 from Las Vegas, extracting the signal from the noise. It's the Cube, covering IBM Insight 2015, brought to you by IBM. And I've been asking, a lot of people have been asking for the last five years, since the Jeopardy match, you know, what are they doing? When are they going to bring this thing out and really make a business out of it? And it was clear from the keynote this morning that Watson is ready for business. It's not just the healthcare, they've got plays in retail. They had the weather channel out there talking about Watson. They have their whole mobile app partner ecosystem talking about what they're doing with backend analytics on Watson. And so it's clear that they have finally sort of gotten their act together. Took them a while to do this, but they've got a very clear coherent message that Watson is a differentiated product. Now, of course you're going to have, Microsoft is going to have its own Watson type of play and IBM certainly won't be alone in that market. But for right now, I think they're leading with their strong suit. I also was impressed by the partners that they brought up today. They had the weather channel on stage. They had Twitter on stage. IBM, of course, has partnership with Facebook. They have put, and their Apple partnership, of course, they've put a lot of the pieces in place with a lot of the major brands. Now, I think in a statement of saying, we are the company that's easy to do business with. And when their competitors are AWS, Google, Oracle, not companies necessarily have a reputation for being easy to do business with, IBM wants to be the nice guys, the nice company, the company that wants to partner. That, I think, came out clearly this morning in the slate of speakers that they had on stage. So George, we were talking off camera about, okay, let's dig into Watson a little bit. Let's understand how developers interact with Watson. They talked about 30 plus APIs. They're going to double the number of APIs next year. You're a former Wall Street analyst, so you see, you know, those old saying on Wall Street, don't bet on companies in transition, right? It's scary time for a lot of organizations. We're seeing all kinds of machinations going on in the business. Dell, you know, acquiring EMC, companies like, smaller companies like BMC and Informix going private. Of course, Dell went private last year. IBM selling its micro-electronics business, actually paying somebody to take its micro-electronics business, jettisoning its x86 server business. All kinds of changes, George, and a big transition going on in the core of IT hardware and software. You've talked a lot about the slow motion collapse in infrastructure software. What's your take on what you heard today specifically, but also IBM in general, from a, you know, Wall Street, former Wall Street analyst perspective? Well, if you step back, IBM's sort of value proposition to customers and its business model has always been about solving hard problems for big business. And they've not been a commodity oriented platform ever. But the shift from their traditional sort of hardware software platforms has been sort of commodified a little bit faster than I guess they expected. And frankly, you know, Wall Street expected. And you know, Amazon is eating into that and the sort of low level professional services that would have put those systems together. But what I thought was most interesting about this new platform that they're pushing that's going to solve hard analytic problems for customers, if you look, listen to last year's keynote and then compare it to this year's keynote, last year was all about a platform as a service and the databases, particularly the analytic databases on it. And Watson was a corner of it, an important corner. But they talked about dash DB, which is their new, you know, analytic database in the cloud. They talked about cloud and operational database in the cloud. And they talked about the roles, the traditional roles, business analysts, application developers, knowledge workers, IT and data stewards and DBAs. This year, there was no talk about all that. It was almost as if that layer melted beneath Watson. And we, as you said, it was all about the Watson services and APIs. And I do want to say one thing. APIs, as we all know, that's critical for building an application platform. What they didn't tell us, and I expect we'll hear a lot more about it, what those APIs look like, who goes in there and builds on them. And the other thing was, in addition to just the APIs, we saw for the first time, analytic data feeds like the Weather Channel. So you're not just a SaaS software app. You can subscribe to an analytic service that tells you, okay, you know, here's what the weather's going to look like in this micro site. And I think we're going to see a lot more of those so that you can feed these data services, analytic data services into custom apps that you're building on the Watson platform. So I think you're making some great points about IBM's, you know, traditional history of going after high margin businesses. I mean, essentially they failed in the PC business. They failed in the PC operating system business and the PC apps business. And so it's interesting when you go around at all these tech conferences, everybody's trying to, when they talk products, trying to differentiate. And the difference between most products is the square root of zero. And so what IBM, it seems to me anyway, has done is that all right, we're going to make a big bet on something that's going to change the world, that's going to be cognitive. And they, the other big difference to your point relative last year is they started to give some substantive examples, Paul, and we've seen that. We saw that a little bit at the MIT event this summer when we talked to Pitchiano. But the, they showed a pepper, which is sort of the future, this sort of robot, but they showed some real examples. The wine sleuth, the woman from the wine sleuth got up. You know, we've all gone to these wine sites and you know, it's kind of a clue there's a nice database behind them, maybe some decent search, but Watson is really transforming that. Certainly in the healthcare industry, there's a lot of famous sort of well high profile examples. Ken Jennings, there was a video of Ken Jennings up on stage, which was quite humorous. Ken Jennings talking about how he hasn't given up. He's gone off and written books and he's speaking a lot of conferences. You know, interesting, Gary Kasparov didn't give up either, right? The greatest chess player in the world is not a computer. It's a team of computers and humans. So from a CIO's perspective though, what do you think all this means? Are CIOs stepping back and saying, okay, I'm going to transition my business into cognitive or is IBM risking sort of this big chasm where the market is over here, they're over rotating into, you know, this new cognitive world. Eventually the market will get there, but what are your thoughts on that from a CIO perspective? I just returned from a conference where there were about 70 CIOs of some of the largest companies in America and then for two days, they talked about digital business. They talk a lot about digital business. They're very hot on this idea of transforming the company with not only operational efficiencies through digital, but more importantly, I think changing the business, finding new lines of revenue, transforming the relationship with the customer. It's very clear that this is a top of mind issue, not just with them, but with their boards. And some of the CIOs were saying that they are now regularly presenting to their boards on the issue of how they're transforming the business. So this is an opportunity for IBM, it's an opportunity for any vendor, of course. But what IBM needs to do is to make this easy. It needs to provide examples. And I think IBM does a very good job at this. You look at their history of how they run these trade shows, there's a lot of customers up there. There's a lot of real world experiences. And today they were showing, you know, Watson doing brain scans and Watson doing customized product recommendations on a mobile app. And Watson predicting the weather. And all of these areas where you could see practitioners sitting in the audience and the light bulbs going off, seeing how they could apply those examples to their purposes. So to George's point, this conference, at least in the first hours, has not been about vits, bytes, digits, and programmers. That's always been important to IBM, but this very much, this is starting off as an application oriented conference. And I would indicate that IBM has turned a corner, at least, in its ability to turn Watson into something that is practical and people can really see the opportunities of how to use it. George, in your manifesto, you talked about systems of intelligence. In fact, you're perpetually talking about systems of intelligence. So we like that. IBM talks about systems of record. They talk also about systems of insight. From your perspective, when you think about systems of intelligence and what that means, being able to actually predict and affect outcomes, take action in real time, where do you, how do you assess IBM through that prism? It's funny, because that was just a point I wanted to make, which was it's becoming pretty well known how to build on systems of record where the key thing you're adding is prediction or recommendation to take an action, whether the consumer, suggesting to the consumer or the operational system sort of automatically making an offer or taking an action. And we know that we've been building essentially Hadoop clusters to process lots of data to come up with predictions that then get sort of put into a model that works in real time in the operational system. But what I didn't see today, and frankly, nor last year hints yet, of how are we going to connect these Watson analytic apps to our existing systems? That I would like to see more of. Well, and I think traditionally IBM's answer to that has been whatever you want to do with services. And so when Gerstner made the choice to really not split up the company and go heavy into services, IBM became quite reliant upon that business for income and revenue stream and was very, very successful. Now that services business is changing quite dramatically. And that is one of the challenges that they face, right, is you've got the traditional business declining faster than new businesses are growing. But IBM I think is organized in a way to address that. They've put a lot of the services and industry capabilities into the different business units. But again, Paul, come to you from a customer's perspective. Obviously that services play worked because it was very high touch. Does IBM risk losing some of that high touch? Or do you feel like culturally they'll maintain that? I think the services business is shifting. Companies, CIOs increasingly want to, they want solutions to be simple. They don't want to worry about the plumbing. And the services business has always been all about the plumbing. I think in that business shrinking now, I think the traditional services business shrinking, as it hit Perot and EDS and all the traditional outsourcing services companies, that's just not a great business to be in. What IBM is doing seems to be pivoting the services business now and focusing more on applications that have demonstrated value. So one of the first presentations we heard this morning was from, I can't remember his name, but a representative of Twitter talking about how they've trained. Chris Moody, who's coming to the Cube actually. Well, Chris talked about how they trained 33,000 IBM service reps to help customers create intelligence through Twitter analytics. That has real demonstrated value. And if they're going to save that services business, they're going to shrink it obviously, but they're going to need to point it in the directions where it's going to have an evident payoff to the customers. So, and I can see what the weather channel, you're doing that same kind of thing. So many businesses are dependent upon weather data for forecasting and for their very existence. That's another potentially lucrative services business for IBM, but it's about the application now. It's not about the plumbing. So IBM has obviously George, a massive portfolio of products and analytics from Cognos to information management that things like Spark, they've got big insights. I mean, you name it, IBM has it, but it tends to be bespoke and it tends to rely on services to bring those things together. Now, Bluemix at PazLayer is a way in which IBM intends to bring that together. You were at Oracle Open World earlier this week. You heard all Larry's keynote talking about fusion and that really is their PazLayer. How do you compare and contrast IBM and Oracle? Are the similarities greater than the differences or are there stark differences in your view? There's a couple of cuts on that question. Oracle has done a great job of using the sort of profits from a declining database business to buy lots of applications, especially vertical applications. Those are a lot less price sensitive and they're packaged applications. And they're belatedly, but still building out purpose with great purpose, this platform around those apps to build customization. IBM has just by their DNA has been bespoke analytic apps that would extend what customers already have. I think we need to see Bluemix mature more in the direction of what Oracle is trying to do. Oracle hasn't done it yet, but- They've done it on paper. Yes, but on paper it's good. It's at least a good vision. And actually probably the most compelling value is that it's going to surround their existing apps because that's where the natural extension. So that's what IBM has to do to bring that to you because IBM has a lot of industry apps, manufacturing apps, information and management apps, tons of SaaS, I mean they've purchased probably 50 plus SaaS companies over the years. So I do see a lot of similarities there. The other similarity is that Wall Street is not too sanguine on either company right now. People are eager but disappointed at the headwinds, the revenue misses, the adjustments for talking about the new stuff but not big enough to offset the old. We are clearly in an industry in transition. We're going to be covering that transition, obviously focusing on some of the new exciting stuff here, exciting stuff here at IBM Insight. We're going to have IBM execs on, partners, we've got analysts coming on, we've got customers coming on, wall-to-wall coverage. This is theCUBE, we're here live at IBM Insight. Check out ibmgo.com, it's the digital experience for this site, registered to be able to watch the keynotes. 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