 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. Okay, welcome back everyone live here in Las Vegas. We are here at IBM Edge. This is the Cube, our flagship program. We go out to the events, extract a signal from the noise. I'm John Furrier, the founder and just look at the angle, which is my co as Dave Vellante, co-founder of wikibond.org. Our next guest is Michael Kuhn, VP of VLE Flash Systems. Welcome back to the Cube. Appreciate you coming back. And I got to ask you, are we on a flash mobbing situation around flash? We're here doing the crowdsourced content. Yeah, there's kind of a flash mob walking around I think, right? Flash ship Lollipop, as we were saying, the flash flagship. We've got a flash city inside the solution center, augmented reality, I'm sure everybody is talking about that. It's no joke. It's amazing this year, right? Yeah, absolutely. It's no joke. We've got Facebook buying up, Oculus Rift, all this new stuff coming, wearable computers, seeing 128 gigabytes on small little sand disk, the data center, flashes everywhere. How much of an impact is this really going to be in your mind? Oh, it's huge. It's huge. You know, the thing that's most interesting about flash is it really is helping businesses transform themselves. And so, you know, what flash does, you know, everybody wants to talk about the numbers and it's, you know, 10x faster, 20x faster, 45x faster. At the end of the day, what really the true value of flash is it's able to move these things to real time. So when you can move, you know, your business decisions to real time, that's what makes a big difference. So I know we've talked about Sprint computers and some of the conferences here. They talk about a 45x improvement. That's not the key thing from my perspective. The key thing is it's helped them to move to real time. When you move your business to real time, you make those decisions in real time. That's truly what changes the industry. So really it's about driving competitive advantage and competitive edge in the marketplace. The winning edge, you've got a lot of winners come on the queue, but else we had Sebastian Krauss on earlier talking about, you know, systems of record, old, decade long, many decade long kind of paradigm. The systems of engagement. You're seeing things on the social data. I was just tweeting, you know, social data is a first class citizen, meaning social data, meaning user data, and bringing that to engagement. I mean, that is real time. Mobile really is a poster child of real time and mobile being real time results, insights, actionable insights. It sounds like a bunch of Kool-Aid, but at the end of the day, businesses are driven to sell the customers value, whether that's products or services, at the end of the day. That's real time, right? Exactly. It's all real time. It's about bridging that gap as well, right? Because when you do the transactions on your mobile device, when you make your deposit with your check that you're getting, you want to make sure to actually guess where it needs to go, right? So creating new errors of new workloads, but actually tied back into these systems of records as well. And Flash is becoming a very, very prominent, making all that work together. Let's unpack that a little bit. So actually, retail's a great example. We had some here partners on earlier talking about retail being one of their killer markets. Obviously, that's only one example. But how does retail or other solutions using real time technologies like Flash to bring on their management of business, whether it's what portions go in the cloud, which portions go on-prem, analytics you can throw in the cloud, but then there's some data issues. So break that down for us. What does the spectrum look like from a solution standpoint? I love Flash. I love this notion of real time. I'm sold. Tell me what to do next. I mean, that's kind of where people are at. So when you think about cloud, you think about analytics, people always ask the question, well, I understand the value of Flash, the performance of Flash. Where does it really get targeted? It gets targeted in this big data analytics space. So that's really where it's all about. It's about driving speeds like never seen before, but enabling things that were impossible before now possible. Go back to your example about retail. It's about improving the client experience. You're online. You're shopping. You want to know, should you buy this? Should you buy that? Hey, that's great to know while you're in the moment, the moment of impact when you're making the purchase, not 10 minutes later, not five minutes later, not when you've checked out, right? It's got to be in the moment in real time, and that's what Flash allows you to do. When you move it to real time, that's what changes business models. So I want to get your thoughts on like the academic side of the equation. When you think about like real time, you think about the new opportunities that exist out there. These new user experience. You mentioned mobile retail. It could be online. Right. You know, Dave always quotes Jeff Hammerbacher, founder of CloudAero. He says, the best minds of our industry are using big data to give the best ad in front of a user, which is kind of like a diss and really on the science side. Watson just made an acquisition today around the AI side, which kind of telegraphs some of the cognitive computing. So the notion of recommendation engine really is about personalization. So how do you see the new experiences and what has to get done under the hood to make that engine of innovation where these new user experience, whether it's mobile or they've got multiple devices on the engine to network and things, all of these are boiling up around what's going on under the hood. So what is available in your mind and what still needs to get done to make those things happen? Well, a lot of technology is available. A lot of people are providing parts of the solution, but it's about making it all work together, right? So, you know, we've talked a lot about our Flash strategy and how Flash is starting to change businesses in all aspects, all industries, large and small clients around the world, but we've really been spending a lot of time with this conference talking about software defined as well, right? So software defined around Flash. So what we're finding is trying to integrate this into the fabric of the system, trying to integrate, you know, Flash across the enterprise. It's really about the different changes you have to make to your software as well to exploit the capabilities of Flash. So the software that was written, you know, a decade ago was written to be optimized for disk. Now it has to be rewritten, modernized, has to be all linked together to take advantage of the true characteristics of Flash performance. So it's about knitting it all together. It's about having, you know, the fastest tier of storage, but it's about having a software defined storage strategy as well to keep it all knitted together. So, Mike, can we talk numbers here? So there's a lot of numbers floating around the industry and we've heard some from IBM this week, so let's clarify it. So Jamie Thomas talked about 100 petabytes of Flash shipped. I think you had, IBM also mentioned 80 plus terabytes shipped last year. I know EMC, petabytes, sorry. EMC has talked about 17 petabytes in Q1 of 2014. Where do we stand? Who's the leader? What can you tell us about your numbers and what do you know about, you know, the marketplace? Well, let me break it down for you. So last year, across all of our IBM products, both on the storage side and on the server side, we shipped 82 petabytes of Flash in 2013. In the last five years, last five quarters, rather, we shipped over 100 petabytes because we shipped another 27 petabytes in the first quarter. So there it is, 82 last year, 27 in the first quarter. How does that compare to others? Well, I believe EMC was here about two weeks ago at this hotel, and they talked about a big number as well. They talked about 73 petabytes. So I'm pretty clear who's number one. And they talked about 17 in the quarter. We did 27, so it's pretty clear who's number one. Now, we should also talk about what's happening in the all Flash array space, which is a subset of that marketplace, which is being very closely watched right now as well. OK, so let's talk about that. All right, so we expect Gardner to release the numbers here soon, as early as this week, maybe next week. They came out with it in 2012. And so when they came out with it about a year ago for the 2012 year, they said that violin memory was number one. EMC was number two, and IBM was number three. So the 2013 numbers are right around the corner. They're going to be released soon. We fully expect that IBM is going to be number one based on where we delivered our performance last year. And I'm pretty sure EMC amount of fell a little bit, but I'm going to wait till Gardner comes out and post those numbers. And let's see where they call 1, 2, 3, and 4. And both EMC numbers, 17 or 72. 17 petabytes shipped in the first quarter. And 73 petabytes, I presume that's shipped to date. And I presume that includes all flash of all types. That's all their flash products, right? And your 109 petabytes includes everything as well, right? Service-nized storage side, including the all flash array marketplace, right? So they show both. It's the kids in sync number, right? Which is fine. That's what we want to know. Which is why everybody wants to talk about what's happening in the all flash array marketplace as well. I mean, that is the fastest growing segment of the enterprise storage marketplace right now. It's growing about 10x faster than the overall enterprise storage marketplace. So that's why everybody's anticipating and can't wait till Gardner comes out and releases the market share data for 2013 on the all flash array segment. How much of that growth do you feel is incremental versus eating into the install base of some of the traditional products? So great question. Without giving you all the numbers, the thing that truly excites us inside of IBM about flash is out of every 10 systems that we sell, probably six or seven of those systems are going to brand new clients who never bought IBM storage. So that's pretty amazing, isn't it? So certainly, flash is going to start to displace parts of disk, especially high performance disk, but when you have that much penetration into new accounts and you're selling that much to clients that aren't buying IBM storage, we get really excited about that. How much is that shiny new toy element here involved? Obviously early adopters want this. They're dying for faster performance. Flash is like a godsend, really is. No debate about that. You're seeing even success of startups like Pure Storage get some traction, start to nibble away at the breakfast of the big guys like EMC and you guys. So you got these upstarts coming in. The customers are starving for faster data systems. Is it POC time? Is it tire kicking time? How would you evaluate the stage of the market? I mean, obviously it's some serious petabytes being shipped by you guys. That will be number one if Gardner releases the numbers. Is it full blown growth? How do you put this in an inning? We always say, you know, national anthem being sung, warm up, spring training. I mean, where are we in this? Yeah, let me give you a context. So last year at Edge, we talked about this. We made our announcement about a billion dollar investment around flash. At the same time that we did that, we talked about, we opened 12 flash centers or companies around the world. To do just what you're asking about, POCs, help clients figure out how to deploy flash into their environments. 2013 was very much about kicking some tires and doing some POCs. We just finished a session upstairs right now. We had a client from a cloud service provider, SlyQuest from North Carolina. They talked about last year, it was about why flash this year. Someone comes into his office says he wants to buy a high-performance spinning disc. It's about why not flash. So that's how much has changed in just one year time. It's gone from why flash, kicking the tires to now why not flash. And flash is starting to displace high-performance disc in big ways right now. So you must be happy. So you're in the fastest growing part of the business. Steve Mills last year announced a billion dollar acquisition to you. And you were there? A billion dollar investment that was there into the business. Now, help us clarify. So where is that investment going? Well, it's going in a lot of different places. So we talked about the broad portfolio that we have across all of our product lines. Certainly the flash system and our new product that we announced earlier this year, the Flash System 840 and the Flash System V840 is our flagship product. But we're seeing flash being adopted across the entire product line. So we talked about some major announcements this week around our DS8000 offering, around XIV. We talked about flash inside our store-wise offering all the way to flash on the server side. So IBM was one of the leaders who announced the first one to announce Flash Dim's inside our System X products, which we did in January this year. So we probably were about a year ahead of everybody else in the industry in terms of adopting flash in the memory, Flash Dim's. So that's part of the investment, is horizontally across all the platform. Now, vertically, what we're also doing is we're starting to do all that heavy lifting to take all that software, all the SVC software that we have, and we combine with our V840 VStands for virtualization. So that same software stack around SVC, which was now we're in the eighth generation, 14 years of that successful product. We now are doing the hard work to modernize that and make that truly optimized for flash. So some of those software tools were written for disk, now they're being optimized to be written for flash, and so that's what's taken off. So we're seeing a lot of software investment vertically as well. So horizontally and vertically, vertically. Yeah, this is one of those cases where gray hair in the stack is an advantage, right? Everybody talks about modern architecture, is blah, blah, blah. But the fact is the many stacks are lacking in all flash arrays. So you've got to rely on, I mean you've got the advantage of being able to rely on existing stack. I wonder if you could just want to go back to the investment area. Does that include the acquisition of TMS? That includes the acquisition that we made for TMS in September, October of 2012, as well as investments that we made over the next two years. So we talked about the billion dollar investment. It was our acquisition flash plus our investments over the next two years. And you didn't announce a number for that, did you? We did not. So it's less than a billion, you know that. It is less than a billion. So we have some crowd chat activity. Even from your own IBM storage handle, it says flash is being implemented across the entire IBM storage product line. Where's the competition in that? Okay, since they tweeted that, we'll bring that up. Competition, how do you guys compare? Mentioned pure storage, getting a lot of buzz right now. Three billion dollar valuation, obviously private market and that's my public market, so it's not surely an efficient market. And they didn't raise that much, it's less than a half a billion dollars. So we'll call them an upstart. You got EMC, I'll see how they're doing their thing. Where's the competition for you guys? What battles are you going to fight? So look, a couple things that people should think about when they think about flash. First of all, most people who adopt flash and talk about a flash system, and you mentioned two of them, EMC, pure storage. So I'll just echo what you said. They're adopting flash SSD, solid state disk, right into their flash system. There's only a handful of people in the industry that does what IBM does. We actually buy the NAND flash chips and we do the innovation at the chip level and build a purpose-built system from the ground up. So no SSDs, right? So what that allows us to do is drive a lot better performance to optimize all the way from the data port in the back, all the way to the flash chip so we run fast than everybody else. So now let's talk about the second part of the strategy and how we're starting to separate from competition. The second part, when we launched the V840 and the 840 in January, we did some of the hard things to make it ready for the enterprise, to make it ready for the data center. So some of the flash startups can't come close to doing things like concurrent code load where you don't have to take your system down to update the firmware, to do encryption. So we put these things inside the flash system 840 which we announced in January which sort of separates us from a lot of the competition. And the third thing is, quite frankly, is all the investment that we've talked about doing across our software stack. So the software-defined storage plate, doing all those rewrites to the code and modernization to the code to drive better performance for flash, that's where we're making a lot of investment. And quite frankly, nobody else has a platform like SVC in the marketplace. So faster, integrated, so the purpose built ground up, that's unique. Faster, because you're faster across different lines, and you're integrating other tech like security and other features into the software. And non-disruptive code change. Yeah, make it ready for the enterprise. I mean, that is huge. Nobody else can do this. I mean, full availability, active, active controllers, concurrent code load, never take your system down to update it. I mean, this is what people want. They want access to the data. So saying you can do it. People still talk about hot swap. They crack open the top of the storage system, and they start popping out cards. Guess what? When you do that, you contaminate all the other cards. So we have the only design that you can service this thing from the front of the box. You can do concurrent code load. I mean, this thing has been optimized for the data center and has barred none better than anything else in the industry. All right, so you're pretty confident. Sounds like the confidence is just oozing out. So no problem. The people are confident on the cube. They get comfortable. So I got to ask you, were you going to flex your muscles this year? What are you going to do to shout that from the highest mountain? Any plans from the marketing standpoints of customers as a partnerships? What are you guys planning on doing to get the word out? Yeah, great question. So last year, 2013 was all about getting the product into the marketplace, making it the best product possible. 2014 is going to be about doing all the work you just talked about. So we're driving a lot of tight integration with our ISVs. We've targeted the top 40 ISVs to optimize them on Flash. You're going to see us at a lot of the industry conferences. We're going to be at the Flash Memory Summit in August in a big way. So you're going to see IBM take a leadership role and start to assert its technology and its leadership position in the marketplace. Any other partnerships outside the ISVs? You're looking at other, so you have a great ecosystem of partners around you. Brokeade was just on here earlier. Anything there to announce or talk about? Great ecosystem, great partnership. Just a lot, a lot of things going on. A lot, a lot of little base hits across a lot of ISVs. Gap shot for a double, take it to second base. What about just overall leadership around taking it beyond on the competitive front? Because with all these fun wars going on, certainly that's a big piece. How are you guys going to get it to the customers? I mean, is it through those, those high level marketing? Is there a ground game involved? What are you guys thinking there? Big ground game involved. You know, we spent a lot of investment in building on our dedicated Flash team. So we have a dedicated Flash team. We're doing a lot of work to integrate the channel. We sell a lot of our Flash technology through our business partners. So it's a big channel play. So we're doing a lot to invest in the channel this year. We're going into the channel, meeting the channel. With some of the key partnership solutions like Atlantis Computing that gave us a great VDI solution in the marketplace. So you're seeing a lot more of that and a lot more of just, you know... Headcount? Oh, headcount. Boy, headcount, where are you guys last year versus this year and any forecast? Just kind of an order of magnitude, thousands of thousands? I think most people in the industry knew that, you know, when we acquired Texas Memory Systems in September of 2012, they were about a 100 person company, you know, an engineering company, not much of a marketing team. We're going to be about 500 in that business unit by the end of this year. But the important thing is it's not just that number. I mean, it's about we have all of our storage sellers now, the talk to Sebastian Krauss. So we have all of them enabled. They're selling Flash, they're moving Flash. I'm just talking about the dedicated people that are out there. That's a division. Now you've got the field. Exactly. We've got the partner channel. We've got all of the things aligning right now. We're driving this thing in a big way. Great. Well, we're excited. We'll be covering, certainly we'll be talking to those ISVs. That actually has come up a lot in the past couple of months. Dave and I were talking to the ISVs critical. Some say that's a real hard nut to crack because they're a little affinity about what's going on there. We'll be covering you guys at the conferences. Great to see the news. It's an exciting time. Certainly the disruption is at an all-time high with real benefits. Again, speed latency. We didn't even get into the cost of ownership piece of it, which is a whole nother discussion worthy of another hour. But this is theCUBE. We'll be right back with our next guest after this short break.