 Live from Las Vegas, Nevada it's the Cube at IBM Edge 2014 brought to you by IBM. Welcome back to Las Vegas everybody this is Dave Vellante with Jeff Frick my co-host for this segment. We'll be going wall to wall all day today, tomorrow, John Furrier is flying in, Stu Miniman is at the analyst session, David Floyer is here, we've got the whole Cube crew and we'll be covering Edge. This is the third year of Edge, as I said, first year was in Orlando, last year was at Mandalay Bay, we've got fifty five hundred or so people this year at Edge, customers, practitioners, partners, analysts, a lot of action going on. Bob Elliott is here, he's the vice president of storage at Mainline, an IBM partner. Bob thanks for coming on the Cube, good to see you. My pleasure, glad to be here. So tell us a little bit about Mainline, what's your stick? Mainline is, it started out as an IBM partner, we've now brought in other relationships but it's primarily an IBM partner. We do large amount of server storage business, probably one of the larger IBM storage partners in the entire country, somewhere in the neighborhood of one hundred and eighty to two hundred million a year in storage. So talk a little bit about what's changing, I mean you're seeing all this software defined stuff, obviously you went through the whole virtualization trend which was probably an upcycle for you guys but maybe it caused some disruptions, you've seen cloud, that's causing your business to have to change your sort of strategies and add new services. How has the storage business changed for you guys in the last five, seven years? It's changed a lot from just being very hardware specific to probably being a little bit more solution specific and what I mean by that is there was a day when I came on board to Mainline six and a half, seven years ago where we just worried about okay are we selling DSAs, are we selling at some point XIVs and it's kind of progressed to customers cloud strategy is this, how do we work with them to fulfill their cloud requirements and it may be with some of the same building blocks that we used in the past, XIV, DSA, V7000 but it's coming from a different angle, it used to be very hardware driven and now it's much more solution driven. So I mean you always hear the, it's kind of a pejorative but box sellers, personally I love box sellers because they can move stuff but you know but at the same time the margins are getting squeezed in the business right, there's all kinds of dislocations going on so you're forced to pivot and add more value. How do you do that? Is it services, is it application affinity, a combination, talk about that. It's a combination of everything, I mean you hit a key topic there in services. If you talk about profitability, you're very limited in the profitability of a piece of hardware, when you buy from an IBM and then you resell, there's a certain amount that you can only mark up, right, that's your gross profit, right, if you do it too much the customer's going to back off or they're going to get it from somebody else. Services there's much more of an open door to create your own profitability. So we are seeing a big drive, at least within mainline but I would expect from other partners are doing the same thing where they're creating their own services whether it's anything from migration services to installation to consulting services, you know a vast you know plethora of products that you can consult on, you can you can perform services on so that you can control somewhat of your own profitability. So I mean you're an independent, you can resell whomever you want. Correct. So why IBM? It's combination of things, it's our heritage. We started out as a as an IBM partner, we have a bunch of the majority of our sales force, I would say probably 50% or greater are former IBMers who have brought their account set over and are now working you know with those accounts and they even though they want to act in a consultative manner the comfort zone is often times IBM and but the third piece is it's a very solid product line that you know we are very well versed on and we've worked with them for 25 years, Mayline is now 25 years old so for 25 years we've been working with IBM, we're very tight with them, we've got good relationships you know like I'm a former IBMer, I know a lot of the storage executives here, if I have questions, issues, comments, suggestions I have a very you know very good direct line into IBM at this point. A lot of connections and touch points, I want to put forth a premise Bob and tell me if I'm off base or on this notion of sustainable advantage from a product standpoint it seems to us anyway and something that Jeff and I talk about all the time is that in the in the storage business it's very hard to from a product standpoint standpoint to maintain for a long term a sustainable advantage you know you saw features like thin provisioning come absolutely I mean SVC is actually one that maybe has done a pretty good job but even that now others are coming out with virtualization engines so is that a viable premise that it's very hard to to maintain that sustainable advantage from a product standpoint if so how do competitors compete going forward? Well that's a very simple question to answer there's multiple pieces to it the the sustainable advantage is an issue that I think we've seen through you know through time and I'll allude back to you know think back to the old days and and I'm storage specific so I'm not going to get into servers or anything like that but I'll use storage as my example you think back to the 3390 days when IBM owned that market and then you know I guess Fujitsu and Amdahl both got into that market and they had slight little tweaks but it was basically the same product it wasn't until the early to mid 90s that EMC came out with a product that was laden with cash that had small discs in arrays and everyone said that's not going to work well it changed the whole market right and that was the first leapfrog and then IBM came back and they leapfrog that and then STK came out with a virtual the first virtualization product which was the iceberg and then IBM ended up getting the market with the RAMAC the RVA so we've seen that so we've seen that over and over again and now in current the current environment we do have what you said we have a sustainable advantage that I think IBM has in their SVC product okay which they've incorporated now into the v7000 product which is I think a huge advantage and now with a new announcement and a new v7000 product you're seeing you know leapfrogs in performance which is going to take it to another level okay but you still have the basic virtualization piece which is a differentiator from anyone else along with a real-time compression so when you put all those together you've got a product that I think everybody else should be shooting for at this point but if you look at other components within storage flash for example we're going to see continually leapfrogging in the flash environment with you know with footprint with speed with with price we've seen the price come down so you know I think it varies based on the component within storage but you certainly do see companies with a sustainable advantage but you know the competition goes out there and they learn from what the other you know the other companies have done and they can build on that you know so so slight shift in in topic we you know we all came here on the airplanes most of us and all over the airports are big signs saying you know the amount of data is going to double by the time you get to your airplane and you know just this explosion of big data and mobile talk a little bit about how that's changed the business because at the end of the day it all has to live somewhere and is the rate of growth in the data your customers you know is it really tracking to what we're reading about and how are they accommodating that growth I think it is I know personally my own data if I just think back at my own house with the number of mp3s photos and then I've got all the duplications of those things I'm still waiting for somebody to write their own personal Ddupe device for me for my mp3s and photos but that's another story but I think that customers are exactly tracking to what we're expecting with the increase and you know you think about anytime you text somebody that's being logged somewhere and to log it it's being captured it's being kept it may be archived and that's what we're going to see is more and more of the tiered storage pieces whether it's you know in the old days you had two tiers you had disc you had tape now you've got multiple tiers for multiple reasons anything from performance down to the actual archiving piece of it so I think what we're seeing is that explosion customers are smarter than ever and you know part of it is because the technology not only is the technology great but the technology to compare the technology what if you want to call it the meta technology is even is even better so you know we've got the ability to to look and say okay this is what EMC is doing this is what HDS is doing this is what IBM is doing these are three these this is the best of each piece you know you get a best of breed and then you've got the you know the consultants who do a great job of putting that out I mean in the old days think about it we used to read consumer reports and we used to decide what we're going to buy right now there are 42 different ways of getting that same information so I think yes the data is exploding and customers are doing a better and better job of managing it and we're going to see that continue to grow and are you being able to stay ahead of their planning cycle and they're planning as the curve is really starting to accelerate I'd like to think you're just here last last week what now you know I'm running out of capacity in this we do trust me we think we do a good job of keeping ahead of the curve but we do get calls in fact we just got a call last week with hey need a disc pack it needs to be shipped before I can cut you a p.o. or else you know my business is going down so we do get those emergency calls because there's no way you can you can truly plan at all times for the amount of data that you know that we're seeing growing and the capacity on demand ability probably has not yet you know caught up to what customers are doing and that's you know that's another topic how do we how do we address that capacity on demand well let's talk about that a little bit let's talk about what your customers are doing with cloud and public cloud specifically how you guys are responding as an organization and how your customers are responding you know I think it varies not only from customer to customer what they're doing cloud wise but within the customer based on applications and you know here's here's the the real key to it is everybody's got a slightly different different definition of what cloud computing is my favorite is one of the guys I work with says cloud is a nebulous term and it really is cloud computing can mean various things to various customers what we find is you know the best we've got like a set of products that we recommend based on what kind of cloud computing they're doing or you know they may go to a third party and actually take it all off site a lot of customers are creating their own clouds within their their enterprises as opposed to going out to an Amazon or somebody like that what we find is some of the smaller companies are going out to the Amazon's of the world we deal with a lot of enterprise customers so we do a lot of you know cloud consulting kind of thing I'm going to ask you is there loyalty in the channel you talked about you know the former IBM or so you've got some connection points but generally speaking is that is there loyalty in the channel to any specific vendor I think so and what creates that loyalty I think it's a comfort level it's a it's it's knowing that you're going to get a response in a timely fashion from from the partners you deal with and but it works both ways I mean the loyalty not only comes and I'll use IBM as an example I believe we're very loyal to IBM but at the same time IBM needs to be loyal to us and we you know I'll be the first to tell you we've got 125 reps throughout the country we have little pockets they're more loyal than others and it's because the local account teams may or may not work really well with our teams if they work well there's a tremendous sense of loyalty if they don't work well together new people come in it may take time to establish that loyalty again so but I believe it exists last question you give feedback to IBM obviously what are you telling them what what what can they do to make your life better and make your customers lives better I think there's a couple things one I think they get a bad rap in in their product line and what I mean by that is everyone talks about EMC and everybody talks about some of the other partners I think IBM's product line is incredibly strong you let you know you have the best mainframe attacks product in the DSA you have what I think is the best mid-range product in the v7000 especially after the announcement you certainly have the best flash product right now I think my message to IBM would be market your own products a little bit better step forward get out in front of it you've got other companies that you know have equal or inferior products that do a better job of selling themselves and that's what IBM needs to do is they need to sell themselves at a more enterprise global level and be thought of as a storage company they're thought of as a great technology company to thought of as a great company but they're not thought of as a storage company well and I think I mean I would add I think IBM obviously does a lot of R&D but but for the last decade some of that stuff would hit the product portfolio but it was intermittent and now what you're seeing at this edge and I made this statement at the top of the edge unlike other edges you're seeing a full portfolio refresh which has got to have you excited absolutely and and previous you know edges you saw bits and pieces new you know new messaging but this is a really hard-hitting session of announcements so I think that I think maybe something's happening internally at IBM or maybe your message is getting through but more of this if it's good I'll take credit yeah there you go thank you Bob for making that happen R&D seems to be hitting the product portfolio and that's critical in this competitive work Bob Elliott thanks very much for coming to the Cube it was a pleasure having you my pleasure my pleasure all right keep right there everybody in the cube we'll be right back with our next guest we're live from IBM Edge in Las Vegas