 Live from Las Vegas, it's the Cube. Covering IBM Think 2018. Brought to you by IBM. Welcome back to Las Vegas, everybody. IBM Think, the inaugural IBM Think. This is the Cube, the leader in live tech coverage. My name is Dave Vellante, and I'm here with Ed Walsh, the general manager of IBM Storage. Ed, always a pleasure, my friend. Good to see you again. As always. Wow. What a show. It's amazing. It's fantastic. 30,000, 40,000. As I said to John, too many people to count. Hard to get through places, right? Just to get here, it was hard to get here. So we're going to get into your business. You're not a newbie anymore. 18 months, right? Second time at IBM, so you really know the ropes. But let's start off with Ginny's talk. Sure. You heard our riff, John, and myself at the top. I really like her style. I was poking at some things. But what was your take on her message to the audience? Well, just consistency. So as an outsider to come to IBM, the power of IBM to actually change the environment is pretty good. But putting smarter to work and really focus on business is where we're core. I think it's powerful. But it also allows you to have the overall message of IBM coming. Innovative technology. Now we're going to talk about data and cloud. Innovative technology. An industry split on things. And then really the trust and security piece. That comes together. Now, what we talk about is how do we in a data era move people forward? And I think it's a powerful message of, I heard you earlier, especially about the power of the incumbent. If you look at this, global 2000 clients that we deal with are looking to user data in a more aggressively in advance themselves. And that's where we're perfectly positioned. Even as storage, and we'll get back to storage in a second, but it all comes back to data, which I can include as storage. But it's leveraging the data for their competitive advantage. And doing what they maybe were slow to do. The early, the phase one of the data era was really the consumer companies really taking over, right? We'll talk about the good tech versus bad tech. Really, now we believe it's the rise of the incumbent, which you messaged pretty well. Because they do have all this data. Maybe they're slow to adopt how to use that data with the right partnership with IBM. We can do that. And that's where we're getting the most traction with clients is how do you actually get data driven in your business? It's not as easy as you want it to be. And it is about technology, but it's also about human capital as well. You talk to a lot of customers you have for years on both sides of the fence. You've been talking to customers about disrupting companies like IBM. And now you're a part of IBM and you're helping the incumbents not get disrupted and maybe be the disruptors as Ginny was saying. The reason why I was poking at that a little bit is because it is all about the data. And if you like I mentioned yesterday, look at the five top companies in the U.S. in terms of market cap. Six, $700 billion companies. We know who they are. The Amazons, the Facebooks, the Googles, et cetera. The premise that I have is they have data at the core of their business. And they've organized human expertise around that data. Whereas historically, we was talking to Peter Verst about this the other day, he said historically people have organized humans around their assets which might be plant and equipment. It might be the bottling factory or whatever it is. And so how do companies go from that distributed, bespoke silo data model into this core data model? That's a cultural change. It's a technology change. It's a people and process change. What are you seeing? Now we saw some examples today, RBC. We saw Merisk. We saw Verizon. I'm a little more skeptical on Verizon. Big telcos have a lot of infrastructure. But what are you seeing with companies? How receptive are they? Are they sort of sidecar-ing their digital transformation? Or are they jamming it right through the center of the heart of the company? So everyone's on a different maturity curve for sure. So we see the leaders and the laggards, right? And people in between. But everyone desperately wants to do it. So we spent a lot of time saying with the clients, let me show you how others are getting more data-driven. On-prem, we focus a lot on private clouds in my division, but also how that's multi-clouded nature. Because you do have to look at the overall environment and how to look at it. And everyone has their own vision. But how are they going to go from where they are to where they may get to? To get them there in the right steps takes actually the girth of an IBM with their technology, with their consultant or capability to do that. It does take innovative technology. But to get clients is really sharing, we come with this, really we see three patterns on premises that are people leveraging to get to a multi-cloud. But really, how do they modernize and transform their current environment to do it? So we spend a lot of time explaining what other people are doing so that they're, because some of them are laggards, everyone wants to be data-driven, they've tried different areas, and now how do we make it easier to do that? We're also making investments to make it easier to do that, right? So little things like machine learning, deep learning, you know, that can be hard stuff. You can wrestle with a lot of the tools in building models. So we're doing simple things like Power AI would be an example. In the environment where we bring these open source tools and make it very easy for you to get your team to start focusing on business value, not the technology components. That's just making it easier, allowing maybe you'd say the slower, right? So phase one is the largely consumer disruptors, disrupting it because they're moving just much faster than maybe the incumbent was. But we can make the incumbent get nimble, which they can with the right technology, but also it's human capital as well. We can get there. So we're doing a lot, not only in the infrastructure side, what you can do in public cloud, but private cloud. But leveraging that system record data is kind of hard. So it's all about tools and being more agile. But also it's about making it really simple to do some complex things. I gave you the AI. I'll give you another one. People want to do app modernization or native cloud apps. They want to refactor applications. They want to go to containers and microservices. Yes, someone, how's that going? And you'll say it's pretty hard. So what do we do? We come out with IBM Cloud Private. What is that? We've taken the challenge out of putting all these tools together. It's a Docker Kubernetes Cloud Foundry, but also our operational layer to make it easy for you to deploy that. And then now you have complete portability between different clouds, multi-clouds, including IBM's cloud, but you can do it on-prem as well. But now what you can do is you're not focusing on getting all the components together. You're driving your value, which is where typically all these things, they focus so much on building a data lake and actually getting, how do I get the data lake up running compared to how do I actually make sure I'm doing the right data, the right business? So that's where I think you see IBM focus a lot of innovation. It might not seem like, you know, that doesn't sound like storage to me, right? But it allows us to help our clients move forward, and those are the things holding them back. And then storage is about having, you know, API-based automation, which you're not thinking about storage that way, but you need to do it to fit into this new world. But you're going to see us do more and more. So when you're talking about putting smarter work, we're trying to make it dramatically easier to get value even for the incumbent, which maybe you could say they were slower than all the right skills or they had to do some things. I think we're going out of our way to build the right things. Well, my takeaway is you're allowing the incumbents to get value out of their existing advantages. Right. And they're existing, they're talking about app modernization. I mean, they're making a lot of money on those apps, and if they can modernize, they can use that as a competitive weapon. I want to talk about your business. Oh, sure. You know, people, the people don't know you. I mean, you've done a bunch of startups. You kind of have the mightest touch that you're a technologist. You really understand deep technology. You're, I'm told you're a tough boss, but a fair boss. Oh, okay. You're demanding. You know what it takes to win. IBM Storage, four consecutive quarters of growth. And not just like 0.05% growth. You're talking about substantial, you know, meaningful, high single digits, mid single digits. And the market's growing at whatever, two, three percent. You're gaining share in a very large market. So, give us the update on your business. How are you doing it? So, you nail it. So, a lot of people highlight, you know, after years of not keeping it on market. We went for not only growing, but we grew all four quarters. But more importantly, we grew seven percent year to year, which the market's grown about 0.9%. But it's really, you know, it's also broad-based, so it wasn't a particular product. If you look at the portfolio, every reported segment we have internal externally grew for the year. If you look at geographies, 6,000, 7,000 geography grew. The only jerry that didn't grow for us was China. And that's not, it's growing on software. It's just not growing on hardware because of some of the unique instances dealing with, you know, business in China. But if you look at broad-based, it's not a particular thing. Our portfolio's doing well. It's really how we're approaching the customer and it's resonating with clients. And then it pulls together the whole portfolio. So, we have the broadest portfolio, which, you know, we talked about early on. Is that a, are you going to simplify that? Or is it too much? I actually think it's advantage because if you're trying to help people, and this is where the advantage is, all our clients are challenged. We're talking about being data-driven. Now that's a big challenge, but also they're challenged with budgets and other things for efficiency. How do you get from where you are, where you need to do, or you get to, and then make the right steps? You need a proper portfolio to do that. So, I think the biggest value is we help people get more data-driven. A lot of that is showing what other people are doing, walking forward. And it's very into modernizing and have the right agility and infrastructure. But that's where it's really resonating with the market. And then we're focusing on offerings. So we're probably the most competitive offerings we have, hardware and software, but also the right go-to market. How do you have the right messaging? We talk more about modernizing, transforming, helping clients free up critical dollars but resources so they can transform and do that in a concrete way. That's what you need to do so they can actually transform. And then we help them with how to be truly data-driven. That message really plays because all of our clients, big and small, are just challenged that way. And what our competitors are, to be honest, more pure storage players. I think I've told you a couple of times the reason I'm happy to be here is you think of what IBM shows up can do to help you. And I think storage and helping people into the next data-driven era is a big boy, big girl game. You have to bring a lot to bear. We're going to talk about analytics, machine learning, different tool sets. It's not about the next array. But underneath my portfolio, we'll go toe-toe with everyone, product by product. And that was just a lot of offering-by-offering work that had to be done. But we're in a much better shape now, and then you're going to see continued innovation through this year. Well, I have to bring in the competition because you're stealing share from the competition. If I'm hearing you correctly, you're saying, Joe Tucci used to say we'd rather have overlapped in gaps. And that's a philosophy that you seem to be taking. EMC now under Dell's ownership, taking a different philosophy. They seem to be consolidating their portfolios. They seem to be going for more volume plays, which is consistent with how Dell would operate. So I wonder if you could compare and contrast those sort of two philosophies. Am I right that you'd rather have a broad portfolio with no gaps than have gaps and not being able to meet market demand. Is that fair? Yeah, I think you'll see us be disciplined in the portfolio, but my point is someone's really trying to, you're trying to really help someone get from A to B in their environment. One product doesn't do it. A couple products don't do it. You do need the full solutions that do it. And I also think it's out, not only what we can do with storage, what we can do with systems. You know, you talk about data-driven. I bring in the overall group analytics. We're number one in analytics, et cetera. That's where you start to get, where we show up, it's a different value proposition. That's where we're winning. Now, we also still get involved with, hey, I'm going to, it's U-verse, EMC, array by array, you know, winner takes all. So we do that all the time and we'll stand by every product. But you said, well, you use Tucci, so conversation with Tucci has been reported, but he said to me, which was, you know, what do you fear most is, if IBM ever got to act together, he said, it'd be scary. All we're basically doing is getting IBM's act together and then from clients are responding to it because they're actually getting a bigger value and that's changing some of our relationship with the clients because they still want to focus on this product and that product, but I think that's really what's affecting the change in the overall business direction. Well, getting your act together involved a lot of blocking and tackling and still does, I'm sure, but it also involved a focused effort on taking R&D, pinpointing that on what the clients needed, getting products out. I mean, when we first did theCUBE with you guys years ago, it was hard to see a rapid cycle of new product innovation coming out. My sense is that's changed. I see more announcements. I see a lot more announcements. That makes products that people can buy. It drives revenue, it drives transactions and it brings partnerships. Is that a fair assessment of what you guys have done? It comes back to team, right? So we'll go to the high level team offering and go to market, but you don't have the right team. So basically, the first thing you do, you get the right team. The right team will make the right call. So I built inside IBM. The team I have now is not the team I started with, but it's really getting the right people that are knowing their business cold, inside, outside, that know storage, that can really drive that. And then the decisions become pretty easy. You've got to have the right vision. So the vision is all about having a dynamic vision that people understand and can get feedback to and it does outside in. It's what's going on with the customers that really matter to us. We get everyone around that. You have an open culture that that feedback loop down to every IBM, right? I need to ignite the IBM. I'm talking about like a third party, but it really is an amazing culture that if you give them the right direction, they'll walk, they'll drive for walls. It was probably my easiest turnaround I've ever done with a right vision. And then also at this size, companies a lot about having very agile operations. So I spend a lot of time on things that you're not going to talk about in the queue, but what we're doing cost and quality and all the different things we're doing is serviceability that really do show up as far as MPS. So we do a lot of things on a net promoter score or every time we sell something or service something, we get feedback from clients. And they're filling in these verbatims. Boy, that is rich information that is going directly in a product. I can give you a couple of examples. That goes directly into it. So what we did is, so one of our products is Spectrum Protect. Again, I'm not going to try to go to it, but might as well. One particular offering that I have is a great offering, but it's been around for a long time. TSM turned Spectrum Protect verbatims from clients. I just need it with simplicity, agent listening. And they came up with three or four different things that had to be done on a particular environment. So guess what? We deliver that. And literally, do this, get that. You listen to clients. We deliver that with quality. You put it as part of the overall Spectrum Protect. All of a sudden, transaction revenue goes up by 6%, which is a big revenue stream to just pop in a very single quarter. So we're going to do that, but that's like an offering by offering work that has to be done. And you have to have the right team to do it. So I would say the credit goes to the team and the IBM team that really responded to it and lifted it. I mean, 10 years ago, that would have taken a year and a half or more to actually get into the product flow, right? It is fast. Yeah, so, okay. But the other thing I would observe, I've been hearing from companies like yours for decades that, well, we're going to use the adjacencies in our other business to compete with the leaders. And it's never happened. It's starting to happen now. And presumably because people don't care as much about the speeds and feeds as they do about transforming their business and digital business and all that stuff. So it seems like you're able to leverage that. So let's talk about some of those other trends. Cloud. That's the other big competitor, the public cloud. You've got a cloud option, but private cloud. We've talked about true private cloud. I think you're familiar with our research there. How is that going? Is it a tailwind for you guys? Is it working? So your research on true private cloud, I use it a lot, by the way. That's the idea. And I'll play it back as having all the agility, flexibility, but also cost models of in the public cloud that they want to do on premises with any time being on leverage of public cloud resources, APIs, resources as business demands. And that's where my clients are looking to drive it. They want to have all the flexibility. They want to be able to go to cloud for particular things, but it's not that it's lift and shift. So we spend a lot of time. That is where we're getting the most traction. And we spend a lot of time saying, this is what we're seeing on premises with true private cloud. And this is how they're going to multi-cloud it. We do show them all of our solution sets are now available in not only IBM, but you can sign the other major clouds because we do believe it's truly multi-cloud. But the biggest thing is helping clients understand what they can do along that maturity curve. And I think that's where clients really get the benefit of engaging. And the conversation does always come to something outside just storage. It comes into a new server or machine learning, deep learning, how to be data-driven, what we're doing as far as containers. We're not just saying our storage works for containers. Hey, are you wrestling with that? Let me give you a distribution. I'll give you IBM Cloud Private, which is a distribution and allows you to literally in a matter of 40 minutes be up and running and then focus on getting a value. But that's my storage message. You're saying it's not storage, but that's exactly how the clients are responding. And they need a partner to help them do that. It's not only having the vision of where they are and where they need to get to data and cloud vision, but then they need someone to actually help them get there. And some things that don't seem like hard storage things really make a difference if a client's can get the value out of the data. Well, as Tom Rosamilia says, infrastructure matters. It's interesting to see IBM's financials. It's the Z power in storage. I think a lot of the momentum. It's hitting the market where it needs as far as the capabilities, right? You think about security on what we're doing in the mainframe. It's just, it's amazing the capability you can accomplish there, right? So same thing on power. The ability to do what we're doing on AI. You can do things on our infrastructure you just simply can't do. And in analytics, speed actually really does matter. Bandwidth does matter. And of course storage fits in all that. Well, for 30 years I've been hearing how hardware's dead and infrastructure's dead and it just keeps bumping along. And sometimes you see a little spike. You know, you have to have infrastructure for AI and this cognitive world as you guys call it. So Ed, great talking to you. Thanks so much for coming to theCUBE. I wish you continued success. Thank you very much. Appreciate the time. All right, keep it right there, buddy. We'll be back with our next guest right after this short break. You're watching theCUBE live from IBM Think 2018. We'll be right back.