 Live from the Mandalay Convention Center in Las Vegas, Nevada, it's The Cube at IBM Insight 2014. Here are your hosts, John Furrier and Dave Vellante. Okay, welcome back everyone. We are live day two wrap up of IBM Insight. This is The Cube, our flagship program where we go out to the events, extract the seal of the noise. I'm John Furrier, my co-host Dave Vellante and this is the end of our two day wall-to-wall coverage here at IBM Insight in the special digital experience lounge called Insight Go, which is a special new feature with IBM with their events where they have a digital lounge, a social lounge, trying to create a digital experience for their audience who aren't on site. And it really is a great, great start. You're seeing influences here, people are sharing their content, really trying to create an immersive experience around the digital. Of course, special presentation by The Cube, we're bringing that, the videos that rapid fire all day long and it's super exciting because we get to talk to everybody that's here, executives, entrepreneurs, investors, thought leaders, people in the trenches, product managers and folks in charge within IBM and also other companies. So Dave, really an amazing show and I think a couple of observations. One, you know, looking back at last year's coverage, a lot of the same themes. I mean, we pretty much hit the marks from last year in terms of checking the boxes. Same stuff but much more of a morphing effect. You're starting to see the cloud piece accelerate the speed of the change. You're starting to see the IBM executives really upbeat and one thing that I was looking for was what were the executives going to be like when they came inside The Cube? Looking in their eyes, getting a feel for their sentiment, their orientation, what were they thinking about? Looking through their soul and finding out is IBM still have that mojo back? They got a huge, huge, bloody bludgeoning at the earnings miss and that was really, you know, a public and quite amplified failure in the marketplace and I think, you know, I was trying to get a sense of what was that all about? Was it just a complete overblown? The press, certainly Wall Street, we trashed them earlier about kind of not getting it but I wanted to see what the executives thought, Dave, did they have the spring in their step and to me, my walk away is this. They're not budging. You know, just like the Twitter earnings we commented on earlier, those executives are in for the long play. Steve Mills was dynamic, energized, he was not mailing it in and even when I asked him the closing question, which we were supposed to wrap up the segment, he went on for a good five to 10 minutes on Watson. He was essentially engaged at a level I've just at a senior level is pretty impressive. So I mean, I think, I mean, I'm just not seeing any cracks in the foundation from the executive team and the people in the IBM ecosystem. Well, I mean, I think the miss was a big deal. I mean, I think it shook IBM a little bit. You know, IBM CEO Jenny Rometti had to come out and say, look, we're going to backpedal on guidance. I, we talked about this with Ray Wang. She, I think was handed a tough deck. The deck that she was dealt with was not one that she crafted, right? It was the previous administration and she can, and she's not blaming them. You know, she said, okay, I'm going to try to execute in this strategy. I think maybe we can pull a rabbit out of the hat but I think she made the right move saying, all right, we got to pull back and we got to put the, the wood behind cloud, big data, engagement, mobile first and those businesses are big. Like Mill said, they're multi-billion dollar businesses. Problem is when you got a hundred billion dollar company, a bunch of multi-billion dollar businesses can't offset the declines in the highly profitable traditional growth areas. And well, I mean, IBM did get some negative press out. I was just on the phone today with a venture capital since Silicon Valley and you know, I mentioned I was here at the event and oh, I hope IBM, like even the sentiment is embedded so that whole rhetoric really was bad for IBM and I think it really is a bummer for them because it really was misjudged and certainly Wall Street amplified that with the earnings missed. But I got to tell you, the IBM is not the culture that I see that does a lot of, you know, cloud washing or snake oil like pitches. Certainly they're marketing, they got a marketing DNA, don't get me wrong. But good marketing is just, you know, putting the sizzles of the steak as we always say and that's IBM's never been a head fake kind of company. So I think if you look at their vision, go back three years and look at what the executives were talking about and what they're doing today. It's basically the same thing. It's cloud mobile and social. Steve Mills call it CAMS. You know, cloud analytics, mobile security and social really has not deviated off their core vision. Now they've reorganized their resources. I was talking to the product management guy with Watson analytics and you know, he was saying even though it's in beta they have really big technologies in Watson. So I think IBM's going to take it in the shorts a little bit on the PR. They might lose some margin with the transition to cloud. But I think on the other side of that chasm, if you will will be massive ramp of leverage. And I think that's going to be the big bet. That's the bet that I see IBM making. Well, I mean, IBM came out of the downturn and roared. And yeah, some of that was financial engineering, a lot of stock buybacks, but the company performed was generating a lot of cash. Stock was had behaved very nicely coming out of that. And then it started to go sideways and you could sort of see, all right, you know, maybe if there's something bad that comes out it's going to get crushed. And that's exactly what happened personally. I think that's a good thing because I think the expectations were too high, especially for a company in transition. Wall Street doesn't like companies in transition. I think in many respects it was ignoring the impending transition. Oracle's going through it now. HP has clearly gone through it. I think EMC is another one that's going through it. SAP is going through it. So the test of these executives is how well they navigate through these transitions. And Ginny is, it's up. Now she's going to own this strategy. It's the three envelopes, right? She has to deliver on this one. And she didn't blame her predecessors. No, I think she was, this is clearly like, okay, I inherited this. I'm going to do a reset on all expectations. Just set the table. And she didn't say that. She didn't say, oh, but that is what she's doing. She did inherit a deck of cards that was a plan that she contributed to that plan in fairness. I mean, she was running strategy before she took over. She needed that grenade to blow up. And that's what will happen. And she finally now can say, enough's enough. We're going to go with my plan. And I think that plan is solid. If you look at their strategy, it doesn't make sense. But the struggles aren't over. So the key now is for IBM to stick to its plan. It's got the right playbook, I think. It's just, it's got to have the patience to go forward with this strategy. And of course, it announced today it's adding $5 billion to its buyback program, which is going to help. Problem with the buyback. I think that's well overblown. People, people criticize that. I mean, that's the game plan today. You've got to do that. It's not a negative, but when New York Times really got that story wrong, Andrew Sorkin, completely wet on that, completely in the dark. Well, they sort of are. If you're watching this, you know, I've had a debate with you if you want. People want to argue all they're putting money into buybacks instead of R&D. All right, my VM spends money on R&D. You can't criticize IBM for not spending money on it. It was a cheap shot at IBM. And you know what? It's just poor analysis. Let's go to the house right now and feed him up. That's poor analysis, okay? IBM spent, it's not like they're saying, okay, we're going to rob. What's the difference between that and dividends? I mean, so what? So increase your dividends. How do you want to control it? You want to control the float. Goodbye, and this is the financial move. Just like hedging for R&D purposes. So if you want to watch analysis, go to day one with Ray Wang, myself and Dave. We get a big drill down. Good 15 minute segment on the IBM analysis. Dave, let's move into- I want to add one thing if I can. So this notion that we've talked about, but this digital matrix where you've got infrastructure as a service, and you've got security, you've got applications of engagement, and you've got data as horizontal transports. I mean, I think IBM's actually putting those things together. And the other wild card is Watson here. I think Watson, as Mill said, has tremendous potential. So to the extent that IBM can craft its messaging and go to market story around those, it's not there yet. I think there's still some confusion around Bluemix. I think there's some traction or lack of traction with the developer community that IBM really has to hit. They're trying hard, but that's where I want to see progress. The true test for Bluemix is do they pull Amazon people over? Because Amazon has success with their integrated stack, and we're going to be at re-invent next month, and Bluemix has some work to do, and they know that. I don't know, John. I don't know if they have to pull Amazon people over. Do you really think that? I mean, I think there's a big unwashed opportunity to just take the enterprise and bring them to keep them from going to Amazon. You see what I'm saying? Keep them from going to Amazon. This is the issue. Developers are key right now for Bluemix. It's not so much of winning and competitive displacement with Amazon. A lot of those guys are going to go bare metal anyway as they grow, and there's going to be a role for that public cloud. But the problem is developers love Amazon. No one says, I'm going to go to Bluemix. That's just not happening. I mean, no one's, and they're, you know, get trying to onboard. But to your point, it's got to happen. No, well, they're working hard to onboard developers, but that's just not happening fast enough. But Watson is their key to that, right? If you take the Watson analytics platform as a development platform, that's unique to developers. I would go hard after that strategy. No, you know what I'm saying, though? Yeah, you really. No, I mean, if I'm a DevOps, if they want to target the dev, they should go hard with Watson at those developers. That's something that nobody else can do. No, no, I think that's a great strategy. And that's the tip of the spear. I think you are 100% accurate on that. The candy to lure them into the Bluemix world is to have one, a good Bluemix platform that means everything's going to be baked out. And then two, you got to sweeten the pod a little bit. You got to sweeten and offer it with Watson. I mean, I think Watson's a nuclear weapon that they haven't brought out. When they drop that A-bomb out there, you're going to see some devastation. Developers, that's the ecosystem that they have to build. And that's, nobody's got that, nobody. Let's summarize the show now, Dave. Let's talk about what we liked in these interviews past couple of days. We had some great conversations. To me, I think the big takeaway was I love the context computing. I love that notion of the geospatial with Jeff Jones. I think this notion of false positive engines is really a lot of the big data stuff that's spitting out a lot of bad analysis. And I think having better use of resources to do better decision making and better predictions on with finite resources is an awesome thing. I think Jeff Jones has certainly got an amazing opportunity there. I think this inflection point versus shift was a great point by Bapachiano yesterday. That was a really genius point to highlight that. And that was one of my highlights of the show. The data changes, data comment, speed. This is a speed game at this point. And I think that Ray Wang pointing out the future of IBM is key. Steve Mills in the cloud on premise hybrid in between. We hear that every show. Again, my big takeaway from this show is three major customer investment areas. Okay, consumer customer experience. One, two, operational asset leverage and optimization efficiency. That's the supply chain, process improvement, stuff they already have systems of records on all that other good stuff. And three, risk and security and governance. Those three things are absolutely the most critical issues on the table today where dollars are behind it with real specific business outcomes tied to it. I think you can't play in those three areas, Dave, with Snake Oil. You need to be there with real product, real outcomes. And the rest, the fun stuff is streaming with context computing, the cognitive computing. Love this vision. This vision of that is really highlights. And you know, we heard two smart people validate our crowd chat opportunity. That is about the cognitive piece. That is the context engine. And it's just really a super exciting show around data. It's awesome. I'd add a couple things. So Kirk Bourne from George Mason University, the Lord of the Things, right? We've got a lot of talking to- The Twin Powers. Internet of the Things, right? The Twin, all right. I agree, Pichiana, it was great. Mills had the quote of the week off camera. You had told him that Ray Wang said that he and Larry Ellison were two of the chess masters in the software business. And Mills said if I had Larry's cash, I'd burn mine. Which I thought was the quote of the week. And we had Katie Lindenhall on who was really an interesting TV personality. We've had a number of TV personalities on. All right? We've had Richard Schlesinger has been on. He tweeted me the other day after the 48 hours segment he did that was kick ass. We've had Nate Silver now with ESPN. We've had, who else we've had on? From Infor. Reggie Jax has been on. Reggie Jax has been on. We've had David Pogue. Pogue's been on. Who else? Infor. Entertainment Tonight. I wasn't there, you were there. I forget. Anyway, we had a lot of personalities. But great guests. Help me. No, maybe it wasn't an entertainment tonight. I don't know. And he, Cho Sa was here. And he went down. She's the personality. She's now a Cube star. And having Brian Fonzo on. Having this new influencer thing. Deborah Norville. Deborah Norville. Dave, you're getting old, man. Sorry. Still on two days. Get some solid state memory in your head there. A little flash. That's right, Adam Silver, Nate Silver. So it was good to have Katie on to join those folks. Well, a great event. Derek Shuttle from Cloudant. I really liked his story. Yeah, I mean, awesome stuff. We just want to see how long he stays at IBM. You know, IBM people, they do acquisitions. They stay around. The EMC's got that same thing. Maybe the top guys leave, but they vest and they bail normally on these startups. All right, John. All right, good working with you again. Guys, thanks for the team here. Greg, Andrew, Patrick, the whole team here and all the folks out and back on the ranch. SiliconANGLE blogging and Wikibon doing all the analysis. And of course, the crowd chat team, Danny, Drew and everyone else working on the crowd chat. We appreciate it. That's a wrap here at IBM. Insight Go, great new digital experience, awesome opportunity to bring more great content to you and we're proud to be a part of it. This is theCUBE signing off from Las Vegas, live at IBM Insight. Good night. See you at the next show.