 I think you're already starting to see that in the industry. Live from Las Vegas, Nevada, extracting the signal from the noise. It's theCUBE covering IBM Edge 2015, brought to you by IBM. Hey, welcome back everyone. We are here live in Las Vegas for IBM Edge 2015. This is theCUBE SiliconANGLES flagship program. We go out to the events and extract the signal noise. I'm John Furrier, my co is Dave Vellante. Our next guest is Doug Baylock, general manager of Power Systems. Welcome back to theCUBE. It's always great to be with you guys. I love it. It's great to have you here at Edge again with us. We always love to put our hands on the rocket ship and try to hold on with the winning formula. You have the winning formula of Power Systems. Congratulations. Give us the update. What's new? Where's the meat and the bone? The hype, would you guys launch it with not a lot of hype? It's got organic growth, ecosystems growing. Then the buzz kicks in. Right, where's the meat and the bone? Yeah, so it's, as you guys know, because we've been together across this journey. It's been about a two-year journey so far to kind of take power from where it was and could have realigned it to the marketplace. And it's amazing to look back over that two-year period, how far we've come. And as you said, we sort of put up our first score on the board here in first quarter with a plus sign. And as I was telling Dave beforehand, now it's a data point. It's not a trend yet. My challenge is not to turn multiple quarters into a trend. But I think we're clearly seeing the strategy around power. A plus sign on the numbers. A plus sign, we were up 1% with constant currency in first quarter, which first time in three and a half years we grew in power. And so why are we seeing that? I think it's back to the strategy we've been on, of realigning power to all the needs in the market around data and analytics, big data and analytics. Clearly a sweet spot. And again, that's where power as a technology really shines. The work we've done to put power into the cloud, on-premises cloud, the public cloud, hybrid cloud, and then the efforts to open up power. It's just phenomenal progress with the Open Power Foundation. Well you got some tailwinds, as Dave says, the market's shifting, right? So what are some of the architectural things that have helped you? One, good call on the strategy and product work. What was it? I mean, you had a thesis, you talk about it when you launched it, smart people working on it. So it wasn't like a gas, it wasn't a Hail Mary. No, it wasn't a guess at all. What are the key market shifts that you're taking advantage of and highlight those? Yeah, so a couple of the key market shifts. First off, and we've talked about it a lot here at Edge. Every client's drowning in data. They're trying to figure out what to do with it and try to get business insights out of it. And I got this crown jewel called Power that does really, really well with data. Gettin' geeky stuff, right? Core, threads, caches, memory bandwidth, I mean, it's all that stuff. And I got smart developers too, which is great to have and smart across the board. So you take all that and you say, well how does that really help clients take advantage of like DB2 with blue acceleration and then build Cognos and other analytics tools on top of that to deliver a really world-class scalable analytics platform. We've got that. That's since last year and blue on power has been a phenomenal success, right? We've got other industry databases. Oracle 12C came out at the fall time last year. And just last week down at Sapphire now, I announced SAP HANA solutions on power as well, which really kind of rounds out all the in-database offerings in the marketplace. And then you sort of build the Mongos, the Marias, you know, SQLs, all the other data-rich offerings on power, so that's been highly successful. Open power's the other big trend. I mean, you know, who would have thought a year ago when we launched the open power foundation in California with like 25 members? We'd sit here now a year later with over 125 members. And like real projects going on, right? We had the open power foundation somewhat a couple months ago, right? Oh, more than 10 hardware vendors showed up to show their wearers and talk about the innovation they're doing. So we really do feel the momentum. I mean, I can feel talking to the clients I've met with here. It's really quite exciting. Well, the hallway conversation, I was just shy, I didn't want to jump in, but the hallway conversation, I was just getting a cup of water. And I mean, people are actually sitting down, having real deep conversations around solutions. I can see customers talking. So it's a unifying kind of moment, really, because data is kind of like this interesting intersection between all these disparate parts of it. It's the thing that draws all the pieces together, right? Because again, you've got to have a platform, you've got to have the middleware, you've got to have the applications on top. It forces my sellers, my team, clients to have a different conversation. But you've got to have it. You've got to have it. But you've got to have the wearers. You've got to have the goods. That's right. You've got to have the goods. So the premise on power, from my standpoint, is with your architecture and with the workloads in big data and with little endian capabilities, you should be able to, for those workloads, offer significant economic advantages relative to, say, Intel commodity-based infrastructure. We're pretty much still offering, even with the Haswell stuff that's been recently announced, we've gone through it. We're still offering twice the performance per core at a system level, about 20% to 30% better price performance. So double the performance, 20% to 30% better price performance than Intel. And we're open, right? And that's where the ecosystem's coming from. You've seen a consolidation play. Now, the open piece, talk about that a little bit more in terms of what that does as far as the economics. Yeah, so when we started this whole open journey, everybody said, well, that's kind of interesting. They're going to create this ecosystem. And clients here at our events would say, I have no idea what that's going to do for me, right? Now we're starting to see, as we've built off this massive ecosystem, we're starting to see, or clients are starting to see us be able to pull some of this technology, some of the solutions in and become IBM offerings. So I'll give you an example, right? So we've always sort of talked about the retices and the software. But also this week, we announced capability for little endian Linux and Power VM. So now on our large scale-up systems that go up to 192 cores, right? These run many firms around the world. You can run AIX, IBMI, big Indian Linux, if you did that in the past, and now little Indian Linux, all in the same footprint defined by partition. Right, so we've sort of brought that whole scale-out notion around Linux to our scale-up platforms on a partition basis. Yeah, so that's the age old question. Scale-out, scale-up, you're saying both. We have both. We have both. And it really solved different problems. I mean, we're not confused back to your point, John, of so what was the cause we made? I said from the beginning, I know historically we've loved to sell scale-up and we still do and we still sort of very much understand that market. But there's a lot of software architectures that just think I go sort of horizontal. I go this way, right? And that's where scale-out is played. In fact, our scale-out business, since we launched it, first quarter, full quarter. First full quarter was 1% growth. Then it was over 20% growth. First quarter was over 50% growth year-to-year in that part of the market. So we've got something going there in terms of scale-out. It is an architectural auto-concept deployment. The integration game seems to scale-up. So the scale-up's stack-driven. And there's a coexistence model that seems to be playing out in the cloud on Primworld, which is its integration, right? It's a ton of engineering work. I don't mean like field integration. You know, I tell clients all the time if you're looking to sort of integrate your enterprise and you want to know sort of where to run that, you know, web app or that mobile app that's written on Linux, just follow the data. You know, put it next to, in the partition, next to whether that data's on Z or whether it's on power, just follow the data and that'll guide you where to integrate it. Now, I would tell you, when we see a lot of clients starting to deploy Linux on power, they're doing it as a standalone footprint. Why? It's sort of a safe first step. Put it on a scale-out infrastructure, understand it, play with it, learn from it, and then maybe sometime in the future integrate it into a higher sort of integrated platform. So you got to spring in your step right now. Performance is good. You made the good calls, you know. Things are happening. Rising tide, boats are floating, as they say. What's next? I mean, obviously the chess board is just the beginning of the game. It's just the beginning, yeah. It's a long game here. Yeah. What's the outlook? What's your vision and how are you managing this business? Because, you know, you do have kind of a rocket ship situation going on. I think it's gone, I don't know if it's a rocket ship. Yeah, again, we got to have two data points to figure out what the trajectory of the rocket is. You can kind of see the platform. You can see it on the platform. The dimensions are igniting. You know, beyond the Power VM, we launched three new systems this week, which really completes the transition of the portfolio to Power 8. We launched, as I mentioned, our scale up footprint all the way up to 192 cores. So that's our highest end platform, you know, 16 socket bunch of cores, as I said. Second thing we announced was our really sweet spot of mid-range, the 850. This is a four socket system, all right? Four times 12, 48 cores. And what we did was we sort of brought the scale out design mentality, but then we brought the resiliency and some of the really cool aspects of capacity on demand into that four socket space. I think, if I'm right, we're the first vendor in the market to offer on-off capacity in the four socket space. And then we launched our next generation converged architecture called PurePower. That really says, you know what, I'm going to take networking, storage, compute, Linux, XIVMI in the future, pure patterns on top of that in the future, rapid management, and you've now got for sort of the MSP market a faster deploy infrastructure. And what's the networking in there? Is it InfiniBand? It can be, it can be InfiniBand, it can be. Ethernet is going to bring whatever you'd like to have. It's very flexible in the choices we provide. Okay, so it's sort of workload dependent? Yeah, it's client dependent, workload dependent. What about IoT? You hear a lot about Internet of Things, is Power the platform for IoT? You know, back to kind of where we're going. So if I was to say, so what's next, now that we sort of got through this journey of the transformation, you know, we're clearly not done. We've got to, you know, we've got to keep going, right? One of the aspects are new solutions, and I do think Power as sort of that data analytics hub, not in the sensor space, right? But in the thing that the sensors feed and then drive the analytics, I think Power could be that data analytics hub from a hardware platform standpoint. So, you know, it's a matter of packaging the right analytics software, the right hardware, and creating sort of that right secure IoT hub. Okay, well we saw Steve Pratt up on stage. We had him earlier on theCUBE, and that's essentially what he was doing. He had sort of the mainframe running, you know, the central, you know, system, and then he had sort of ingest points, bringing it into Power, doing analytics, and trying to be anticipatory. You're saying early days, but I mean, the market there is enormous, right? It's enormous, right? And again, it's one of these examples where they're flooded with data. The sensors are just driving so much input, ingest of information, you got to make sense out of it. So, center point is clearly a great example of how you need that sort of hub of analytics. So, I got to ask about the consistent scale out, and you mentioned that architecture. The consumption, that's how customers are buying. I mean, that's the new consumption that are capacity on demand, caching services, all those goodness is coming in. It seems that IBM has the vision of saying, hey, you know what, we'll put the solutions where the customers will want to consume without the big upfront license. Yeah, the whole learning as we've gone through this, with Google as the chairman of the Open Power Foundation, they've been a great coach. We've got Rackspace in there, we've got Cloudwinds in Europe. They're all teaching us that the era we're in, you sort of have to put aside your licensing models and say, you got to listen to how they want to buy. They want to buy by the drink. They want to buy components. They want to buy from their supply chain. So, Meemarch didn't say, hey, you got to buy an IBM server. That's a non-starter in a lot of cases. So, part of opening up the platform has been building those new supply chains. So, software can buy from who they buy from as they put power in software. They can buy components, we'll license software. In fact, in first quarter, we just closed our first major IP licensing deal with Suzo Power Core. So, we're taking, as we said, that chip and licensing it to others. So, Doug, for decades, the server business has marched to the cadence of Moore's law. Right. What's the cadence that you're marching to today? What's the innovation cadence? Yeah, so I think what we're seeing, part of why you see so many companies gravitating towards the Open Power Foundation, that community, I think we all realize the days of Moore's law are numbered. Even Gordon Moore recently has gone on our record saying that, who knows, maybe it's one more term, maybe it's two more turns. I mean, Diane Bryant's talking about the end too. So, we sort of all see this end of a single company owning the innovation agenda. And what we see is the same thing we saw in open source software, now coming to hardware. We're just going to take a community of innovators at the chip level, the system level, the software level, compilers, accelerators, really being the way in which applications continue to run faster, because they want to. Applications aren't slowing down. The demand for applications to run faster, we're all impatient as ever these days. You got to find new ways to do it. And it's going to be community-based innovation, just like we saw in open source software. So, what's next for the community? I mean, I saw that when you guys launched, like you said, 25 companies, and then we saw it spike up, to close to 100, blew through 100. Yeah. And where do you want to take that whole thing? Yeah, I think it's less about the number of members. I think we're sustainable now at 125 or whatever the number of today happens to be, right? 127, I think Tom said. So, it's not about the number of companies. It's really now about the output from those companies. The real innovation being driven, right? Who is now taking the supply chains we're enabling and starting to take those servers for their needs and deploy them? So, as we announced, we'll take open power servers in the software this quarter. So, clients will be able to come in and license bare metal, virtualized services, blue mix, power in the software domain. And other cloud providers are doing the same thing. So, I think it gets down to deployment and the innovation that comes out of it now versus counting members. Doug, thanks for coming on the queue. I know you're super busy. Congratulations on your success. Just for the folks watching who are not here. Yeah. What's the vibe here at Edge? I mean, the show's changed. We're hearing, you know, City of Memphis getting a grant for Twitter data, 911 routing, triaging calls, a lot of big data, a lot of storage. How's the show changed? What's the show about and what's the vibe here and what are some of the hallway conversations you're involved in? So, having kind of been involved in this show now for I think our third year now of having this has definitely come a long ways from where it started to where it is now. I think it's fantastic. You've got all of the systems components, the software, the Z, the power, and the storage coming together at one show. More importantly, I think the industry recognizes we're in a digital transformation. And infrastructure really matters for that digital transformation. And we're here to show how we're innovating around it. And what you guys are enabling for. And what we're enabling underneath all of that. So, it's got to run someplace and we've got some of the best stuff in the marketplace for it to run on. It's coming to Dave. I've never heard a customer that's been on theCUBE say, I want less compute. Yeah, that's right. Trust me, that's not the conversation that it made either. I mean, it's just one of those, it's table stakes now, right? You've got to have the performance across the board. You've got to have the performance. You've got to have the innovation. I mean, this really is less interest in commoditization, because if everybody's buying the same commodity, then they have to, I mean, how do cloud companies compete if they're all buying the same commodity? They're really looking for innovation. And I think the recipe we have going across our platforms gives the industry that differentiation they're looking for. More power, power systems like Bayluck GM. This is theCUBE, we'll be back here in Las Vegas. I'm John Furrier with Dave Vellante. We'll be right back.