 Live from Las Vegas, Nevada, it's the Cube at IBM Edge 2014. Brought to you by IBM. Now here are your hosts, John Furrier and Dave Vellante. Hey, welcome back, everybody. We're live in Las Vegas for IBM Edge. This is the Cube, our flagship program. We go out to the events, extract the signal from the noise. I'm John Furrier, the founder of SiliconANG. I'm joined by Coach Dave Vellante, co-founder of Wikibon.org. Our next guest is Phil Schomburger, director of technical delivery, pro-active solutions. Welcome to the Cube. Thank you. I got to get you to take you guys one on a war. You're a big part of the system here. What does the ecosystem look like here at IBM Edge? Mostly customers, partners, IBMers. I mean, give us a flavor of IBM Edge. Well, I've been focusing mainly on getting my technical aptitude up. I'm looking at all the different sessions that are out there, but we have a lot of customers and a lot of business partners. This is kind of a venue to educate yourself and get all the latest information on IBM products and offerings. So as a partner at IBM, how have they been to you guys to work with? Obviously the x86 transition to Lenovo is not, it's a new thing, but it's not new to IBM's ecosystem. They did that with the laptops and the PCs in the past. How's that affecting your footprint, your customers, and your partnership with IBM? We spend a lot of time working with Lenovo in the laptop desktop area. We're also a good x86 partner. I think that it's going to be a good transition. I feel like the x86 platform is almost like the Lenovo mainframe. That's the biggest product set they'll have, the highest in enterprise product, and I feel like we can, since we have a good partnership with Lenovo already, we're going to do fine in that space. So what about the award you guys won? You guys were featured. Just give it a little taste of the accolades, the award and the category and the reasons. Yeah, as a business partner, we have different categories that we sell, but our focus is on the IBM, pretty much the entire portfolio. We sell all the products across the board, but one area that we've invested a lot in our human capital and with certifications and new hire, strategic hires really, has really helped grow that space, and we received a winning edge storage award for growth and vitality in that space, and we had 700% year-to-year growth, so that's pretty significant for us, and we sold a lot of... 700% for the company? Yep, year-to-year growth, so that's pretty significant. Like I said, we sell a lot of IBM XIV, a strong growth area for us that, truthfully two or three years ago, we weren't really thinking about is flash, dedicated flash storage, and we had really good success. We've invested in trial equipment, where we can take that to customer sites coupled with IBM's sand volume controller, and we've had good success with our proof of concept equipment, and we've made a ton of investment in that space, and I guess IBM recognized us with the award for all the effort that we've put in there on the storage platform. So 700% growth, that's growing slightly faster than the storage market, so you're obviously gaining share, to what do you attribute that growth? Well, part of it is, like I said, we had real strategic hires in that space where we knew they were gonna be storage-focused individuals. SE types? Uh-huh, SE types, same sales staff. Yeah, that's right, Rockstar SEs. Some of them were ex-IBMers, you know, that had good relationships, and we've leveraged that the best we can. Part of the thing that they get, I think our customers get from a partner, versus just working with IBM directly, is we're very nimble. We put together packaged offerings with education and consulting. We're able to do incentives and rebates and bring education to the customer site. So we do have a different dynamic, and I think that's been very successful for us. We're very client-oriented and customer-sensitive. So given that you're growing so rapidly, a lot of partners are under major pressure to transform. The cloud's coming in, margins are getting squeezed. You got to go up the stack, you got to get an application affinity. You're presumably not feeling those types of pressures, but, you know, Andy Grove, you got to be paranoid. Absolutely, absolutely. So if you're always transforming, like a lot of organizations, how are you transforming? What's going on in the channel, in lightness here? We are retooling, as you can imagine. The hardware business isn't quite what it was even 12 months ago. So we're retooling, trying to get up-to-speed, IBM software offerings are exciting. There is a newly announced partner program. We're getting our education and certifications in that space as we speak. We're working on the storage as a service platform. There's going to be new offerings coming out in the software space, and we're trying to adapt to those. You know, there's this elastic storage. I guess you just heard that from one of the IBM executives that were here just a few minutes ago, but we're trying to retool in that space and we're getting more cloud-friendly, more software-oriented, but like I said, our success in the storage business isn't a fluke. There's a lot of customers out there that still plan on owning and will own their assets for years to come. So we're going to try to continue to grow and leverage those relationships, but we're not going to sit still and let the cloud world pass us by. So we're definitely focusing on that. I was going to ask, you guys sell across North America or just United States? We, just across the U.S. Okay, so presumably you're seeing more cloud, more public cloud, more Amazon, right? Coming in from the line of business maybe? Yep. Okay, so now you've got software now in the bag. So talk about what you're seeing in public cloud adoption. What are clients telling you and how are you helping them respond? Well, the logistics behind it, I think the biggest challenge is the bandwidth, customers bandwidth and security. That's typically been the conversations that I've had. And sometimes it's a business model. It's kind of like leasing equipment, either buy it or lease it. And a lot of folks are still on that edge where they're going to be in the cloud or they're not, but most of them are dabbling. We've seen a lot of our enterprise clients are hiring cloud specialists. So that just leads me to believe that sooner or later they're going to have cloud workloads. We do have one enterprise customer that's a large, large bottler, if you will. They have an initiative that they will price every new workload, new requirement on cloud infrastructure as well as internal. So public and private, it's a bake-off. Yeah, so they are not going to be biased at all. They're going to go to the cloud if they can. So what are the results of those types of bake-off? I mean, a lot of people say, I think we heard Tom Rosamilia say essentially the driver is not necessarily cost. It's the flexibility and the agility. At the same time, you're seeing new pricing models. You're seeing utilization models because it's elastic. So versus, you know, wasting capacity. So on a, and then this kind of apples to oranges, but when you net it all out, what are you seeing? And I know it depends on the workload, but maybe you can add some color to what you're seeing with the results of those bake-offs. What I've seen so far is that owning the assets are still a little bit cheaper than the cloud. But like you said, the flexibility, a lot of companies are, we don't want to be in the IT business. We want a couple really smart guys that can architect in the cloud and get our applications in the cloud, get us cloud-ready as a business, but they don't really want to be in the IT business. And so, but the bake-offs have been just like you said, a little bit more expensive on the cloud, but I think that difference is closing. I mean, it's getting closer and closer to buying the assets versus going to the cloud or about even up. Renting more expensive than owning, but gives you a lot more options. Okay, so then, second part of that question is, is there enough motivation within the enterprise to duplicate those kind of economics? Certainly there are in some, certainly sensitive, if you have financial services. Sure. And certain other types of environments, but you're seeing a real rush to build sort of your own internal cloud on-premise hybrid. What do you want to call it? Yeah, I think internal cloud is almost a given now. Everybody's doing it. Using cloud loosely, I guess, depends on how you look at that. A lot of companies are providing services for other business units. So I look at that as truly being internal cloud and even service providers within your own four walls of your organization. IT is a service. Yeah, that's right. Service catalog. And that model has been adopted internally, even if it doesn't have charge back or build back or it's internal marketing kind of a concept. It's still happening in all organizations. So going to the cloud is almost, what I'm trying to work for in our organization and with our resources is to figure out a, almost like a checklist or line items where we can say, is your application cloud ready? And these are the five things we need to make sure that it can do to be ported to the cloud. And once it's there, it should be fine. But those are the types of things that we're trying to do to adapt to those requirements that customers are coming with us. Phil, I got to ask you though, and getting out to the mainstream marketplace, actually I'm in Silicon Valley where the Kool-Aid injection is at an all-time high right now. So it's certainly booming. DevOps is driving everything. That's clearly the cloud culture as DevOps. Are you seeing that translate in the field? Are you seeing DevOps being a key driver in the culture and also into the delivery? Yeah, I mean, that's something that we're seeing. And I don't think that, like I said earlier, the, all of our customers are looking at cloud and IBM statistics, I feel like I came out here for another IBM conference a couple of years ago and the cloud was the word, right? That was the buzzword. And they said, all of our customers are going to be looking at or have workloads in the cloud by 2015. Well, I was a skeptic and with DevOps as well as even large workloads like SAP, I see a lot of large database companies are still providing services in the cloud now. And that's, I'm pretty shocked to tell you the truth, but it's truly happening. So I guess if you listen to the experts, it'll come true. And that's where everybody is moving. All right, well, thanks so much for coming on theCUBE, really appreciate the stories, what's going on in the trenches. This is theCUBE in the trenches, getting the data, sharing that with you. We're live in Las Vegas for IBM Edge. I'm John Furrier, Dave Vellante. We'll be right back after this short break.