 Live from San Francisco, it's theCUBE, covering IBM Think 2019, brought to you by IBM. Welcome back to intermittently sunny San Francisco. This is theCUBE, the leader in live tech coverage. We're here at day four at IBM Think. My name is Dave Vellante. I'm here with Stu Miniman, John Furrier. It is also here. Wall-to-wall coverage Stu, the second Think, first big show really of the year at Moscone, the new Moscone Armando Ortiz is here. He's the vice president and partner for mobile and extended reality leader at IBM IX, an interesting part of IBM that you may not know about, Armando. Welcome to theCUBE. Thanks for coming on. Yeah, thanks for having me. Yes, so tell us a little bit about IX. So IBM IX is a part of IBM services. We focus on user experiences, whether it's a consumer experience or an employee experience. And the way we look at it, user experience is really kind of stitched together and allow you to unlock the value of all the technology investments that companies are making. So you guys aren't making headsets, or are you? No, we don't make hardware, we just put hardware to work. So talk a little bit about the sort of state of whether it's augmented reality or extended reality. Lay out the terminology for us, if you would. Sure, sure. And as part of the role I have, I lead our mobile practice as well as the extended reality practice. And this kind of all relates together. We use the term extended reality to kind of encompass all of the different technologies along that spectrum, from augmented reality to mixed reality to virtual reality. And of course there's a lot of technologies, whether it's the glasses on your face, like the wearables, or it's in your hand, as a lot of mobile platforms today like Apple's ARKit and Google ARCore allow you to have AR experiences within your mobile apps. Yeah, I wonder if you can expand a little bit on that. We're all ready for the rollout of 5G and that's going, you know, it holds the promise at least for a lot more bandwidth and a lot more applications. And that's one of the linchpins we understand to kind of make your world more of a reality. When do we see that rollout? You know, what devices are going to happen? You got a preview of the next iPhone for us? I certainly don't have a preview of the next iPhone, even though I do lead the Apple partnership for us in North America, the Apple IBM partnership. When you look at 5G, obviously some of the use cases for extended reality in enterprise are around field services. And 5G will have an amazing impact on the ability, not only because of the bandwidth, but also the low latency that you have for 5G. So we're excited to see that rollout in the different markets around the world and, you know, the pilots and things that are starting this year. There are going to be a lot of great devices and I think for handsets all the way to the wearables, it'll really allow us to put more use cases on these devices. Can you walk us through some of those use cases? Any specific customer examples you have that might make our audience understand a little bit more what's really available today? Sure, I mean, in the XR space or in the extended reality space, there's a lot that we learned through what we've done in mobile for years. I mean, even our Apple partnership for the past five years and things we've done across the 16 industries we work on. But the initial sort of wave one use cases that we are really seeing today kind of fall along these categories of work related use cases like that are in field services, training related use cases that go all the way from virtual reality, immersive training, like teaching someone how to do something in a dangerous situation or you want to simulate that all the way to on the job sort of training and step by step guidance that you could get with AR. Step one, attach the cable here, step two, check this over here. You know, those kind of use cases and then into use cases related to shopping and retail. If you look at what augmented reality is going to do for shopping and retail, allow people to assess sort of fit and purpose of something that they want to buy. Does it fit in my home? Does it fit in my life? And then also even in the stores as people in retail sort of navigate a store they can use AR to help understand and add all that metadata to the in-store experience that we've all gotten used to in our online experiences. And the last broad category, we sort of call it share ideas or sharing of ideas, which kind of spans the gamut from collaboration to even having like AR brochures and augmented reality tools to help people understand a product or a service that you're offering. Imagine that we could just kind of spawn a piece of equipment here on the table, walk through it and help understand how that piece of equipment's going to help your business. Oh boy, you're giving me flashbacks. I remember IBM had a huge initiative in like second life and it was like, come build an island and we're going to do recruiting and things like that. So tell us why this generation is going to be better for business and not have everybody put some money in and have it stolen by us. You know what I'm saying? You know what I'm saying? It's funny you should ask that. The second life topic actually came up was the one I was speaking to yesterday and it's come up before. I think there's a significant difference between what second life was trying to be and what extended reality is going to be and it already is. I mean, when you look at extended reality today, I think one important thing to think about, this is not future tech, this is not some sort of dream of sort of like a ready player one type of situation, but more it's looking at real enterprise use cases that are already driving a value. Time savings on inspections, productivity enhancements for people assembling, consistency and increased safety. All the key performance indicators and value drivers that we had for mobile. So there's a real path to business value and the use cases are much clearer than it might have been in the days of second life. Less mistakes, less rework. Armando, what kind of infrastructure would a consumer need? You gave the example in retail for instance. What kind of infrastructure would I need? Am I just, is it just my mobile phone? Am I going to wear headsets? What does that look like? So when we talk about extended reality, we tend to keep one foot in today and one foot in the future because it's changing so fast. When you talk about retail, there's the sales associate side of things that might be helping you decide an automotive. Maybe you're looking at configuring a car right in front of you or in a retail store. Maybe you're looking to look at a piece of furniture or something that's not on the showroom floor. Now those experiences can start today with tablets and iPhones and other devices, but we see also as well devices that people be wearing wearables that are available today and that trend moving the glass kind of from your hand to your face is going to be something that's going to really be accelerated. So this is maybe how a piece of clothing will fit, what a couch might look like in a particular room. Is that right? And you would envision that people will purchase this infrastructure for a variety of use cases, not only to see how things look, but maybe there's gaming, maybe it's a multi-use kind of environment or not necessarily, is it more specialized to you? No, absolutely, it's important that it's good that you brought up sort of gaming as well, because obviously we all know gaming has been kind of the forefront for virtual reality, but when you look at gaming and entertainment, those are going to also include many use cases. When we look on the enterprise side, we're kind of focused on those other wave one use cases, but I also expect in that sort of share ideas category I spoke of marketing and sales activities will also include AR experiences to help people understand the product or service that you're positioning. And what's the state of adoption? I remember if you always joke about Google Glass and remember the movie The Jerk with the Opti Grab and the guy was like cross-eyed. So that didn't take off, but what's the state of hardware and hardware adoption today? So I think what's unique about this technology and what's happening now, the technology we already all have in our hands on our mobile phones is already there and that's where you're going to see it happen first. I think the number is by next year, like 3.4 billion phones will have an AR capability. So the technology is already with us and the next sort of technology set that we're talking about is getting to the wearables. And of course we see things today in the VR space that's much more available in the consumer side, things like the Oculus Go, but in the enterprise space, you also have headsets from many manufacturers that maybe grew up doing things in the military that are now being more commercially available. Think of like someone trying to repair something that needs to be hands-free. You're seeing those technologies readily available in the enterprise. All right, so tell us about how AI fits into this new world. It's a great question. If you think about it, it's really kind of a really great combination. You take XR extended reality, so whether it's AR or VR and you add AI to it, you kind of give AI the ability to kind of enter the 3D space. So as you think about AI solutions that we had in the mobile world where you might be using AI to solve a problem or diagnose a problem, visual diagnostics or acoustic detection, AI can kind of give sort of superpowers to an employee. And at the same time, we see that the experiences that we have in the extended reality space get really enhanced because you now have the ability to democratize expertise with AI. You take all of the expertise of your organization and that one technician who's only been there for 10 days now has the power of your entire collective knowledge. What about privacy? Any time you hear some of these and I think about, we're going to have wearables out there, there's concern about, facial recognition is going to be everywhere, like privacy is going to be invaded. What's IBM's positioning and where does that fit into this whole environment? Yeah, of course we take privacy very seriously. And when we talk about our AI and Watson, your data is your data. And if you look at some of the things, I mean, you'll make decisions, enterprises will make decisions on the same way they did with mobile devices. Is it okay to have a camera in this environment? And if I do have a camera in this environment, what's my cloud strategy and where am I going to host this data to make sure that I have not just privacy but also IP concerns considered. So all of the same things we've learned in the mobile world are going to apply to this. And it'll get even a little more important as you think of the different types of sensors that are required to make these experiences happen. So I wonder if you could help us understand how much of the prerequisites to do things like a technician actually, troubleshooting a problem. Many of us have seen, you know, we put on the glasses and you walk around a shelf floor and you look at a new, you know, system or something. And it's really very cool. You can look inside and inspect the different layers. What has to be done? I mean, I'm inferring from what you're saying that a technician would be able to inspect live real-time a device and identify problems on that device. So what has to be done? It has to be instrumented. It's going to have, you know, cameras installed. What does that infrastructure build out look like? Sure, I mean, when you look at, let's take the technician scenario for a moment and kind of unpack that. When you look at that, there's a couple things that are already happening. Like in a lot of major pieces of equipment are instrumented. So you have the Internet of Things data, sort of the data streams coming off of that. How do you make that available to that technician in the moment? Sort of thing is the vital signs of that piece of equipment that you might be operating on. So having all that information, like temperature and all the things from an IoT perspective, that's one angle of it. But the other side of it really is, when you think of failure of equipment, usually at some point, there's a situation that technician may not have encountered before, but maybe someone else has. And maybe you've already had a bunch of close tickets on that three years ago. So having all that information available and using cognitive processing to kind of navigate that unstructured data, that'll let you kind of navigate that. And voice will be a part of this interface as well. I think voice is an important part because you're going to be hands-free and you're going to be having a dialogue with Watson, let's say, to help diagnose the problem. How about healthcare? It's not something we've really talked about a lot. Just in terms of applications, whether it's for the operating room of the future, remote guidance from a doctor, training. Do you see those kind of use cases emerging? Yeah, absolutely. All the way from training through execution of surgery and other things. And this is where the 5G topic really comes into play because low latency is really required if you're talking about surgery and other things like that. Give me a few minutes. Give me a minute, we'll get that round-trip of that signal going back and forth. But I think when you think about the VR side of things for training is immensely powerful, the AR side for during execution of procedures will also be powerful as well. And it comes back to that general theme of democratizing expertise because now one expert that's physically in this part of the world can serve many people that need their services around the world. It sounds like there are a lot of uncertainties in terms of how this is going to evolve. First of all, is that a fair statement? And given that, notwithstanding that, can you give us a sense of sort of expectations for how it will evolve and the adoption levels that you expect over the next two to five years? Five years is a long horizon for this technology. Too long, perhaps, okay. So we're talking, what's more fair? 18 months? Let's talk for immediate, yeah. I mean, I think when you look at, there may be some uncertainty in terms of which use cases will drive the most value, but there are already many use cases that companies are publicly sharing information about. Like some companies, especially inspection use cases, there's a company that published 96% savings on time because really you're using AR to document, okay, inspect this point, this point, this point, this point, assembly use cases, diagnostics with AI and AR working together. All of these are already happening. So what I think is going to happen is enterprises are going to be able to more and more easily justify the spend to make these investments because the ROI is rapid. Just like the ROI in mobile was rapid for enterprise, the ROI in XR will be extremely rapid. Armando, for people that didn't come to IBM Think, give them a little bit of a taste of what they missed from an IEX standpoint, some of the conversations that you've been having. Yeah, when we look at, IEX across the IBM Think, we've had a lot of conversations and a lot of sessions around how experience is really driving business value and also around marketing technologies and marketing services and all of the things that relate to experience on the consumer side and the employee side. We've really enjoyed some great showcasing of our client stories and the works we've done and everything from mobile to commerce to a marketing platforms to Salesforce across everything we do in the IBM services part that we're in. How long has this business been around? IBM IEX? Yeah. IBM IEX has been a part of IBM originally since the 96 Olympics in Atlanta and I've been with IBM about 25 years and this space has kind of really evolved in terms of the position of user experience and design. If you know how IBM has become really a design focused company and you look at enterprise design thinking and everything we do, so this is really kind of a part of our business that's really become focal point as companies start thinking more about design. Well, it's been a long time but it's certainly not mature but it's a revenue generating business obviously. Yeah, and a very high growth part of the company. Awesome. Well, Armando, thanks so much for sharing this part of IBM that's not well known, really exciting futures and we appreciate you coming to theCUBE. Thank you very much. You're welcome. Appreciate being here. All right, keep it right there everybody. Stu and I will be back day four. IBM think we're at Moscone, stop by we're at Moscone North, I'm Dave Vellante, Stu Miniman, John Furrier's here. We'll be right back. You're watching theCUBE.