 Live from Las Vegas, Nevada, it's theCUBE at IBM Interconnect 2015. Brought to you by headline sponsor, IBM. Okay, welcome back everyone. We are live in Las Vegas. This is theCUBE, our flagship program. We go out to the event and extract the Sinclair noise. Silicon Angles, proud to be here for a special event with IBM Interconnect in the Go Social lounge where all the action's happening, go to interconnectgo.com for the new social experience site powered by CrowdChat, CrowdChat platform, the VIP influencers, a great way to experience the show if you're not here live. Our next guest is Nancy Fierston, CMO of IBM Cloud, welcome back to theCUBE. Great to see you. Great to see you guys. Love chatting with you, you're dynamic, you're so awesome, great to have you back. And the cloud is super hot right now. It is so hot right now. This is dominating the show pretty much. I mean, there's a lot of stuff going on, but this is a cloud show. It's all about under the hood and application speed, standing up stuff. What's your take? How do you feel? Are you happy with things here, customer reaction? I feel terrific about this event, I really do. And as you know, this is the first one of the size. So we compressed three of IBM's previous conferences into one major conference and we made it the cloud and mobile conference. So yes, it's all about cloud, we got some mobile in there as well, but we're really actually covering the entire portfolio here. So it's been exciting and we actually got 45% of the attendees are new to any IBM conference. So that's kind of a really important number and we've seen some really positive feedback from our clients and from our business partners. They're saying that's the most exciting part about this event to them because they're having some new conversations. So that was one of our objectives. The other was to combine the content, really focus on cloud, make some major announcements around our hybrid cloud capabilities and our strategy. And then also profile clients. This is about client success. A lot of client success and key partnerships. So the data doesn't lie, well you know we're data-driven. And so I'm looking at the IBM community of Interconnect, the three shows. Since you guys announced the three shows, been running full monitoring on our listening engine. And over the past three months, data, the top interest points are cloud, big data and IoT. And the other ones are IBM, obviously IBM Centric. The three top are cloud, big data and IoT. Do you agree, is that the right sentiment? I mean IoT seems to be coming up in every conversation in applications, mobile, healthy cloud. It really is. And when we talk about cloud, it's really impossible to talk about cloud without talking about big data analytics or IoT or mobile and even social. And in fact, we took a very different approach to this event from a general session perspective. We focused on client vignettes. And so we have highly produced client vignettes for every general session. So it's not an IBM or up there talking with a bunch of PowerPoint charts about technology. It's, we bring to life a customer scenario. And in many of these scenarios, they cover IoT plus mobile plus cloud in very meaningful ways, you know, in an integrated approach. And I think that's another interesting thing about the way we're doing this particular event differently is we've had clients kind of railroaded into oh you're going to go to Pulse because you're interested in systems management and asset management. You're going to go to Interconnect because you're interested in web sphere and business process management. So bringing all of this content together, cloud is really permeated all of these areas. And then we get more clients because they understand it more from their perspective versus are going at it from an organization out perspective. Plus it's more integrated. So you're hearing the stories that are full end to end. Right. So talk about your keynote a little bit. Yeah. So, well yesterday was general session kickoff and Robert LeBlanc did that with Airbus and Citi. I'm sure you probably went through. Citi was unbelievable. Citi was awesome. So cool. It was really great. Jerry did a great job and so did the Citi executive. So today this morning I did the keynote on business, cloud business applications. And we also- You made it to your keynote. I did make it to my keynote. It was questionable. And we had a couple of fits and starts. There were little technical difficulties but I just got up on stage and delivered anyway. So- And the key message was there? Our key message there was we featured a lot about business applications and we featured the IBM cloud marketplace. You know that's something that we announced last year. And now we have over 400 services in the cloud marketplace between IBM and third parties. And so we took a fun approach. I gave an overview of what's happening in terms of digital transformation, reinventing your business processes. How you need to do that with new services, your own capabilities as well as third party services and a strong development platform. But we did it with a vignette. So we had this story about the Stratus Cafe and we had chef Jay Baer, who was the guy who was the commentator on the first day come up. Big chefs had a whole outfit. And he basically, he took them through a startup cafe and what would happen in terms of you needing to merchandise your cafe, hire talent, do one-to-one marketing all through the cloud marketplace and leveraging and demoing those services. People loved it. They thought it was really great. Did you pop up restaurant? Yeah, pop up restaurant idea, exactly. That's exactly what we did. You do a little Shark Tank action, you know, have entrepreneurs come in with their proposals, you know. That was one of my ideas for the conference. I was hell bent on getting Shark Tank here. And I think it's going to be really fun because we took some of the key entrepreneurs, the finalists, and it's one of my favorite shows. I love that show. Oh, I love that show. Shark Cube, yeah. Shark Tank Cube. That's why you could do some rebranding here. I like that. Yeah, Dave's a shark. I'm more of a sheep, but. Thanks. Going back to the key theme of clouds. I mean, I mean, that's the same question. Are you having a pinch me moment like Steve asked the same question? It was like, you guys announced it a year ago. I mean, this is not even a year. I know. So we were kind of like, it's in beta. We don't know how it's going to go. Right, remember that too? You know. We were talking about 2,500, and that was a stretch number at the time. I'm sure Steve updated you on the number. It's 250,000. Yeah, it's massive. So, and now we're also seeing a very important part of the Bluemix momentum and market penetration is some of these key relationships, like Bluemix and Capgemini, CSC, some of the new announcements that we've made here, TechMahandra, so large system integrators that are really integrating and standardizing on Bluemix. That's the kind of momentum a year later that's pretty significant because those are large enterprises. And certainly we have a lot of individual developers on the platform as well. Well, I think the big shift that we've noticed, Nancy, is that previously, a couple years ago, it was sort of, everybody wants hybrid. There's a lot of concerns about the public cloud, the people are nervous, blah, blah, blah. But we don't have a solution. Now, all of a sudden, you really, by the way, we're saying before it was true, but now you've got a solution. And so what's the customer reaction been to that? The customer reaction has been very positive. Whether it's our hybrid cloud announcements around visibility and control and security, or we made a number of developer productivity announcements. I'm sure Steve talked to you about Bluemix Local, but in addition, the secure gateway capabilities and API harmony, if you think about this, we're making it easier for developers to develop that innovative app and do it in a way that's secure and able to leverage the requirements around flexibility in terms of moving your data to the application, moving the application to the data, getting decision-making closer to the client through these applications. So the feedback has been very positive. I had dinner with Gartner last night, and we've got a number of things that are exciting and really help accelerate our client's success with cloud. So it's not about just bringing out ancillary, whiz-bang technology. It's about understanding where our clients are, listening to them, and making it easier for them. There's not a question about am I going to go to cloud, whether I need cloud technology. It's where are you and your journey, and how can we help you accelerate it? Actually, talk about journey. You got a lot of great feedback on Twitter and your keynote startup, the journey of the startup, but one comment here I wanted to get your take on. Oh, besides, best shoes of Interconnect goes to Nancy Pearson. Oh, great. You got a treat there. I mean, when you're on stage, you look at it. Wait a minute, are my shoes trending? That's all I want. I'm just, that's what the crowd's saying. The journey of the startup, the stage, discussing the transmission of the startup, that was good positive. The comment of disruptor, or disrupted. What do you mean by that? What is that concept? You're either on the side of being the winner or loser. Well, it's a decision that we're saying, the audience really needs to make that decision. So, if you look at the nexus of forces and the advent of cloud, mobile social, big data and analytics, you have other businesses, like the non-traditional businesses, like Fitbit and Uber, coming into the market, they're leapfrogging technology, the technology legacy challenges of large enterprise, but they're also innovating on these applications that can disrupt your business. And it's not technology disruptor, either. It's a business model. Yeah, disruptor. It's a business model disruptor, because they're breaking the class thing through. Enabled by technology. Well, then they got to go back and get the tech, because once they break through, they got critical mass. Right. This is the new business model. The new way to work. That's the new way to work. Exactly. New way to start up. Yeah. So, I told them a story this morning of, I was with a large aeronautics or aerospace customer that we all had been flying on their airplanes. And their client rep asked me to come in and talk to them about cloud. So, I was telling them about how cloud's about innovation and they're like, well, we're trying to figure out what applications we should move. And I said, it's not, you can't just think of it that way. That's a very infrastructure data center oriented way of looking at it. You need to look at it as to how can you leverage cloud technology to basically increase new revenue streams around your core competency. And they said, aren't you worried about competition? Because the airline industry is very competitive. And they said, well, not really. We have this great app and we're using this great app. And I said, well, are you thinking about how to create kind of augmented solutions or services around the core competency of airline travel? And I said, an example would be, if you looked at something like Uber, in New York City, Uber not only has provided transportation in a totally different way and in an expedient way, but they also did some testing around porting nurses to people's houses to do flu shots during that spike in that time of the year. It's not within their core competency. Well, it is because their core competency is transportation, but they're including other capabilities and experimenting on other delivery methods, leveraging their infrastructure. So I said to the airline, you could be creating services around a car service. So when people get off the plane, it's your car service. You can be coordinating multiple services that are adjacencies to airline travel. And then people will flock to you because there's one place to get through one application. I can get my car. I can get my airline tickets. But it's your service, not some travelosity who's doing it and disrupting you. Well, this is the interesting thing is you can, you're now seeing organizations traverse horizontally across different industries. These adjacencies that we're talking about enabled by technology, clouds sort of the substrate. Data is one of those transport mechanisms. Social information is one of them. You're seeing companies, Apple gets into financial services, Bitcoin, Amazons getting into entertainment. I mean, it's insane. Well, the barriers to entry in terms of expanding horizontally are much lower with cloud and big data and analytics and social because you're transforming your business process. So it's interesting because everybody looks for disruption in technology waves and says, oh yeah, this next wave is going to kill all the old guys. That's not happening. What happens is the old guys actually have a ton of cash. They got creamed before and those guys who didn't go out of business realized that the people at the helm realized, well, we can do this too. You know? We're going to innovate. So either be disrupted by somebody new coming in and taking your core competency and doing it better. That's number one. Or you innovate internally and disrupt. You're in a district. So what can clients learn from IBM? Because you guys are one of the largest, oldest companies in the world. You are both now, you've got a $25 billion business which is this disruptor business. You've got almost a $75 billion business that is, you know, people are trying to disrupt. So you're in the middle of that and you're navigating it. We are and we're very upfront and back to my keynote. I was very upfront with the audience saying, we're going through this digital transformation as well. We're changing our business model. We're introduced to the cloud marketplace. And yes, it's only a year old and there's, you know, we know we need to do more with that, but it's opening up a channel. That's a consumption strategy. People want to consume that way. Why wouldn't you go into business all right? That's right. They want to self discover. They, 70% of clients make decisions before they ever even contact you in your business. And where are they making those decisions? They're making them online. They're doing the comparisons themselves. You might as well serve them a fertile environment like a laboratory or a library. You guys are going for it. I got to say, IBM, you guys are going for it. The way you do your social business outreach, I mean, you've always been great for the cube openness. Now with cloud, you got soft layer in there. You got some meat on the bone. Blue mix is taking off. There's a rising tide. And all the top engine- We expanded soft layer. We've expanded soft layer around the world. And all the engineers are working on it. So I want to talk about two things. Internal action in terms of building value fast into the platform from all the resources around IBM, what's going on there and how do you market against Amazon? They are winning the gold standard in public cloud. They're viewed as winning the integrated stack. But now blue mix, red-ish, you got node. I saw an Adam Gunther. He's like, Adam's like, you guys are kicking some ass. Not fast enough, but go faster. So I'm sure they're all like, hey, we want to go faster. So how do you market against Amazon? Given now you got the soft layer, now you get the blue mix, you got open stack. And what's going on internally for the resources? Well, from a resource perspective, you know we created the cloud unit. So we pulled a lot of those development resources together now very much all focused in the same direction. So we're going to be able to go much faster this year. We've taken the power of IBM and put it right in the sweet spot of where Ginny wants us to focus, which is on cloud. And again, cloud brings in social data analytics. So that's basically like stop everyone says time out and then time out resources, bang. That's right. Each of them are faster. It's all cloud. Yeah, nice. And again, the marketing teams all came together, the development teams all came together. So there's no excuse, right? We've got to continue to go more quickly. Now your point about like, how do we market against Amazon? The reality is Amazon is an infrastructure as a service. It's a public cloud, but it's only the infrastructure component. So when you talk about what we have, well, and you see, we see some blurring between infrastructure and platform, but so we've got software, we've got Bluemix and we've got a SaaS portfolio that's pretty robust and we're going to continue to invest there. Some clients don't want to take a piece over here, a piece over there and a piece over there. Because by the way, they're in large enterprise. They're already pretty fragmented as it is. And their biggest fear is visibility control over hybrid cloud environments. So they're either hugging their infrastructure behind the firewall, right? And very nervous about the public cloud or they've chosen the public cloud and they realize they're expanding and they've got to tie back into legacy data or deal with data. It's a lot of sense. Yes, that makes a lot of sense. So our announcements, we're really focused on, we're able to bring visibility control to hybrid cloud environments, right? And we have capabilities at each of those layers. We're integrating those capabilities across layers more. And so when you think about it, if you're a growing business, you're going to be able to come to one place and get an open architecture. And we're offering third-party services as well. Open architecture. Open architecture. Open cloud. You guys are committed to open architecture. That's right. So you've got infrastructure as a service plus, that's kind of Amazon. You got SaaS minus, which is kind of like Salesforce, right? To me, you described it. The best solution is a layer, stack of infrastructure as a service, platform as a service, and software as a service that's open and integrated. That are integrated, exactly. Okay, so the IAS piece coming together nicely, the PAS piece very clearly coming together nicely. What about the SaaS? Can you talk about that a little bit? You've purchased so many SaaS companies. That's a hard thing to bring together. Well, that's what my keynote was about. It was really on the SaaS applications, the marketing applications, specifically workforce and talent application, and then a strategy application. And by the way, most of those SaaS services are leveraging Watson. And where else can that be? Nobody else has that technology. So it was amazing to show the audience how embedding Watson technology in whether you're sourcing for the best talent in the city that you're looking to start your pop-up shop in, or you have a growing business and you're trying to deploy marketing by leveraging analytics that are pulled in through not only Watson, but also some of the other capabilities that we have, statistical capabilities that we have. So that's a big differentiator. Now, do we have that across everything? No, but we have that across some very focused areas that are growing quite rapidly. We're not a lot of companies have that. They don't have that. A handful, right? We are not even using customer base. You're installing base data centers. So you can't just say, oh, we're going to get a few of Amazon head-on, but they're coming into the enterprise. So you got to kind of put the heat shield up a little bit. Say, whoa, whoa, whoa, we got to address this concern of economics, a new way to do business. Well, they made a lot of noise two years ago. Who did? Amazon, I was saying. Hey, we're coming to the enterprise. And I think they were very naive about it. Well, it's not easy, right? We know about it. It's not easy. Trusty, it's good. I've seen startups go out of business and the enterprise is easy. So Amazon, again, then a big startup. Internet of Things. Why is that so hot? Big data I can see in cloud and big data work well together because analytics feeds the apps, clouds the engine, Internet of Things. Is that kind of just another word for mobile or edge of the network? I don't really see it that way. You know, mobile is about the mobile experience through a mobile app. Internet of Things is about integrating sensors and data structured on structured data through all kinds of devices, right? It could be your refrigerator. It could be from a car, right? It could be from TPS, from a boat. We hit Bosch on yesterday, right? Right, you'll see the, yeah. Nigel is on. The silver hook, right? Yeah, that's such an exciting story. That's a great example, by the way, right? In terms of not being able to be able to demonstrate a whole sport and get people engaged, a lot of what we're talking about is about engagement. So their business, they wanted to engage and they wanted to share data and information across the human that was driving the boat as well as the support team behind the scenes and the fans. We interviewed them in the Cube earlier, by the way. Did you? That's a great story. Great guys, too, dynamic, great interview. And he's like, thanks for Bluemix. No, literally, Bluemix, Watson, Cloud, real time. They couldn't do it before. They fundamentally couldn't do what they're doing now before without Bluemix. But that's about instrumentation. It is. On the boat, leveraging it in real time to the Cloud back with Bluemix. That's right. And presenting it in a way that can engage a massive audience that's, you know, could be two or three miles away. What's the big confusion of Internet of Things? People is that some, you know, GE calls it industrial internet. That's got their flavor. It's just because the Internet of Everything or what? I think you're seeing just some of the same, the terminology's not the same because I have seen the Internet of Things grow over the last year tremendously. And just in terms of people even talking about it. So I just think it's, you're at the earlier stages of it. It's the same way people talked about Cloud. It's the same way people talked about mobile. And now they're much more comfortable in understanding the same thing. But so it's, I think it's more of a maturity thing in terms of people really understanding it. It's the next wave. Exactly, but it's here. It's not coming someday soon. And it's a developer hook too. I mean, developers are old. It's very much a developer hook. You know, how do you create those applications, right? Okay, so what's next? What's the big focus this year for you guys? We asked this last year, and you just said we could do it best we can. We're going to get out there and create a share with the developers and learn and delve to community. What's your marketing philosophy this year? But you got a lot of going on, right? You got Softlayer, you got BlueMix, you got the tsunami of growth with data and Cloud. Right, yeah. What's your plans? Clearly we're going to continue to build out Softlayer and BlueMix and our hybrid cloud capabilities for visibility and control. Integrating across those elements. Again, that's not a job that's done, right? The more we can integrate, the more beneficial value we'll be providing to our clients. And then in addition to that, some of these key partnerships, you saw us partner with SAP, you saw us partner with AT&T, with Microsoft. You know, we'll continue to have some key partnerships because they're bringing us into their industry or into their business. On top of our cloud. So we'll continue to do that. And then there'll be some surprises. You know, we'll get into some things that really change the game. That's our goal. And what's the big thing that's going to come from this IBM focus of the cloud division and all these resources? Speed and agility and innovation. Awesome. Nancy Pearson, here inside theCUBE, we're looking forward to it. Obviously, when IBM starts putting their engine together, they got a lot of resources. So we're looking forward to watching it, being part of it, covering it. This is theCUBE bringing you all the signal here at IBM Interconnect. I'm John Furrier, Dave Lund. We'll be right back with our next guest after this short break.