 Okay, we're back. I'm John Furrier, the founder of SiliconANGLE.com. This is the Cube, day two of the Dell, the IBM Edge 2012. We're here with Martin Krause. I'm sorry, Sebastian Krause. We'll fumble this morning here. So, John MacArthur. John MacArthur, Walden Technology Partners. Dave Vellante, how are you? Seriously, so welcome to the Cube. Thank you. Appreciate it. So, you run the storage sales globally for IBM. Tell us what's going on in the field right now. What's going on in the field? I mean, it's one of the most exciting areas in the IT industry right now. I think we can all agree on this one. I think you said it in your introduction here. What is happening in the field is that customers, I think, realize that they have to handle the vast explosion of data and that they need to find a way to get intelligence out of the information and use this to their competitive advantage. So, I think everyone up to the C-level suite is in full understanding of the outside environment that is happening, how social media and things are coming together and how they need to basically make sure that they are melting this into their business environment to get a competitive advantage. And clearly, intelligence coming out of information is becoming more and more important to all of them and this is where storage is kicking in. So, storage actually is growing with the big data we've been covering. What do you see as the core customer expectation these days in terms of implementing storage? Because they have to buy more storage and you guys are a supplier for that, but you guys are talking about an ecosystem of a solution set around that bringing other parts of IBM. Do the customers really want to have that touch point through storage or the other groups? How do you guys handle that in the field? I think the most important thing that customers want right now are innovative solutions that help them to either have flat budgets or reduce costs. So, they are looking for innovation. They are looking for reducing the labor that is attached to managing storage and making sure that they can deliver competitive advantage. The way we handle it is that as an IBM corporation, we are of course providing solutions to the customer from an overall perspective. So, we are incorporating our solutions out of software group, out of the system and technology group and we provide the full solution to the customer. What is the number one thing? By the way, if I may add this, including of course the solution that our business partners are providing, so whether this is a service that they are providing an implementation services or consulting, all of this is basically provided by all partners. It's a direct and indirect, depending upon the engagement. Correct. What's the profile of your partners and how is that changing? You've got a lot of different types of partners. That is correct. If you are looking specifically to our partner landscape and we have more than 6,000 partners worldwide, I would say that the variety of those partners are offering service as well as storage and software solutions. So, they are having a kind of heterogeneous skill set that they bring to the table. But what we also see, and I believe that this is absolutely important to deliver customer values, is that they are specializing around storage solutions and that they are getting more in-depth knowledge about the area of storage and how to provide those solutions. Do you have partners that are sort of focusing on the big data initiatives and leverage some of IBM's capabilities in that area? Absolutely. I think almost every storage partner has to think about how to handle big data and what kind of skills they need. So, from that perspective, all of them are on that topic and certainly we provide them with the enablement around that. So, are they skilling up on data analytics? Are they actually doing that? Or are they signing the contract and then look to you to be the provisioning agent? No, they are actually doing it. I mean, as always, you have different models, right? So, sometimes we are providing 80% of the implementation services. Sometimes the business partner is doing 80% of those kind of services. But what we are doing from our perspective, we are providing the enablement to the business partner. So, we educate them, we skill them, we provide them with tools to make them knowledgeable about the topic. So, that's kind of the approach that we have taken with the partners, which they appreciate. You look for a big investment from your partners in terms of adding skills. Well, I would say without the skills, you cannot deliver competitive advantage to your customer and you cannot provide any solutions. So, it's important that the business partners have that kind of competitive edge to be accepted by the customers and to make sure that they have this kind of relationship that is needed in terms of to develop a solution and to deliver a solution. When you think about sort of the big problem sets today, obviously there's the how do I approach and what's my answer towards big data and analytics. There's that. I've created this cloud infrastructure and now I'm having difficulty managing it. Or there's virtualized infrastructure. I'm having difficulty managing it. So, I need to improve perhaps my storage performance because storage is often getting blamed for poor virtualized environment performance. Sometimes it is, sometimes it's not. But you've got to help customers sort that out. And then there's the whole question of how does backup, data protection, archive, disaster recovery change under a new sort of highly virtualized environment? When you think about those three, which ones are you hearing the most about and where do you think IBM's best positioned to sort of win? Honestly speaking, I think the strength of our portfolio is that we are equally positioned in all of these three areas. I mean, we have the broadest portfolio in the storage industry by no means. That's a fact. And from that perspective, we feel pretty positive about offering those solutions to our customers, providing the consultancy services. What I'm hearing personally from the customer calls that I'm making is that right now customers are thinking more and more about archiving and backup solutions that will help them to also free a budget so that they can invest in more innovative solutions on the primary storage side, so to speak. Okay, so on the primary storage, it's just for sort of traditional workloads or the new workloads that are coming out of... Definitely both, because the traditional workload is also increasing. Certainly the new workload in terms of big data and the streams that are coming in are providing the next challenge, so to speak, which has to be solved, so it's a combination of the two. When I was on the customer side, I found that there was a core infrastructure team that managed the applications and they were the ones that dealt with the 30% growth, the 20% reduction in budget. Then there was another group that was responsible for most of the innovation that was happening and driving the top line revenue growth on new business initiatives. And they tended to have sort of more flexibility in terms of what they acquired, who they worked with, things like that. How's IBM positioned with that second group, that sort of the cowboys of the business, of the corporations? My first comment would be that I think that customers are more and more merging these two groups and that they try to ensure that they have a seamless transition, so to speak, between the two areas because they are realizing that they have to manage the speed in the business in a different way than they have been able to do it in the past. So from that perspective, it's almost impossible to separate these groups because you anyhow have to catch up all the time when you're managing those kind of things. So tell us about the conversations you have around cloud. Because cloud is obviously the alternative around how they're going to deploy the resources. So, okay, customers are buying more and more storage. That's good. But the cloud conversation, how does that evolve for you? When you're talking more private hybrid, we heard yesterday that the prediction was it's all going to be hybrid, which kind of makes sense. How do you guys, what are some of the conversations like when you talk cloud with your customers? The conversations that we are having is either to talk about a storage cloud or to talk about storage in a compute cloud. Well, obviously, the compute cloud, that is a significant investment that IBM is doing in terms of providing the infrastructure for cloud computing. But from a specific storage perspective, this is the biggest discussion that we are having on storage about a compute cloud. So how do you help us to virtualize the environment in a compute cloud? How do you ensure that we are optimized with the server virtualization that we are doing? How do you match this with your storage value proposition, so to speak? And how do we ensure that we have an environment and an infrastructure that works seamlessly together? And this is where our, I think, storage strategy comes into play when you talk about virtualization and all the things that we have had in the past and which we have announced in the edge conference this year. So the storage virtualization, we want to talk more about that. So you go in the compute cloud, a lot of virtualization at the server level. It's happened, it's going great. We've heard that there's an accelerated conversation around storage virtualization. How does that play into it for you guys? Well, I think this is one of the areas of strengths that we are having. If you think about our sand volume controller, it was the first storage virtualization appliance in the industry which we invented or brought to the market in 2003. Since then, we have continuously invested in that area, brought more technological leadership into the market and into our solutions, and we have integrated virtualization in all of our storage solution and devices. So it plays very well. So you're a wheelhouse, as they say. How does Flash fit into that conversation? Because obviously you're talking Flash into the infrastructure. Well, I think Flash is becoming more and more important in terms of making sure that you have the right I.O. and that you also optimize your storage from a cost perspective. What we are seeing is that with investments in an area of about 3%, that you can drive three times the performance that you have on your entire storage system. So Flash is becoming a very, very important component of the entire storage solution. In the context of integrating Flash into a traditional storage system. Exactly. What about some of the new markets for Flash where I'm doing an all Flash system or I'm putting Flash very close up. Actually, I think you announced some capabilities to manage solid-state disk in the servers. That is correct. Yeah, that's the ultra drawer announcement that we have done here where you have exactly that capability that you can manage the Flash in the server and then you're leveraging it across the various appliances and the various installations that you are having. And we are doing this also with the virtualization. So it's not only the storage in the rack that you have, but you can also virtualize the other storage that you have in the server or that you have in other parts of your environment. So for that solution where you're managing the Flash in the server, what's the use case? What's the customer drive for that one? I think the customers are looking for higher IOPS and looking for higher performance on the entire system. In a virtualized environment? Absolutely. Okay, so starting to solve some of the problems of storage bottleneck in a virtualized environment. That is correct. This is not really compute constraint. Sebastian, my final question because we have to break for our next guest is going forward now the momentum coming out of this conference, what do you see on the sales side relative to the customer environment? What's next? What's the big focus area for you guys right now? For sure, storage optimization. We continue to be on the path of helping our customers to optimize their storage environment. We have invested significant amount of money to help our customers to assess their storage environment. We have drawn a lot of conclusions out of this and best practices that we are providing to our customers in return and help them to optimize their environment, make it more efficient, make it more effective and definitely drive innovation into their environment so that they certainly achieve their business goals. That's Sebastian Kraus, the VP of Global Storage Sales here, day two for IBM's Edge 2012. We'll be right back with our next guest.