 Live from Boston, Massachusetts, it's theCUBE, covering Red Hat Summit 2019, brought to you by Red Hat. And welcome back to Boston here on theCUBE. We continue our coverage of Red Hat Summit 2019, with just that Jim Whitehurst on President and CEO, along with Stu Miniman, I'm John Walls, and now we turn to the IBM side of the equation. Arvid Christian is with us, the SVP of cloud and cognitive software at IBM. Arvid, good to see you this morning. My pleasure to be here, what a great show. Yeah, absolutely, it has been, I was telling Jim, he couldn't have a better week, right? Monday had good news, Tuesday, great kickoff today, again, following through, great keynotes. We were talking briefly, a year ago, you were with us on theCUBE and talking about IBM and its forward plan, so on and so forth. What a difference a year makes, though, right? We couldn't predict that you would be in the position that we're in now, so just if you can summarize the last year, maybe the last six months for you. Sure, and I think it's more building on what I talked to you about a year ago, if I remember last May, May of 2018 in San Francisco. So I was espousing very heavily, look, the world's going to move towards containers, the world is already embraced Linux, this is the time to have a new architecture that enables hybrid, much along the lines that Jim and all of the clients, as well as Ginny and Satya were talking about on stage yesterday. So you put all that together and you say, that is what we mentioned last year and we were clear, that is where the world is going to go. Nice step forward a few months from there into October of 2018 and on 29th of October we announced that IBM intends to acquire Radhat. So then you say, wow, we put actually our money where our mouth was, we were talking about the strategy, we were talking about Linux, containers, OpenShift, the partnership we announced last May was IBM software products together with OpenShift, that is, we already believed in that, but now this allows us coming together, it's more like a marriage than sort of lose partners passing each other in the middle of the night. And that then goes forward, you mentioned the news on Mondays, so for our viewers who don't know it, that's the news that the United States Department of Justice approved the merger with no conditions. So now we've got to wait on a few other jurisdictions and then hopefully we get together really soon. Right, right. So I think back to looking at IBM over my career, I think the first time I heard the word co-opetition, it was related to IBM because IBM, big ecosystem, lots of innovation over its long history, but as we know, when the bigger you get, the more chance that your partners are also going to overlap with you. Seeing Ginny up on stage and a little bit later seeing Satya up on stage is really interesting. You look at the public multi-cloud environments, everybody needs to work together. You talk to your customers and I'm sure you find today, it's not the future is hybrid multi-cloud, that's where they are today, even if they're trying to get their arms around all of it. So you're with a mega trend of cloud, what you're seeing that competitive but partnering dynamic. Look, I want to step back to just give it a little bit of context. So when you talk about companies, let's go back to the beginning of distributed computing, a PC. The PC came from IBM, the operating system, DOS came from Microsoft. Then you had Windows sitting on the IBM PC. So that's co-opetition or is that pure partnership, right? I mean, you can take your pick of those words and our value has always been that we IBM come to clients and we're trying to service problems that actually help them in their business outcomes. Then whoever they have inside their IT shops that they depend upon has to be a part of that answer. You cannot say, oh, so-and-so is bad or they're out. So it always had to be co-optitioned from the lens that we came to with our clients. We always built originally computers, other people's software and on those computers. Other people provided services around it. As we went into certain software space, ISVs and so on came together. So now that you come to the world of cloud, we hold a very fundamental belief and I think we heard a number of the clients talk about this, they're going to be on multiple public clouds. If they're going to be on multiple public clouds, they're also going to have traditional IT and they're also going to have private clouds. That's the world they live in if I look at it from the viewpoint of their infrastructure to now come to your direct question. So if that's the world they're going to live in, hopefully one of those public clouds is ours, but the others are from other people. The private cloud, we believe the standard for that should be open shift and should be containers. So as you go down that path, then you say we want to take that environment and also run it on the other publics. That's good for the client. That's good for the publics. That's good for us. It's really a win-win-win. And so I think the ability to go do this and to make that play out, it really goes back to my thesis from more than a year ago where we talk about this is a new set of standards and a new set of technical protocols emerging. Yeah, I want you to take us inside the conversations you're having with CIOs when you talk about cloud because when cloud first came out, it was, well, the sins of IT is this heterogeneous mess and it's complex and expensive. Cloud's going to be simple, homogenous and cheap. Look at cloud of 2019 and I don't think I would use any of those adjectives to define what most people have for cloud. Where are they today? Where do we need to go as an industry? So, glass house computing. All centralized, all homogenous, not at all heterogeneous. Oops, 15 flavors of UNIX, all different. None of them really talk to each other. Oops, let's go to desktop computing. You begin with a pure architecture, maybe a novel which doesn't exist, or maybe does, I don't even know. Oops, back to this complete spiral of client server. Okay, let's go to cloud. Back to centralized glass house. You're making me dizzy. Let's go to lots of public, lots of SaaS, lots of private, back to this thing. So, in each of these, a different answer came on how to unite them. I think when we look at that UNIX and client server sprawl, I think TCP, IP, and the internet came together so that you could have all these islands talk to each other and be able to communicate. All right, great. We've got 20 years of victory on that. Now you're getting these things. How do you begin to move workload across because that becomes the next level of value. It's not enough to communicate. Can I really take a workload? A workload is not just a VM or just one container. It's a collection of these things, integrated together in a pretty tight and complex way. And can we take it from one place and move it to the other because that goes to the right ones, run anywhere, mantra, which by the way also we come to about every 20 years. And so I think that's the magic of this moment. And if we succeed in making that happen, which I have complete conviction, we will, especially together, then I think we give a huge value back and we give freedom to every CTO and every CIO. So you paint this really interesting whoops picture. I love that. It's really a back and forth, right? We're swinging and almost there's a cyclical nature to this is what you're, I think, implying. What's to say in your mind that this isn't just another whoops as opposed to this being a permanent shift in the paradigm? Oh, I think it's a, the reason I think that it's going to be cyclical is we tend to, you know, whether you go to construction in real estate, you talk about capacity in factories, you see an opportunity and people tend to go one way. The only way to correct culture if you're sitting in one place is to sort of over-correct the other way. Now you're over-corrected. Now you have to come back. And always when you over-correct one way then suddenly all those other benefits you've lost. So then you're going to come back to get those benefits. After about 10 years probably, you can debate 10 or 15, you're done. You've exploited all those benefits. Now you need to go get those benefits because the technologies have changed. It's not just that you're going back to what was. We're going very conceptually from sort of centralized to distributed to centralized to distributed. And by the way, another one that's getting out from pure centralized is also edge. Edge in effect is another distributed. So you put those together and you say, I went there, but then I lost all this stuff. Now I need to get back to that stuff. If you go too much there, you'll say, no, no, no, I need to get some of this back. So it's going to go that way, I think for every... If you look at it, the big arcs of back, pendulum, body color, pendulum swing, is I think about 20 years it looks like, right? 1960 centralized, 1980 PC, 2000, you could say was the peak of the internet. Hey, 2020 we're in cloud. So it looks like about 20 years looks like. All right, so I like what you were saying when you talk about that multi-cloud environment. The application is really central there. IBM, of course, has a strong history, not just in middleware, but in applications. What do you think will differentiate this kind of next wave of multi-cloud? How will the leaders emerge? Right, so if you look at it today, you run infrastructure. I think OpenShift has done a great job of how you help run the infrastructure. The value now rise in putting the services on top, both coming from open source, as well as other companies that are running like an integrated package. This is all about taking the cost out of how do you deploy and develop. And if we can take the cost out of that, you're not talking about that five to 10x that we heard a couple of the clients up on stage yesterday with Jim talk about. If we give that to everybody, you can sort of say that 70% which goes into managing your current and only 30% sort of an innovation, can you shift that paradigm completely? That's the big business outcome that you get as you begin to deliver these towers of function on top of this base. You need a solid base without one base. You don't want to say, I can't deliver these towers of function on 30 different things underneath. That enduring answer is a terrible one. You know, in terms of the infrastructure market, you know, things keep changing, right? Consolidating, EMC doing what happened there. How do you see your play in that market? First off, how do you see infrastructure you think evolving? And then how do you see your play in that going forward? No, so infrastructure has always been big in the end. All the stuff we talk about has to run on infrastructure. I'd say the consumption model of how you get infrastructure is changing. So it used to be that many years ago, people bought all their own infrastructures. They bought best of breed boxes, they put in boxes, then they did all the integration and what came from the vendor was just a box. Then you went to, all right, you can get it as a managed service or you can get it in cloud which is also a pay by the drink but you cannot turn it up and down also. And so it's not either or. It is people want all of these models. And so our role in infrastructure, certain things we will provide. When it comes to running really high emission critical workloads, think mainframe, think big UNIX, think storage of that ilk, we'll keep providing that. We believe there's a lot of value in that. We see the value, our clients appreciate that value. That workload turns up but it's the mission critical part of the workload. Then in turn we also provide the more commodity infrastructure but as a service. We supply a large amount of it to our clients. It comes sometimes wrapped in a managed service, it sometimes comes wrapped as a cloud. And we will also consume infrastructure from other cloud providers because if the people are providing base compute, network and storage, there is no reason to presume that our capabilities wouldn't run on top. If I go back to just February, we announced that Watson will now run. We said we use the sort of the moniker Watson anywhere to make the assertion that we'll run Watson anywhere that we can run the correct containerized infrastructure. So, Arvin, what's the single most pressing issue that you hear from organizations with respect to their technology strategy and how's IBM helping there? I think modernizing applications is the biggest one. I mean, so people have typically a large enterprise anywhere from 3,000 to 15,000 applications. That's what runs the enterprise. I mean, like we talk about everyone's becoming a software company, right? I mean, that was one of the codes and everybody's becoming a tech company. That was, I think, one of the clients said, hey, we think we're a bank, we're actually a tech company. What that says is that you're capturing the essence of all the business processes. You're capturing the essence of the experiences, the essence of what regulators need, the essence of how you maintain customer and customer of our clients trust back to them is maintained through this collection of applications. Now, if you say I want to go change, I want to become even more client-centric. I want to insert AI into the middle of my business process. I want to become more digital. All of that is modernizing applications. The big pain point they all have is how do I modernize them? What becomes that fabric in which I modernize? How do I know I'm not locked into yet another spaghetti mess if I go down this path? Because we've seen that movie also. So they're interested in, hey, I want to be clean at the end of this. I want freedom to be able to move it. And that is why I'm so passionate about, hey, the fabric is based on open source. The fabric's got to be based on open standards. If you go there, there is no lock-in. And it's not a spaghetti mess. It is actually clean. A much cleaner than any other option that we can dream of is going to be. And so if you go down this path, now you can open yourself up to a much faster velocity of how you deliver innovation and value back to the business. Okay, so I'd agree, first of all, when you talk about modernization, the applications that they have, that's the long pole in the tent. We understand compared to all the other digitization, modernization, this is the toughest challenge here. I'm a little surprised though that I didn't hear the word data because when they don't necessarily articulate it, but the biggest opportunity that they have has to be part of the data. Oh, to me, when I use the word application and you heard me use the word AI, it is, can I insert AI in the context of an application? Now why is it not being done today? To get the value out of AI, the data that powers AI is stuck in all the silos all over the place. So you've got to have, as you do this modernization, it's imperative to put the correct data architecture so that now you can do the governance so that you can choose to unlock the appropriate parts of the data. It's really important to say the appropriate parts because neither do you want data sort of free-floating around the globe because that is the value of a company at the end of the day. And so that unlocking of that value is a huge part of this. So you're after your right to ask me to express it more strongly. When I use the word application, I'm inclusive of not just runtime, but always of the data that powers that application. Well, Arvin, it was again a year ago that we were talking to you out in San Francisco and you made some rather strong thematic predictions that turned out well. And I'm not going to put you on the spot here, but I can't wait to see next year and see how this turns out. I can't let him go before we had the CIO of Delta who we had on our part in the keynote. You made a question about licensing. Of course, Jim Whiter said, we're right out, we don't have licensing, but what's your answer? Oh, I'm willing to offer a deal to Summit. So I think that both IBM and Red Hat do a fair amount of air travel. We'll give him a common license if he can just include Red Hat. For whatever IBM pays, just include all the Red Hat travel that is needed on Delta. You know, just so that then the business model's become clear and we can go have a robust discussion. Out of Delta, that's a good, or out of Raleigh, that's a good deal. For us, that's what I'm saying. That is a good deal. All right, so the ball is in your court or on your runway, whatever the case may be. Arvin, thanks for being with us. My pleasure. We appreciate it. And we'll let you know if we hear back from Rahul on that or a good deal. The CUBE continues live from Boston right after this.