 Welcome back to theCUBE, we're here at IBM Storage Edge 2012. I'm here with my co-host, David Fleuer. I'm John MacArthur, President of Walden Technology Partners. David is the co-founder of Wikibon and we are here today with Dan Shea. Dan is VP of Storage Sales and Solutions for IBM East of our eastern US region and thanks for joining us today. Thanks for having me guys. This is a step up party for IBM. You run a lot of customer events and partner events. Partner world is huge, right? Absolutely, absolutely. But this is very focused on storage, why'd you do it? Well, for a couple of reasons. One is we took a toe in the water approach last year and we had a couple of local events that were just so well attended by both IBM customers as well as clients or prospects who were thinking about doing something with IBM and we saw in the two local events how successful they were we decided to take it really national this year. And your partners are telling me we had a couple partners on earlier today so they've been asking for this for a while. Absolutely. So raise the volume a little bit. Yep, and we've combined kind of three different events the executive edge, the technical edge and then the partner winning edge also. So with the three different events we've actually combined it so that everyone can get both a lot more networking as well as a lot more technical and sales support here. So it's been really great so far. So what's the reaction been from the customers? I'd say our customers have been actually everyone's told me that they've really enjoyed it that the information that they're getting has been very well received. The new announcements I think are generating some real buzz and there's some real excitement there. And then from a partner perspective again we've got I think it's over 250 or 300 partners here with us and we had an event of BP Forum yesterday with them and again the feedback has been phenomenal both from a content perspective as well as everyone enjoyed the entertainment last night. So how many people have you got here this year? I think the number I heard was 2,100 is what we had. 2,100, that's a good number for the first year. Yeah, for an all go event. Yeah, and I was talking to Deon Newman who is really the mastermind who pulled all this together and he's talking about trying to do five or 6,000 next year. So what is it? EMC world is up in the... EMC world is up to 8,000, 15,000 this year and 15 or close to 15 this year. Something like that. And again ours is more storage specific where EMC is branched out to a lot of different areas obviously but the other thing we really try to focus on is not to make this just a hardware event because the hardware is interesting but until you start layering the software on top of it. So if you go into the main tent session you'll see that it's about 50-50 in terms of our STG or systems and technology group leaders as well as our software leaders. Now I've been in a lot of the events and yes, you've got a good software and hardware mix. Yeah, and with big data and cloud and things like that it's all enabled with software. So it's very important that we take all of IBM, our hardware, our software, our services that we laid on top of each other to really give the solutions to our clients that they really want. Yeah, but we also heard just in the last segment with Essex Tech, there are also times when they need you to be best of breed because sometimes they are just head to head in a best of breed. It's not necessarily where they are all the time but 70% of the time they're integrated solution and maybe 30% of the time they're competing on a best of breed sort of decision. So when you think about the announcements this week that you made, what are the areas where you think you can come out and say, hey, I am best of breed? By far the biggest best of breed announcement for this conference is our compression technology. I don't know if you guys were in the discussion around that but we've delivered real time compression on file based data for a couple of years now. What we announced this week is the compression on block based data. It's something that no one else can do from a real time perspective. And Ed Walsh who actually did the announcement, he used the analogy that I thought was very simple in terms of how we differentiate ourselves. Ed said what everyone else does is if I have 100K write coming in to a two megabyte file what everyone else does is they uncompress the two megabyte file, they do the 100K update and then they compress the 200 megabyte file or the two megabyte file and they send it back to the disk. What we do is we real time compress that 100K and we go and update that file directly. So it's real time compression where you don't have the overhead of uncompressing and then recompressing the file. So it is really going to be an exclusive for us as well as a competitive advantage for both us and our partners. So what kind of a difference is that going to make in terms of storage capacity requirements for the customer? What kind of ROI are they going to have from a... And let me just put a little wrinkle in that. There's two costs, isn't there? There's cost of IO and there's the cost of the actual storage itself. And if you save some of the storage you don't necessarily save on the IO and the controller and all of that overhead because you've got a certain number of IO's to do. So what's a reasonable figure for in terms of ROI? What we're telling our customers and our partners is that if you have a 100 terabytes of storage that the requirement by 50 terabytes and with our compression technology it'll cost you about 70% of that 100 terabytes. So we think it's a 30% savings and we think that's actually conservative. That's if you get a 50% compression rate. Right. And that's a reasonable rate to achieve. Well again, the iBurst guy who spoke yesterday said they got 80%. So if you get an 80% then you're talking in order of magnitude even better of saving that 30%. Are there particular data types that are more easily compressible and so where are you guiding your customers to? Yeah, I mean techs, so anything in a database is going to be that 80%. If you start doing video or JPEGs or something like that it'll be closer to zero. But one of the other things that we actually are delivering is something, and I'm sure I'll get the name wrong, but I think they were calling it the compressinator which is a compression estimator that you can actually put on your system to see what kind of compression results you should expect. And is that a free tool? It's something that you can actually get off the web. Okay. Okay, so they can take it off the web, apply it themselves. I'm not positive it's available right now because I think that they wanted our systems engineers to be the first ones to give it a try and stuff like that, but it will be generally available for people so they can go out and test it. But keep an eye out for the compressinator. Right? Yeah. I like that. We should get Arnold Schwarzenegger to be the person that actually announces that. Maybe. Maybe you should. I don't know. Your reputation's been up and down. You're right. You're right. You're right. So you might want to think about this. Sometimes having stars do stuff for you can lead to unintended consequences. I understand that one. I think so. Well, that's good. So any other areas that you're seeing? So again, that was definitely the big highlight of the announcement. We had over 20 announcements though. You'll see some additional add-ons to our linear tape file system. I don't know. I saw a file system interface to linear tape open. Yeah. So basically you can mount a tape now like an NFS mount with an NFS mount. So it's a very interesting technology. We're getting the most interest from the media and entertainment. Because Sony's moving away from their video, their proprietary video format, and the industry's really looking for something that's both open and portable, which LTFS is. And you're going to need to migrate a bunch of data. Absolutely. Absolutely. Data migration solution that you can apply to that. So actually, yeah, we're working with some of the media industry now to actually develop a lot of the software around the technology that we've delivered. Because there's also indexing capabilities that you need and things like that. So the LTFS, the hardware and the NFS interface was really our first foray, which was about a year ago. And then we're announcing additional software technology that we're layering on top of it this year. What's the competitive landscape look like there? Again, I mean, no one else has anything like LTFS. So from that perspective, it's very different. And again, the competitors in the past have been things like the Sony video format and that type of thing. So I'm sure there will be some places that want to look for disk solutions. I think it really depends on the size of your library and what you're trying to do with it. But I actually was talking to someone in the healthcare industry and they're interested in, can we use this for pre-diology images and other types of images? Just because there's so much data that they're driving now that they're always looking for a more cost-effective solution to store that data. Right. So can you talk about that? Again, the business case here, which is a voice of interest to me. How much, I mean, a lot of your competitors don't like tape at all. Take every opportunity to knock tape. Those are the ones that don't have a tape solution, right? Okay, I just want to make sure we're talking about the same ones. Yeah, we are. But so, what is the, from a real-world perspective, what is the cost case? How much can you save by staying on tape? Yeah, I will tell you that I don't have the numbers other than once you get over about, I believe it's about 50 petabytes, but again, someone else can give you the actual ROI case. But that's where tape becomes less expensive and will continue. So anyone who's got a massive library is going to have big savings on tape. It's still the cheapest, most affordable and best ROI for long-term solution. Right. But you've got to have 50 petabytes? Actually, I'm not positive that's the number or not for some reason that sticks. But again, if you're talking about Warner Brothers movie studio, it's a tiny piece of their library, you know? So again, that's why things like LTFS are more interesting to them than to other people. A lot of emphasis on the media business. Anything else in this tape area that's ripe for exploitation of LTFS and the other thing? You used to do a lot of writing to tape of scientific data, but that wasn't file data, right? Or was it? Actually, some of that is file. Yes, it is. Or you mean the GFS? Yeah, GFS. So, yeah, what are the other applications? You know, you're not sure. I'm not positive where else. Like I said, I just know where we've actually started working with customers. Okay. Let's talk a little bit about you. You have a strong background in partner management, partner channels. How are your partners reacting to this event and what are you looking for from your partners? What do you want them to do? So, again, I've gotten very good feedback from our partners. As I said, we did a partner forum yesterday where, you know, basically the leaders of both our storage organization and our North American organization were there to meet with all of our partners. And, you know, partners look for a few things. One is they look for great products. And I think everyone of my partners would agree that we've got the strongest product line we've had in probably forever in IBM. So, very competitive. And again, things like the V7000 and SVC really differentiate us in the marketplace. So, they're looking for a strong product line, but also that differentiation that you and I talked about earlier so that they can go out and be differentiated in front of their customers. The other thing that they're very keen on is skills. Because if you look at it, the partners when they compete against each other, they compete based on the skills that they can bring both in a pre-sales and a post-sales support, as well as anything else they may be developing or wrapping around our solutions that can differentiate them from their competition also. So, we've put a big emphasis on education this year, both within our own team but also in our partner organization. We actually created a partners mastery program. And we've also created something, a program where a partner can be an elite member of our storage organization and get different benefits because of the investments they make into selling IBM storage. IBM partners have tended to be pretty loyal partners. Are you, how are you sort of rewarding them? So, we have a lot of partners who have done just tremendous jobs for us. We continue to work very closely with them. And again, the rewards can come in kind of a number of different flavors. One is obviously monetary awards. We try and make sure that our partners are making a great living on selling IBM technology. But that's not what's going to differentiate us. What's going to differentiate us is how we go to market with them. And what our partners would tell you is, listen, IBM, I don't need you all the time, but when I need you, I need you and I need deep expertise in the areas that I usually call on you for. So, they will handle 90 plus percent of the opportunity, but when they need us, they'd like to have us. So, we've developed a technical organization that actually will, is available to any partner out there that can reach, where they can reach out to get deep technical expertise, whether it be in a specific product or a specific solution area. And I think they very much appreciate the fact that they can get that technology or that deep expertise when they need it. What's the biggest misperception of IBM that you face when you go out and meet with customers? The biggest misperception, I don't know if I've thought about that one. You know, I would tell you that IBM's come a long way in terms of being client-centric and trying to do things, make things easier in terms of doing business with us. I've been with IBM for 29 years now. 29 years ago, people told us we were the hardest company in the world to do business with. Some people still have that perception today. And you know, I don't know that I've got a lot of outside expertise to tell me if we are the hardest or not. What I can tell you is we've come a long way in terms of ease of doing business. And we've made a lot of changes both in our channel programs to make it easier for our partners as well as directly with our clients also. So, how does the pure systems, pure flex, pure, how's that going to change your relationship with your business partners? And how are you going to market with them, with those products? Actually, if anything, it's going to deepen our relationship with our partners. If you look at pure systems and pure flex specifically, it's a lot of the products that our partners have been selling anyway. The issue is, or the difference is they've done a lot of the integration in front of the customer, where with pure flex, it's going to be we're going to do the integration and have them deliver it. And in doing so, we'll lower their costs. They won't have to do all that integration. We'll actually do it. And yet they'll still be able to deliver a fuller system to the end user. So, again, all the, since pure flex has come out, all my partners have told me that it's absolutely going in the right direction and it's the right thing to do, both for them but specifically for our clients. If you look at how much time our clients spend doing things like setting up the systems and getting them ready for their end user customers, if we can eliminate that time and take that time down to plug it in and start working, there's going to be great value there in terms of really tying the value from a business perspective. We had Jim Torney on from Messick's Tech, just prior to you. And Jim was talking about, Jim was talking about turning some of his business into a recurring revenue model. And he was looking to use pure systems as pure flex as sort of the infrastructure for that. What percent of your, how do you see your partners sort of evolving from that recurring revenue, towards that recurring revenue model? I think a large number of my partners like the idea of setting up their own cloud infrastructure and being able to basically host stuff on behalf of their customers to drive that reoccurring revenue structure. And they see pure systems really as the infrastructure because again, the simplicity of it as well as the fullness of it in terms of being able to deliver an entire system to the customer, they see it as a way to get into this business at a lower cost than having to build it all themselves. So it's really an entry point for them or a jumping off point for them to actually get into this business. Some are already there, a lot of talked about it. And I think pure systems will just be the little nudge that they need to actually get in and start that business. Well Dan, I appreciate you joining us here today. Thank you very much guys. Dan Shea, VP of Storage Sales and Solutions at IBM. I'm John MacArthur here with David Fleuer, co-founder of Wikibon on SiliconANGLE TV at the IBM Storage Edge 2012 Conference. We'll be right back after.