 Okay, welcome back everyone, we're live in Las Vegas. Day two of theCUBE's exclusive coverage of IBM Pulse. IBM's premier cloud conference, cloud equals growth. This is theCUBE, our flagship program. We go out to the events, extract a signal from the noise. I'm John Furrier, the founder of SiliconANGLE. I'm Joe with my co as Dave Vellante, co-founder of wikibon.org. Dave, day two here for IBM yesterday. Very impressive event, IBM's cloud strategies coming into focus, it's no longer cloudy. It's pretty clear what they're doing. Cloud meets big data, sounds like EMC's original positioning with Jeremy Burton years ago. But clearly big data analytics and cloud infrastructure is the focus and everything in between is going to be IBM middleware, dedicated software from IBM as well as open technologies with cloud, cloud foundry, among other things. But the bottom line is the big story here is soft layer acquisition, really front and center as the key enabler for IBM. For IBM to put their stuff around it, put the wrapper around that core asset and build other assets around it and really make this a software driven cloud model. So what's your take of day two? Day one, day two, what are you expecting to hear? Well, a couple things, so I think you're right. That whole cloud meets big data theme that Jeremy Burton started years ago, we're seeing to come to fruition. I think that IBM actually has quite a portfolio here. It's for IBM, it's all about visibility, automation and control and IBM's playing its hand, as you mentioned with software and also playing its hand with the hybrid piece. The ability to build applications which we saw yesterday, one of the IBM practitioners in five minutes built a Node.js app, retail app, literally in five, 10 minutes had the thing pushed live. It's that type of agility that IBM's trying to affect and have the ability to go from private to public and back in a seamless fashion. That's something that IBM's really emphasizing. The other thing is security. You're hearing a lot about mobile first. We heard Brendan Hannigan in the keynotes this morning talk a lot about security. I mean, it's something that IBM's known for back to its mainframe rack F days, in terms of control and knowledge and log knowledge of where people did, who did what. So IBM's very, very strong security culture. So we heard a lot about that. We heard from some customers this morning. We heard from Paychex, we heard from Honda, we heard from the CIO of Red Bull, Infinity Racing, who was on theCUBE yesterday. So IBM's stitching together a story that involves mobile, cloud, big data and really driving a lot of those big trends. We also heard from Steve Mills, who's coming on theCUBE later on today. Mills really set up the day. He didn't do a ton of deep diving, which he's certainly capable of doing, but he definitely talked about applications that span both public and private cloud. And then one of the more interesting talks that I heard to this morning was from Tom Rosemilia, who's now the Senior Vice President and General Manager of STG. STG is the server and the storage business. IBM's had a lot of changes in that division. It's not performed up to the company's expectations. It's performed below where IBM has wanted and below certainly the software and services business. IBM made a change. Longstanding Senior Vice President, Rod Atkins, was replaced by Tom Rosemilia. That's not uncommon at IBM. Things get shifted around. And also another individual, Ambush Goyal, that we've had on theCUBE is running the storage business. So IBM's kind of retombing that business. Now one of the major announcements IBM made this year, John, is they are basically announced they're selling, and this was no surprise to anybody, the x86 server business to Lenovo. Sort of a patterned after the playbook of the PC business that IBM sold years ago to Lenovo under Sam Palmosano. They're doing the same thing now. Ginny has agreed to sell that business to Lenovo. That's part of Steve Mills' portfolio. So that leaves essentially Z and Power at IBM. And obviously we're seeing renewed emphasis on power. So we're going to have Doug Baylog on today later today. He's the general manager of the power division. I want to ask Steve Mills, why are you even bothering? You know, why even do this? He told me two or three years ago, Spark is dead, you know, basically, you know, flexing his muscles. Why keep power going? Well, the answer is it powers Watson. IBM's doing open power. They're doing sort of an alarm coalition with the likes of Google and others that we'll talk to Doug Baylog about today. So IBM is opening up power. It's got a long standing heritage in the semiconductor business and is not giving up in that business. It's essentially shipping off the commodity stuff, going after profits, not revenue. So these are some of the themes that we're going to be talking about today. Certainly cloud, certainly big deal. There's a lot of inside baseball there, but let me ask the bigger question. I mean, that's good at IBM fodder and inside baseball. Got to ask you the Amazon question because they often in the room is Amazon, right? I mean, Amazon is dominating the public cloud. Reinvent was a very big success. How would you compare this show, their first cloud show with Amazon reinvent? So I think number one, you know, Amazon is sort of invented the cloud. It's so-called true cloud, meaning it's pure public cloud. Really, Amazon doesn't have a big private cloud play. I guess you could argue Eucalyptus is their private cloud play, but Amazon's pure public cloud. The second thing about Amazon is it's heavily, heavily developer centric. It's where IBM wants to go. IBM wants to get to the agility, the simplicity, the swipe the credit card, the pricing transparency, and the feature richness of Amazon cloud. And IBM's strategy is not to replicate Amazon's public cloud per se. It's to replicate that simplicity and speed and feature function richness across both internal and external clouds. And do security one-offs and do other one-offs for compliance and other services capabilities that IBM will bring to bear. So different strategy, but IBM is trying to replicate what Amazon has done and do so for the enterprise. And having said that, IBM's behind. Everybody's behind. Amazon has a big lead in this business, but others, the entire industry is going to coalesce really to try to stake their place in the cloud and also form partnerships. So you're seeing very interesting partnerships forming IBM and Cloud Foundry, OpenStack, the participation of IBM and earnest, as well as HP. So you're seeing a lot of the enterprise guys really coalesce around some of these open standards to try to compete effectively with Amazon and hang on to their legacy base. What about the middleware argument here? IBM is investing a billion dollars, Dave, into software. How's that going to play out in your mind? How do you see that rolling out? Well, I think in the late 1990s, in the middle of the dot-com bubble, IBM made a big bet on e-commerce. And IBM was one of those companies that actually did quite well through the internet bubble, even though obviously everybody's stock got hit, but IBM made a lot of money on e-business. And a lot of that was around middleware and the whole web sphere application development platform. So that is renowned. And IBM is essentially taking the learnings from that legacy and bringing it into modern day pass, born on the web, web-tooling type of application development environments. And so we're going to hear from a number of IBMers today, a number of executives that have some web sphere heritage that are really trying to drive that new pass. We heard about Bluemix yesterday. This interesting combination, John, of IBM and Pivotal with Bluemix and Cloud Foundry, using an open platform and open standards, is something that I think is quite relevant. Now, one of the things we've talked about, John, is the pass market. I asked you yesterday, well, who's really getting it done in pass? Because you were a little critical of IBM. So I want to take it back to you and ask you, what's your critical analysis of IBM's pass play? And what about the market in general? Who's really getting it done in pass? Well, I mean, I'm not critical. I mean, I think pass is the battleground. It's very clear to me that if you look at the computer science evolution of how people write code, how systems are being developed. So, you know, I look at it from a tech, like a computer science perspective. There's systems programming, there's distributed networks, and then there's just writing software or DevOps, or just writing good software engineering. So if you look at the computer science landscape, Dave, it's always shifting now to clearly software. Compute is abundant. Cloud has shown that the economics on the business value is high, but more importantly, automation and workload management is critical. So I believe that the pass layer is going to be the battleground for the future. Okay, with that being said, Paul Moritz, who we've always been really positive about with his vision that VMware initially now a pivotal, is laying out essentially a software architecture and trying to bring a group of people together through a foundation to be the Switzerland, to be an independent self-governing body for this pass layer. Now, I think that's going to cause a lot of confusion because you got OpenStack trying to build their pass layer. That's a year away. Much thinner pass layer than Cloud Foundry, which has been called bloated by many insiders. That's a fat pass layer. We're not going to go with that. Rackspace did sign up for that. I wonder if that's more of a Barney deal, you know, they're kind of loving each other right now, but Rackspace might have other agenda. Red Hat's not on the list, but the Cloud Foundry, that's an interesting indication in my opinion. They're a very big player, but I think in general, I think that having their toe in all the different passes, Platform as a Service where IBM is a good move for them. There's no real downside there. They have to move the ball, and I think it's the first step in the right direction. I'm only critical in the sense that pass is early, Dave. So really not a big deal. However, there is going to be some major jockeying for position in the Platform as a Service. We're going to see that for sure. And that's going to be dictated by the developer community. And I think the winning signs will be right out of the gate. Who has an ecosystem? All these biz dev deals can be done all they want. But at the end of the day, developers vote with their code. And that's ultimately will be the telltale sign. Who could provide the most open APIs, best technology, best enablement, extensibility, value creation, and distribution. So to me, developers will be the telltale sign for who is going to really move the ball in the past layer and ultimately win the enterprise cloud business. And that to me is where IBM, Pivotal, HP are really working their butts off to win that ecosystem. And it's a much more competitive market. Amazon locks in on the startups and has a great, great success rate. Can that translate to the enterprise? We'll see. We said this at the last event we were at. I mean, how far will Amazon take the enterprise in? And how far will the wall be built by these incumbent positions? Well, I thought, we talked about this yesterday, but I thought the couple things, I think very clearly IBM knew a couple of years ago that it needed to do something in cloud. It was getting feedback from analysts, from partners, from customers, and own internal people that, hey, this really isn't a coherent cloud strategy. So IBM set forth on a combination of strategy, acquisitions, talking to customers, and putting forth a plan to really shore up its portfolio. And that's really culminated in the soft layer acquisition and obviously the cloud acquisition yesterday, as well as a legacy of 100 or so SaaS companies. So IBM's got a big portfolio. Now, putting that all together is obviously challenging. Of course, to help you with that challenge, IBM has a lot of services. The other piece that the other milestone in my sort of observation is really the CIA deal, where IBM went after the CIA business for cloud, Amazon won it, IBM sort of game the system is what the judge found. This is the judge's conclusion and manipulated the pricing is what he said. And which is, of course, that's what you do in the enterprise. You don't just let the new kid come in and take over. So IBM, I think very cleverly, used its experience there and slowed down Amazon. Couldn't move by IBM. Probably cost him some money in the legal system, but ultimately bought IBM time. Now, that's all ancient history. IBM is a completely new portfolio with which to now compete against Amazon and its game on. Yeah, I mean, the rules are changing. What I love about that Amazon, IBM legal story is what we were talking about yesterday about the cloud foundry. The old ways of doing things are gone. New dynamics are at play. The old days of creating standards bodies, slowing things down to catch up is gone. I mean, in tactics like winning sales, deals like that will be exposed. And I think that is ultimately what's exciting. And I think there's not much to critique. Yeah, there's some stuff we can point out. Pick the scabs of some of the soft spots. But it's exciting, Dave. The time to value for application developers with the cloud is fantastic. You're seeing massive, massive adoption by enterprise who was spending big bucks on projects for cloud migration, hybrid cloud works. SaaS business models are proven. Platform as a service, databases, this middleware layer is up for grabs. And to me, that's going to be something that's going to be exciting to watch. We will be asking all the questions here inside the cube. Day two of wall-to-wall coverage, Silicon Angles theCUBE, our flagship program, exclusive coverage of IBM Pulse. We'll be at IBM Impact, IBM Edge, doing all the IBM shows. IBM is back spending money on acquisitions, building organic growth. We're going to hear about Watson, all the new stuff on ThinkData today. And of course, Dave Mills is coming on, Senior Vice President of IBM Software. We're going to ask him, what has been the transformation for IBM in software? And have him answer those questions directly. This is John Furrier with Dave Vellante. We'll be right back with day two coverage, right at this break.