about that a little bit. Absolutely. It turns out actually, about a year ago, I came into this role at Worldwide System Ex-Sales. Before that, I was running the channel. And in that capacity, I was one of the early decision makers of expanding Edge beyond storage to bring into the marketplace the way our customers are buying, right? Which, while sometimes it is solution specific or product specific, most of the time is more of a cross brand approach or a cross technology approach to solving the business problems, right? So I feel a little bit of personal satisfaction to see this event the way it is today. So when you say solution specific, you clarified that to say product specific. You mean there are customers, of course, that will say I want this box to solve this problem, give me something that does deduplication or as an example or making up stuff or give me a server that does X in this price band. And there's a lot of buyers there and certainly you're experiencing the channel. Sometimes that's the mentality of the channel but there's a spectrum there, right? So talk about that spectrum. Both ends, the middle, where you fit and what you see happening there. Excellent, so I've learned over the years here that as the customers buying patterns evolve, we need to meet the requirements and right now I see four distinct patterns. On the one extreme, you have the buyer of business outcomes that is looking to automate a process or a service, if you will, who is most interested in just reducing AR or improving customer satisfaction, right? On the other extreme, you have the buyer that knows exactly what they want from a technical point of view and wants to come up with the best of breed solution. They're the self integrator and as a self integrator, they want to specify not only the server they want but how many bits and bytes of this or that or that processor or that hard drive or that memory then, if you will. In between, it's a more interesting category at least for me, for my business because we see clients that, one, flexibility of that self integrator to whom we're providing reference architectures now and in fact, if you look carefully our announcements over the last couple of days, you see a plethora of reference architectures built on IBM and on IBM software stacks on SystemX products to allow our clients to more readily and more efficiently deploy solutions whether it's in cloud or analytics or even high performance computing. That's kind of in between. The next level up, but still below that outcome or business outcome buyer, you got the buyer of integrated offerings. I mean, this is where our recently announced Pure Flex family plays right in, right? This is the buyer that is willing to give up a little bit of flexibility, right? But it's once a fully configured, fully tested stack solution that provides some database engine capabilities on process queuing capability, but it's not all the way to business process outcome. So I see four patterns on one extreme, the self integrator, peace parts buyer, the next one, the reference architecture buyer that wants some modularity, but still wants flexibility. The next level up, the integrated solution buyer who's looking for an entire package of hardware, software and services that is pre-integrated with some flexibility, but very much still an IT buyer and finally the business process buyer, if you will, who's looking essentially for the business analytics engine like Martin and Tisa offering. They make this pain go away now. Yeah, all of those are underpinned by a plethora of SystemX based technologies, right? Whether it's racks, traditional racks, or towers, or our Blade Center family, or our Pureflex family, or even our high performance computing high end systems, right? You can deploy solutions in all of those different segments. So Alfredo, that's a great breakdown. So if you take a look at the percentage in each one of those four categories, how have you seen that shift maybe over the last 12 to 24 months? Because that's interesting. Coming from the storage space, I see a lot of those shifts as well. Am I buying to grow? Am I buying to, for a new project, a new business outcome project? Am I buying to be fully integrated for a whole new solution? And the mix is slowly starting to shift. I'm curious what you see in this. I'd say four years ago, it was 50-50, meaning maybe even 60-40. The first two are 60%, and the last two are 40%. Maybe even higher, two thirds, one third. I see it now becoming a lot more balanced. The first two are a third. The third one is a third, and the last one is a third. So, which is frankly for somebody that comes from the x86 world, like me, is a strange feeling. Because if you know how we came about, we came about from the PC world, right? It's a PC turned on its side that was then made a little bit more robust, best of breed. Now it's water-cooled. Yeah, now it's water-cooled, you got that right. So, it's a mind-shift for us too, as we develop product and create solutions. So how much flexibility is in that reference architecture? How much flexibility is, what's IBM's strategy with regard to flexibility? Because you see some people will have, allow other people servers. IBM's actually unique in that it will allow other people's storage through SVC. You talked about software, maybe other people allow different networking components. What's IBM's strategy with regard to that reference architecture? We are approaching the reference architecture from the customer view in. So, for example, if we're designing a reference architecture for VDI, we start with what are the top VDI solutions in the market place, in this case, the Citrix and the VMware offerings. And then we look at the next layer under that, okay? What are the most popular virtualization engines? And we enable them as well in the reference architectures. Then we look to the next layer and work on, okay, what are the most popular storage architectures? And of course, we enable ours first, but we also know that some of our competitors have options there. So we enable that as well. And then finally, our own product, in this case, the SystemX x86 based server who runs all of these workloads. So we start from the customer out, customer in, and we work, as you would expect, with the dominant providers, right? In this case, which are Microsoft, SAP, VMware, Citrix, SaaS, Oracle. Okay, so if the channel says, oh, so SystemX is why it's in your title. So that's what you're, that's locked. But if the channel says, all right, I want to use some other people's storage and say, okay, we'll allow that. We provide that in the reference architecture. It's not a restrictive architecture. We provide cookbooks, if you will, that allow you to plug in as appropriate. Are those Redbooks? Is that right or no? Some of them are, not all of them are, but some of them are. So Redbooks has some sort of, they do tour, right? Yes, they do. Okay. Redbooks are a little deeper. But so, no flexibility around the server, otherwise you don't have any business. I have no interest. Right. Flexibility around the storage and major storage architectures you guys have tested out and have validated through the reference architecture, high degrees of flexibility up the software stack. Yes. Yes. With the hypervisor and say the VDI, for example, or other industry solutions or applications. Same on the database side, by the way. Okay. If you say database offering, if you will, or integrated offering or reference architecture. Hey, I don't want to use DB2. Okay, I have an Oracle shop. Okay, great. You guys will. Yeah, we'll support that too. Okay. That comes from our DNA, right? We are the most heterogeneous hardware server platform in the planet. We have to be that way. We have to provide that open approach. So it's interesting you said one-third, one-third, one-third. I would think that would be that middle, that in between would be the largest business over time. Am I, did you think I mistaken on that? Not yet. Over time. No. It's moving in that direction. It is, okay. But it's hard to predict that it will be that way five years from now. We've, this is a trend, frankly, that most of us did not expect. In the X86 server marketplace, we never thought that clients that prize their independence and their ability to self-integrate so much, because they did, are saying, well, maybe I am okay. You know, having a few restrictions here and there. It's very odd. It may be strange for you to hear what I'm saying, but for us that leaving this road is very odd. You're point of view there. And I would imagine the channel is driving a lot of these decisions as well. They are. And to be honest, the channel loves that approach, right? Right. Flexibility. Right, of course. And it gives them choice and opportunity to go where the margin is, right? Yeah. I bet the software drives a little bit of that too, right? So we see it with clients that as they start thinking about their architecture and their infrastructure, and they do want to build their own, they're like, well, nobody likes the commodity word, right? But if I can then pick some of the things that I want in my business, where I want to sacrifice some financial savings, but then pick software that can help manage or help grow or help all of those things, maybe that's how I want to build my architecture. Maybe it's not about the hardware. So I would agree. We see a lot of that too, as folks trying to decide how they're going to build their architecture and take a lot of pride in. No, I want to build it, you know? Yeah. Well, if you think about the entire stack of the solution, they all want to cut at different places where they do the self-integration, right? Yep. The left-hand side guy cuts it as the lowest point they can. The right-hand side guy cuts it at the highest point they can. That's the bottom line. And in the non-X86 world, that was commonplace. In the X86 world, it's new. It's emerged over the last two years. Last two years, okay. And by the way, it's mostly a trend in the major markets. It's not yet a trend in the growth markets. Because of skill sets or maturity, or will that change? I think it's primarily skill sets of the clients themselves and the partners, as well as the IBMers. And I would bet also in a lot of those major markets, you have customers that maybe have their own homegrown software. So they probably think a little bit more about, nah, I know what I need for hardware. I can build that before, because I wanted to mirror something that I'm building with my software, versus any type of hardware can work for me in this particular solution, like an Oracle solution, right? And many times, most sophisticated implementations are in the major markets in terms of complexity. Right, so clearly the emerging markets, you're saying it's not as fast as an uptake, but as far as differences between, say, North America, Europe, the larger parts of the world in AP. I don't see much of a difference. It's pretty much homogeneous, right? It's just skill sets, right? Okay, all right. And how about industry? Is there any nuance by industry? Oh, clearly there's nuances by industry. Well, I mean, in terms of their uptake of this type of approach. Yeah, there's clear media industry is on the left-hand side, extreme left-hand side. Okay, yeah. You can think of a few names that are definitely there. And you can think, for example, retailers or CPG companies, they're more of the right-hand side. Drop it in. Yeah, I don't give it. Any color, as long as it's black, it's fine with you. It works, right? I mean, I'm a retailer, I'm not an IT guy. I don't want to do the non-differentiated heavy lifting. The media guys are actually willing to do that. Well, the media guys are the ones that kind of push that agenda big time over the last few years, right? Right, because it's competitive advantage for them. For them, yes, yes. So yeah, there's some clear differentiation across some industries. So we got to play across all four models. We got to play across all software stacks. We got to play across all the industries. And offer our customers choice. And offer our customers, our partners, the ability to meet those choices. So let's talk some more about the channel. You've spent some time in the channel and you know what floats their boat. And there's been a real land grab for the channel amongst the large IT players. Some have it right, some haven't had it right, some are sort of adjusting. Talk about IBM's position in the channel, what your message is to the key channel partners. First, your first point about land grab, it's an interesting, the channel is a local business. Channel is not a global business. Some of our distributors are global firms, but they still operate locally. So to the point of land grab, the land grab is going on in the United States of America, nowhere else. Which is interesting, it's a unique challenge to this country. So that's unique to the United States, maybe even North America a little bit. North America, yeah. Primarily, yeah. But it's not happening in Europe, AP, to the same extent. Not even close, not even close. You and your competitors aren't buying channel partners the way you are in the US. Right, now I would tell you that the marketplace is substantially different in terms of how to market in North America versus the rest of the world. In the rest of the world, because of regulatory or tax or local laws, there is a high dependency on the channel. So in spite of the fact that the channel is not as mature, they are a critical component and they've been stable. And they're just developing skill, moving up the stack in terms of their ability to satisfy clients and solutions, right? In the US, the channel is very mature, very developed. And it is a true, you know, word for talent. Within them and between the audience, right? It's a true word for talent. Where we have a challenge, right? We've been working particularly in this country to tell the channel number one, we're committed to you in terms of giving you best-of-breed offerings, because we know that's number one in their list. You have to have the best-of-breed value proposition. They want the hot product, don't they? Yes, that's number one. Always be number one. It would always continue to be number one. So we got to do that. Second, second, we want you to make the most money. So the financial proposition has to be there. And they think, in their minds, those are related and they probably are, right? Well, if you don't have the first one, you will never have the second one. You could have the first one, but not the second one. So you're going to have the second one. And then third, you want to have an OEM that is there to support you throughout the wholesale cycle. And that's, frankly, the part that we've had to work the most on in this geography. So... I think it goes beyond the selling cycle, right? At least when I talked to our partners, support is also a big deal for them, too, right? Yeah, my selling cycle includes post-sales support. Yeah, the whole thing. So it's interesting. There is no generalization. I know we have a US mentality in this conference, so a North American mentality, but being a global guy, I see more and I can tell you it's different. I used to run a global business. I'd parachute in thinking I knew everything and then learn quickly. That you didn't... That wasn't the case. I didn't understand a lot about local markets, but you're right, the channel and services, generally, are localized, which is why it's always been so impressive that IBM's done so well on services. That's a local market. Okay, so you mentioned that support is one of those areas where you guys are really putting a lot of emphasis and a lot of effort, area of improvement. What are you doing there specifically? So probably the most important element there is just bring in leads. You know, it's as simple as that sounds. We haven't done enough of that, if you will, in the recent past, and we need to bring in more leads because in the end, that's where everything starts. And to do that, for example, in my particular brand, we hired 50 people here in the US in the last six months to dedicate them to the channel in terms of calling on clients using the APAR logo and opening those for them in order to bring them leads. Same thing in terms of our telemarketing engine, right? We have had a telemarketing engine. It has brought them leads, but they have not been as well-qualified as they need to be. So we're doing a better job now in terms of nurturing those leads so that when we do pass them, they're really good leads. So the IBMer goes in, cultivates the relationship, you know, takes the client golfing, whatever it is. And brings the channel partner in with them. You make it comp-neutral, obviously. That's right. So we're doing that more than we had in the past. Right. That's critical, right? Yeah, absolutely. So those are two examples. The last one I'll mention is a lot of the back office, right? In the end, one way that the partner makes money is by having a very light and simple back office in terms of their business. So a lot of automation, a lot of tools, a lot of capabilities to simplify the back office processes for our partners so that in fact they can, you know, bring some more money to the bottom line. And how about the initial engagement? I mean, in terms of the way you engage, a lot of times people complain, this is not necessarily specific to IBM, but I know with a lot of big companies, it's complicated to sign a deal, a channel, you know, relationship with a large company. Has that been a problem historically and have you simplified that in any way? Not as much for us. Our problem has been more in the backhand. Yeah, okay. So it's not hard to, if you're qualified. To get in? To get in. No, it's actually quite easy, to be honest. Okay, I mean, I've seen some of those agreements. I've not seen IBMs, but I've seen some of your competitors in there like this. Yeah, yeah. You know, you just say, well, I'll get to that someday. Yeah, yeah, no. I don't have that issue as much, so. All right, good. Well, listen, we're out of time. Alfredo, thanks very much for coming to theCUBE. Thanks, Steve, for sitting in for Stu and it's a great discussion. Really appreciate your time. All right, thank you. Good to meet you today. Nice to meet you. Keep it right there, everybody. With our next guest, In He Cho Sa is coming on and this is theCUBE, right back. All right.