 Okay, we are back live inside the Cube, SiliconANGLE.tv's flagship telecast. We go out to the events, talk to the smartest people we can find, and our next guest is one of the smartest people that I know, has been on the Cube many times, an industry analyst, and we're here in Orlando for IBM Edge 2012. A lot of news going on all around the web. E3, SiliconANGLE.com's got all the coverage around E3 and tech trends, but here we're on the ground. We're storage at the center of the universe right now enabling all kinds of massive innovations around flash, software, infrastructure. I'm John Furrier, the founder of SiliconANGLE.com. I'm joined by my co-host. I'm Dave Vellante, and we're here with Mark Peters, who's a senior analyst at the Enterprise Strategy Group. Mark, first of all, welcome back to the Cube. Thank you, good to be here. Appreciate you making some time for us. I think it's good to be here, okay. So Edge, you know. You're attacking from both sides today, yeah. Well, that's only so you can hear us. There's a little background noise. Okay, that's good. We have a speaker today. So Edge is kind of IBM's coming out party, you know? I've said a long time coming and I've been said, well, we've had a number of these types of events, but this really is the first branded storage event in a while that I've seen out of IBM. Yeah. What do you think? Well, I mean, so far, so good. I mean, the turnout's really good, which is surprising and impressive. As you know, this is a busy time of year. Yeah, right. EMC World last week, Discovery's on this week. I mean, not that those are specifically storage. Yeah, but there's a lot going on. There's a lot going on. And as you say, I think your description of it as a coming out party is absolutely right. And it's refreshing to see, by the way. You know, I mean, I think we all look in from the outside and see this kind of sleeping giant. And we all know they have a lot of good stuff, but no one knows about it half the time, so it's good to see. We were talking earlier about contrasting this event, not necessarily the event, but the announcements at this event relative to last week at EMC World, where there were 42, there was a Mega Launch 2, they called it. There were 42. So it's like a boatload of products. This is more about integration, about, you know, the portfolio, and what do you make of that? Compare and contrast the two. Yeah, can I tell you something on a side note first? And I'll probably start to answer your question. So it was just intriguing if you believe in sort of weird stuff. So EMC was supposed to be 39 announcements. Did you know this? No, I didn't know this. And I had this great blog worked out because there were 39 announcements. And when I checked in, I was on floor 39. And I thought that was kind of interesting. But then they had to beat their last announcement at 41, so they made it 42. And when I checked in here, look, this is my table for 39. There is something weird going on in the world. Anyway, what was the question? So just to compare the sort of two styles, two approaches, right? One is just this flood of products. Here at Edge, we're not seeing a flood of products. I mean, we have them in the portfolio. Not a ton of new stuff. Where's the leadership? The question I have is, where's the leadership? So I see you can argue both sides, you got, you know, I mean, on the numbers, EMC wins on the scoreboard. 42 versus a handful. Sure. It's a round. On the product ones, but let's talk about benefits, right? The integration. Yeah, yeah. And also, what does that mean for the customer? I'm going to answer this one. So, I mean, you've been around this a long time. I'm sure they could make this 43 announcements if they wanted, because you could split everything down and you just take, you know, a different press release out of every sentence that they've got. There's a lot here. Quite frankly, and this is both a, you know, double-edged sword. There probably are 43 announcements here because half the ones I've been made over the last two years, no one noticed anyway, because they've not been very good at it. The problem is, they haven't had this coalescing, you know, this coming together. Coalescing, that's a good way to look at it. So, is that a good word? Yeah, good word, because that's what's happening. But no, absolutely true. And so I think, where's the leadership? I mean, clearly you cannot deny from the storage perspective. I mean, it would just be pushing, be King Canute to say that EMC is not, you know, a huge wave in this ocean. But I think from the perspective of an overall supplier, I mean, clearly it doesn't take much brain power, thanks for the nice intro, but it doesn't take much brain power to say that's where IBM's role is. I think what they did well today, I must say, I thought the general session was very well done. What they did well was to put storage in context, not just to say we got more storage. Because again, the other thing with IBM historically, and that's why I think this really is a different thing for them, is I've been joking with people, but you could actually read the slides. Yeah, I mean, whenever I get a briefing from IBM or sit through one of their events, I know I need to bring binoculars, even from my laptop, because it's going to be so small and so detailed. We've got this and we've got this. Yeah, and it's, and that wasn't, this was about context, and this was about putting things in an overall IT context, linked to business, which everyone tries to do. Every storage presentation. They actually did some good marketing. That was actually quite frightening, I know. I mean, there's some marketing here. Yes. They're marketing their product. Absolutely, absolutely. And there's solutions. There were a couple of notes, if I can just refer it, or did you want to do another question, I just thought these were interesting because being IBM, they do a lot of research, and I just thought some of the numbers and the background business that they have were interesting. The ones I jotted down were the global CEO survey that they just completed. I don't know if you've covered this already, but where IT was for the first time, apparently noted as the number one external pressure on CEOs, that was interesting. Get this, 80% of those CEOs expect more complexity in their environments, yet only less than 50% think they have a plan to solve it. You tie that with things like the other thing, there's an MIT survey that IBM sponsored and did with MIT, I presume, where it says that analytically savvy company, organizations, are 2.2, to be precise, 2.2 times more likely to outperform their peers. So there's... Which of course it's more likely to outperform their peers. So there are others as well, but the point being that unless you can pull all this stuff together, both in a marketing sense, but what I think they did really well, quite frankly, was we're all used to seeing presentations where there's the first slide that says, data's growing, the world is complex. Right, I've now got 10 products. They spend a good amount of time explaining why there is a problem. And I guess it's because they have a portfolio of products they can do that, because there really isn't any aspect of the problem that they can't say something about or address in some form or fashion. One of the things that we've been talking a lot about is this whole integrated systems, converging infrastructure, what do you want to call it? Attacking that labor problem. Yes. IT labor problem. What's, you know, ESG does a ton of work. You guys do a lot of surveys. You talk into a lot of customers. You talk to a lot of the technology suppliers. What are you guys seeing around that convergence? I mean, it looks like it's a real trend. Yeah, brilliant. Yeah. What's your take on that? First off, for us old guys, that'll be us too. I know you're young, but for us old guys, it's interesting. Talk about what goes around, comes around. Doesn't it strike you as like system 34s and that sort of thing? X86 mainframe? Exactly. I remember, and I'm going to get to your question, there was a great quote years and years ago when I lived in the UK, and it was, you know, the mainframe is dead, long lived a large server. And it's always struck with me, because really, that's what this is about. So, to answer your question, first off, yes, people want simplicity. I think what's interesting about IT, we've talked about it as a utility, or we talk about storage as a utility, and people have talked for ages about buying chunks of IT. But it's never really been possible, because it was too complex, it didn't really work very well. But we're finally getting there, both from a software and a hardware perspective. And I don't know if it works for you as an analogy, but imagine, so you're sitting at home somewhere, all the days you get home, and you know, you're sitting there, you're doing something in word for the sake of discussion. And then you want to move to Excel or PowerPoint. Imagine having to change for a different laptop to do that. But that's how we run IT, and we've accepted it. Now, some of it, I think, has been accepted, and there's an important point here. Some of it has been accepted because the people running it, are used to doing it that way. That's how it is. And by the way, that's what their jobs depend on. But I think one of the values, if you like, of the economic stress that we've been suffering, is people aren't going to college wishing they could become a storage administrator. They might want to be IT administrators. Howard Goldstein would argue with you, by the way. You know, Howard. So the question I have for you is for storage administrators. So can you do that? Sorry, just to finish, but we've got to find an economic way to do things. And that means bringing things together and using them all better, which is why virtualization is so popular right now. And they've made a comment about storage virtualization accelerating faster than server virtualization when it was the day-to-day. The question I have for you as an analyst is that IBM, to pull off this kind of integration, big data is all about analytics. It's not even in the storage group. So totally like what you said and what IBM is doing about the context of storage, because it is an element of the overall solutions that the customers want. And they can buy cloud from IBM or other places, but analytics is a different division. Do you think IBM can pull this off? I mean, they're like a battleship. I mean, cross-functionally, different sales teams, different groups. Do you think they can pull that off? And what do they need to accomplish to do that? So really good question, which actually, if you saw the comedian today, that means I have no clue what the answer is. I think the best answer to that is actually to look at this conference, because if you'd asked me six months ago whether they could pull this off, I would say no, because they're all different units that are actually coming together here. The topic might be storage, but you've got the Tivoli people here and you've got the analytics people here and so on. And so, and also having a bit of an inside track here, having been talking to them over the last few months about this, I know the machinations it takes in IBM to get everything agreed. You can say that they are doing it. They're walking the top internally. I think this is actually showing that, which is kind of an odd thing to say, but I think it really is. I think you're making a really good point, because they finally, storage has taken the lead in pulling these pieces together and showcasing it as part of a storage event, as opposed to sort of tagging on to other people's, drafting behind other people's activities. The other thing, and you probably both know me, that I read a lot into small things, I think not just the devil, but I think the delight is in the detail. And so the other thing that's really interesting, I don't know if you've had a chance to see many of the main sessions sitting here, but just a couple. There were also statements of direction. Now, again, we'll work around the business. Everyone tells you what they're doing in the future, some deliver, some don't. But what was interesting is to get a statement of direction signed off in IBM. It's like the white smoke out of the Vatican. You know, it takes forever. You don't know if you're going to get it. And so, back to your question, do I think they can do it? The fact they've got any statements of direction at all is in and of itself amazing, because IBM doesn't do that. The fact they've got a whole ton, which tries to show that smarter storage is actually going to be real. And hopefully not just something they do for Orlando, and then we'll forget about in July. Knowing the work it would have taken to get this event and all those announcements together, that's why I'm kind of drinking the Kool-Aid. We got to talk about Flash before we run out of time. Because Mark is one of the leading observers of the Flash space. Again, ESG, you guys do tons of surveys. What are you saying these days about Flash? What are you telling customers? What's going on in the market? Okay, well you know that old joke about rumors of my death are greatly exaggerated, so Flash has been the other way around, which is rumors of it being everywhere have been greatly exaggerated. Well actually I should restate that. Rumors of it taking over from disk have been ridiculously exaggerated. We're years away from that and it will require changes in technology, I think, to happen. But what's clear right now is that Flash has definitely gone through that hockey stick of acceptance. People are beginning to understand its value. At the end of the day, it's spend a lot of money here and get a lot of benefit somewhere else. And it's an economic benefit as well as performance benefit. In other words, the performance is a means to an end as well as an end in itself. It's a business productivity impact. Absolutely, and that ultimately means that you essentially, because lots of people still think it's expensive, which it is, but you spend a judicious amount for the expensive stuff and you get a huge back end benefit. Now, again, to come back to your question, what are we telling people at the moment? The game has moved. It's no longer about the hardware. Other than the hardware has to be integrated and go into different places and we'll have multiple iterations of it. But what the game about now is orchestration. You heard a little of that here today. You're hearing a lot of it from other organizations as well. In other words, guess what? Comes back to software because so much of IT comes back to software management. Orchestration is the term we're using. You're going to need flash to be not just SSD down in the system, not just in the storage controller. Some can be in the network. You heard today about it going up into the servers and somehow we've got to manage all that both within and across applications and servers. That's where the game is moving. How far does the price point have to move now to really get that mass adoption? I'll see the trend lines are right there. It's right in line. Cross the board flashes everywhere as I'm also saying. Still price is a concern and a price point. Where do you see that falling right now? Well, you see, actually I don't think price is a concern. So if I can hit it that way. I think going back to what David and I were just saying, it's if you use it judiciously and correctly you can make that argument already. And I'm not just talking about the all flash providers who have an argument using de-duplication and other methods to get the effective price down. I'm talking about the absolute price when you use it as- As in a systems element. As a small percentage of an overall system which is why the orchestration matters so much. And again, if I can be- The price falls as a fallacy right now. The what, sorry? The prices, that's just not really a big issue. Well, the other thing is if you look at them and I don't know where my hands are on the screen but if you look at the price of both spinning disk and flash. You different people argue it's a bit like watching unemployment or the trend lines. They're both heading in the same direction not unemployment and the trend lines flash and disk. They're both going to come down over the next couple of years. It's about it's judicious, careful application and it's about tiering and caching which is what makes it valuable. I haven't seen anything that says flash is going to in any time that we need to worry about the next couple of years. Take over from spinning disk, it's just silly. And if I can just finish that rant on one other thing we'll stay with this caching use which is the main use. There are certain specific applications where the performance is what you need but usually it's just, you know you add this turbo power to the overall system and as you say to get economic business benefits but we're going to still continue. This is I think a really important point if I may since I got the mic is that unless and until all storage is either free or the same price we're going to have a hierarchy of storage. That means and this is the crucial point we're going to have a hierarchy of solid state as well. We're so used to having it on disk that we've forgotten to even think about it. It's just natural. You have this SATA stuff and this SATA stuff and this fiber channel stuff and some goes faster and some makes cash and some's down here and we call it near line. We're going to have that same thing with solid state. Well, if you look at the, as well if you look at the difference between the lowest level SSDs out in the storage system and the stuff that gets put up into the service it's orders of magnitude both in terms of price and performance. So we're going to have a range of that as well. So we've seen historically last couple of years you saw a run on enterprise data warehouse companies like Netiza and Vertica and Green Plum and Astrodata. And we saw the sort of tier 1.5 guys I know a lot of people don't like that term but you know what I'm talking about? The compelence in the three parts, you know, billions of dollars in acquisitions. We saw the Extreme IO acquisition I guess it was announced last week of the week before. Couple of weeks, yeah. Last week. We had Rich Napolitano and he said ah, we didn't announce a number but the whisper numbers 300, 340, whatever it is. It was a substantial number for a company that didn't have a product to market yet. So would you expect a similar run on Flash companies? Maybe you could talk about that a little bit. Yes, I'm not sure what else I can tell you. Yes, I think so. Particularly given what I just said it's not just a matter of saying, I mean now EMC for example have a lot of offerings in Flash. I mean Tucci has been saying this for ages that you know he's doubling down on Flash and it's going to be everywhere and EMC probably has the broadest portfolio. If you buy into what I just said about the hierarchy of Flash the need to have it in every place for that economic advantage. Forget the performance. Performance is a means to an end. All storage is about economics. Whatever else we like to tell each other. And you said earlier it's all about the software. It's all about software but just to finish the point I was making so what this means is that just because you see other vendors, big vendors with one or two offerings doesn't mean to say they have a complete Flash offering from soup to nuts and I think that's why we'll see more buyouts over the coming months and years. So do you think that was a low price? Like think of IBM and XIV, let's say it was 300 million. And then you saw a compelling and go for a billion, three par go for 2.4. I salon go for 2 billion. Do you think we're going to see massive valuations or do you think it's going to be sort of trial and error? This will sound very odd and I'm sure there are all CFOs in lots of companies watching this who will hate my answer. I don't think valuations are based on value when it comes to these purchases. A lot of it is strategic. We need that before someone else gets it. We need it to complete our portfolio. And the thing for Extreme I.O. particularly is I'm not sure publicly we all yet really know what's there. We know what has been stated publicly but I suspect there's rather more to the purchase than just the all-flasher rate. Yeah so the question is given your scenario that the demise of spinning disk has largely been exaggerated. Yes. Reconcile that with the economic impact. So is this largely incremental? In other words can it command the valuations without taking on the $50 billion spinning disk business because of that incremental economic value? Or does it have to eat into that disk and it's going to take longer than many people think? Well so there's two parts to the answer. The first is that it's incremental in the sense that you only need to sprinkle in a few percent to have a big difference. So I think it certainly drives down and many of us have spoken about this for a long time. It certainly drives down the likelihood of 15K5 channel being out there for very long and ultimately SAS as well. Because it's like putting some wonder liquid in your gas that suddenly turns your car into faster and does 100 miles to the gallon. And so you're going to buy that as long as the price is not too ridiculous. Can it continue to command extra? Absolutely for that very reason because it has that economic benefit. And the other point to your question is that again, you don't have to attend many of these conferences or see what many of us do. I don't know whether storage capacity demand is chicken or egg, do you? Are you right? I mean all I know is it's elastic. It's elastic and exactly. So if we can make the whole thing more economic by spending money on expensive stuff called solid state then actually we might grow the overall demand for storage because now we'll want not just pictures on our phones, we'll need 3D video on our phones. Or whatever else is next that we haven't thought of. Yeah, I had a great little side story but I won't take you there. Okay. Oh, okay, I will if I've got time. Gosh, what? No, it's just great. We all have that. Did I do a jump in Jack's yet? We all have that great story from when we were young and selling this stuff. And I remember I wasn't that young but back in the 80s I was selling to a bank in North London, swept their floor, actually, of IBM. That's convenient for the conference and replaced it with something else. Doesn't really matter. The long story short in your thinking it's long already was that this equipment, mid-80s, it's not that long ago, we had to close the street, crane it in on a Saturday morning, it was all very exciting, it was 10 gigabytes. And like a million bucks. Big deal, right? And I was out the other day, you know, sand disk. They had something the size of my fingernail which is 64 gig. And yet people will go into Costco or wherever they go to buy their card for their camera and they'll say it's too expensive, it's not big enough, I can't fit all my video on there. So to your point about elasticity, it isn't going anywhere anytime soon. We're running out of storage capacity all the time. So to teach a perspective on, Dave asked a couple of questions earlier to some of the guests at IBM. And I think one of them, I forget who it was, didn't get the answer or question, but you alluded to the fact that services revenue around the consultants is going to be big around big data and with flash of storage evolving. Do you have any perspective on how you see the channel partners emerging from these, from these solution sets? Because we always compare the client service, how about going back to the old days, back in the late 80s, really 90s, HP servers and all the server vendors were making a killing, but yet the guys deploying the ERPs in the software packages were making even more money. So a huge boom in the management consultants, back in the loyalties of the centers of the world, I go to Anderson Consulting back in the day, but remember those days was glory days, we're making a lot of money. So we kind of compare that now. Do you see that same robustness or frothiness? No. Is robust and frothy the same? No, one's healthy, one's, yeah. Oh, that's why I'm checking. Well, whichever one's the good one. I think robust is good, frothy is, depends how you, you know, bubbly. It also depends which side you're looking from, doesn't it? Yeah, I mean, it's certainly bubbly right now, but no one's, I don't see people walking in and saying, hey, I got your cloud for you in a box and channel partners are not really, it's not turnkey. I mean, EMC nailed it with respect with that. Right, right. I think we are going to head in that direction. I think the, as we become more commoditized as we get down to more in a box, what are you smiling at now? The camera. Oh, okay. Because it's a good answer. I like the answer. Well, no, it's not, it's a good answer. It's the right answer, yeah. There was a great quote from the gentleman, I can't remember, that Rochester Medical. He said, talking about infrastructure is the new ringtone. I just thought that was a really good quote, but to find him, thank you very much, sir, but there is definitely a propensity and a desire by users, coalesce and propensity, too good to buy IT in chunks. I think, again, not to be too ageist, but those of us who grew up in the fighting world of plug-compatible manufacturers and, hey, do I buy this disc or that disc? Users don't care. Again, the gentleman from Germany, the customer was talking on the stage, he was wonderful, he said, I love hardware, I love software, and then he said, no, I don't really, I just care about what it does for me. And that's true, that's a real user speaking. No one really wants to spend ages deciding which storage system to buy. Does it work? Does it meet the requirements? Absolutely, and although we all spend our lives talking about the intricacies of it, the importance is what it does for a business. Well, I mean, I'm smiling mainly because cloud can be viewed as a word about outsourcing. You're basically renting. So with that, come to services, and we're just tracking, we're trying to get the state of the market. But if I can come, so the reason I thought that guy's quote about the guy, that gentleman, that lovely client customer, was so astute is because, just think, none of us run our own, if you view infrastructure as a ringtone, which is really, I think, where we're heading, you don't go and then service your own phone line, do you? You just pick up the phone to whoever happens to provide it, be it the Comcast or your phone company or whoever, maybe you're just wireless, and you say, fix it. You're not interested in going and finding the wires and putting them together and deciding whether you've got the right electronic switchboard or whatever else you're doing. It's just a ringtone, I just expect it to be there. And it looks to me very much, it's not going to happen instantly, of course, it's not going to happen in the next five years, but we certainly seem to be in a decade or two of moving towards IT as a ringtone. Okay, Mark, thanks for coming on theCUBE. Really appreciate it, great to see you again. Great commentary from an analyst who's covering both EMC and IBM and all the top guys' storage. Thanks for your perspective and we look forward to having you on again. This is theCUBE, we'll be right back with our next guest after this short break.