 Live from Las Vegas, Nevada, extracting the signal from the noise. It's theCUBE covering IBM Edge 2015, brought to you by IBM. Hi, everybody, welcome to IBM Edge 2015. This is theCUBE, I'm here with Stu Miniman. My name is Dave Vellante, and theCUBE is a studio. We go out to the events, we extract the signal from the noise, and we bring to you, our audience, a flavor for the event. We talk to the guests, we talk to CIOs, IT practitioners, industry technologists, industry analysts, we've got a number of those folks coming up. We have a packed two-day schedule here. We're at the Sands Convention Center. Las Vegas is the place where all the tech companies go in the spring, they bring their customers in. 6,000 customers here, Stu. And really, the Edge show started in Orlando two years ago. This is our third Edge. It really started as a storage show, and now here we were just talking to Deon Newman, the CMO of the STG group. It's really expanded. The scope really now is not only storage, but system Z, the power, middleware. There's even a little analytics flavor. I saw N. He Cho-Sah is speaking on the main stage. So a lot of IBM clients, a lot of IBM executives, industry ecosystem, and a growing show. Yeah, Dave, as you said, it's our third year doing IBM Edge, and it's grown and matured. It's interesting to watch IBM this year has really been consolidating some of their shows. We were at Interconnect earlier this year, which kind of was cloud and some of the other pieces put together, and this show, as you said, heavy storage, power, Z, middleware, pulling those pieces together. I mean, mainframe, Dave, you did the IBM Z13 launch earlier this year, and it's interesting to see all the pieces going on in the mainframe era. Actually, I got a little Twitter discussion going last night, because what is the hottest technology in tech? Well, it's Docker, and what's another place that you can run Docker? Well, let's take an IBM Z13, run ZLinux on top of it, put containers on top of it. We've come full circle in the IT world. What started with the mainframe is now back on the mainframe, and so a lot of stuff to cover here. Well, mainframe cycles are very long. The R&D cycle in the mainframe is longer than the typical X86 cycle. And we're talking several years. A lot of money goes into R&D. The January announcement of the Z13 was a big boost, in my opinion, for IBM's do, and it's going to help with earnings. People don't talk much about the mainframe, but if you think about what IBM has done in rationalizing its systems business, systems and storage business, storage has been in decline for a number of years. IBM has had challenges turning R&D into productive product. IBM outsourced its storage to a number of companies, NetApp, LSI, and others over the years, and then really in the last decade it's had to kind of scramble and make up for that. And so that is a business that's been in transition. Jamie Thomas took over a year and a half, I think actually a year ago, Ed, or two years ago, I got to get my stances last year. So she's been on for about a year, a little over a year, really pushing toward a software defined world for storage, and then she comes out of the Tivoli Group. IBM jettisoned the X86 business, so it's chasing profits, not revenue now. So it puts pressure on the revenue line, but it should help with the gross margin, and consequently the profit piece. The Z mainframe cycle should be a big boost to IBM, and then of course there's the power, and power is like fighting it out. You know, there's always an alternative, right? There's always going to be a room for a number two, Intel's obviously number one in the enterprise, and power has found a niche in high performance computing, analytics, big data, driving power into little Indian, so that it has binary compatibility with a lot of the applications. The Z is really interesting, Stu, about 25% of the workloads that run on Z run on Linux. And so what IBM has done is they brought the open Linux platform to the mainframe and allowing people to develop modern, Linux-based apps, building apps on top of that Linux platform, and even converting migrating people into that platform. So you'll hear some stories about that. The big thing from a financial perspective, Stu, is mainframes are highly profitable for IBM. They drag not only hardware, they drag software, they drag database, they drag middleware, they drag services, and so I would expect that 2015 should be a strong year for IBM's so-called hardware division, which has really been struggling over the last couple of years. Yeah, and Dave, some of the things I'm looking out at this show, you mentioned last year, IBM took the X86 business and gave it over to Lenovo, so what is the repercussions of that? How does the converged infrastructure and hyper-converged businesses still have play with IBM because Lenovo took over the server business and especially hyper-convergence really sits on that X86 platform. And what about the cloud? Right now, going on this week is the Cloud Foundry Summit in San Francisco. IBM is a big presence there because Cloud Foundry is a big piece of what Bluemix is and that whole push. We've been having a lot of discussions inside the Wikibon offices about Paz and what's happening there. And IBM's a big player there, and if you talk about middleware at this conference, Paz really is that new middleware taking over really the application lifecycle, if you will. So how does all of that fit in with all of the other discussions that we have and storage power and Z? Well, it's interesting too, I was just talking to David Floyer about this and you were in our research meeting on Friday and we were talking about helping our practitioners within the Wikibon community better understand the whole Paz, what it's all about, where it fits. And we're trying to simplify it for people, not only for ourselves, but for our audience. And essentially you've got three classes I was talking to David Floyer about this earlier today and we're just about to publish this. You've got what I call IIS plus. In other words, you're buying infrastructure, you're buying servers, and then you're adding a Paz layer on top of that. So Amazon's the perfect example. You've got another example, which is more of the Cloud Foundry Bluemix approach where you're going into an application development environment of Paz layer, and that essentially defines the infrastructure underneath it. And then you've got a third level, which is what I call SAS minus. So it's like a Salesforce or a service now that essentially has a platform and an application, but they're providing a development platform for the world to then extend those applications. And of course Red Hat's in the mix and everybody wants a piece of that action. Why is that still? Yeah, so I mean Dave, we know the whole reason that infrastructure exists is to deliver those applications. And that whole modernization of applications is one of the biggest challenges we have in IT today. If you look at where we are with applications, applications run your business. And companies are looking for new ways to accelerate how they can get new business value, have business units, leverage the data that we have. So here at the IBM show, we've been talking with the last couple of years, is it's not about storing your data, it's leveraging that data, and it's analytics and new business value that we can create, often with new applications, the cloud native apps, if you will, mobile applications and analytics that leverage that data, which is the whole reason why this whole space exists. Another big story that we're going to hear today this week is Flash. I mean, if you're in the systems and storage business and you're not talking about Flash, then you've had to sleep at the wheel. IBM, as you know, Stu, acquired Texas memory systems. They subsequently, initially were using the sand volume controller to provide the stack for TMS. They've now integrated into the store-wise product line with an all-Flash array. Gartner just published its numbers. IBM was number three, EMC was number one, Pure was number two, IBM was number three, ahead of NetApp, ahead of Atachi, ahead of HP, and others. That's a very fast-growing market. It's growing at 50% a year, and it really is going, we think, going to overtake not only the SSD space and the hybrid space, but the entire spinning disc market. Yeah, absolutely. So TMS always had some good performance numbers there, and there's a lot of competition in this space. It's moving hot. As we've said many times, Dave's were six years into kind of this wave of flash, and we think we'll see way more innovation and change happening in the next four years than we did in the last six. So I'm interested in people's opinions on this. We've got a number of analysts. John Tewego is coming on later. We've got Stephen Pratt coming on. He's the CTO of Centerpoint Energy, a lot of practitioners, a lot of customers, a lot of IBM execs, so keep it right there. Everybody's doing our way back with our next guest right after this brief break.