 Live from Austin, Texas, it's theCUBE. Covering OpenStack Summit 2016, brought to you by the OpenStack Foundation and headline sponsors Red Hat and Cisco. Now here are your hosts, Stu Miniman and Brian Gracely. Welcome back to theCUBE. SiliconANGLE Media's flagship program go out to all the shows, extract the signal from the noise. Love talking to a broad spectrum of ecosystem players here in the community. I'm Stu Miniman joined by Wikibon's lead cloud and dev ops analyst Brian Gracely. It's the day one of three of our coverage. Happy to have on two first time guests of theCUBE. We've got Dave Lincoln who's the general manager of Lenovo's data center group and Stuart McRae, director of product marketing also with Lenovo's data center group. Gentlemen, thanks so much for joining us. Yeah, thanks for having us. So Dave, we'll start with you. Most people know Lenovo from just broad spectrum solutions, of course. There's PC business, a lot of consumer business. Took the x86 business over from IBM. But can you just give us a little bit? What's your role there? What's that in Compass? And how do we think about Lenovo in kind of the data center enterprise side? Yeah, thanks. I would say back in 2012, Lenovo at the highest levels made a determination that we were going to go and start to hedge out from PCs. We've done a good job ever since the PC acquisition of the IBM system in 2005, eventually kind of claiming number one and kind of starting to break away from the rest of the pack. But the PC business, the margins aren't as healthy as they are in the data center area. So back in 2012, we made a decision to start to go deep into that. And since then, we've had a lot of success. We started down the organic path and while we were going down the organic path, we were approached by IBM about the system X business, which was a perfect fit. We had a lot of success integrating the PC business a few years before that. So the last six quarters, we've been busy stabilizing and completing that integration. And really, if you look at the combined business for the first time since 2010, the business has kind of bottomed in the quarter that ended September and the quarter that ended December, we actually grew eight points here a year. Which is the first time, like I said, since 2010. But I can't talk about the quarter that just ended, but the point being is that no sooner than we were starting to bottom and get the ship turned around, the leadership realized that to be a proper data center provider, we needed to expand into the adjacent categories of data center infrastructure. So in September, we launched the hyperscale business unit in October. Our business unit, the storage business unit was born and then the conversion networking business units were born in November. So a lot of investment, a lot of focus behind this. And so that's it in a nutshell what we got going on. So a lot of pieces, you know, we'll have time to dig into many of them, but Stuart, let's pull you in, you know, tell us, why is Lenovo here at OpenStack? What are you guys doing at OpenStack? I mean, you know, a lot of software pieces and you know, of course that has to live somewhere, but how's Lenovo fit in the picture? It's a very dynamic time in the industry for us. And we see a lot of convergence in the industry, a convergence in the traditional storage today. For us, the big future is software-defined storage. We're here because OpenStack is we believe a big part of that. As a consolidation in the industry happens, combined at the same time with the desire to move storage stacks from a traditional model to a open model and a software-defined model, that's where we're focused. Plays very well to our strengths and we're looking at, you know, driving innovation with a range of software-defined storage providers, OpenStack being the foundation for many of those. All right. So, you know, let's talk a little bit about storage. So, you know, what can you talk about, how Lenovo looks at storage, where they fit into it, and kind of what you have, what you OEM, what you partner. Yeah, so I mean, as we were trying to kind of formalize what our strategy was gonna be, this was back in the fall that we're now starting to execute on, it was quickly apparent that there's never been so much flux in the industry, both in terms of the competitive dynamics, big acquisitions, maybe you've heard about, and then even just the technological flux. So, you know, we've been doing a lot of customer briefings and they kind of come in and, you know, quickly it just rises to the surface that because of all this change, because of all this uncertainty, it's given us a window's opportunity to compete and customers are looking for a choice, they're looking to hear what we have to say, so. Yeah, and what's driving, I mean, from, we understand from an industry perspective, like you said, you've got some major, acquisitions and things going on in the market, you've got some other vendors who are struggling to kind of deal with transitions in the business, what are you hearing from customers that are saying, hey look, we're now open to software-defined storage, we're now open to converge, what's driving their business to come have those conversations with you? Yeah, I think it's a few things, one's the consolidation, so there's a mass of customers out there who have to make a new investment in storage, they see on the horizon that maybe what they're buying today is not going to be there tomorrow. At the same time, there's a desire to kind of separate what I call the data plane and the control and management plane, so as they move more of the orchestration to an open-stack kind of environment or a more traditional control plane, it changes the way they think about the base storage, right? So the attributes they really wanted, they've always wanted great performance, rock solid availability, service and support, they still want that, but they're not willing to pay for the features, right? The feature innovation has slowed down to some extent and it's moving to a different area in the control plane. That's an area in a traditional space where we'll really focus hard and driving efficiencies in that. At the same time, if they're looking for a different scale, right? So a traditional storage, when they look to a software to find, when they're moving from their traditional world to a much larger scale, it's not really manageable in a traditional scale-up storage stack, right? They want to go broad in that and software-defined is a perfect design point for that. Also, as they look to object storage, right? That's one of the things that we see as more and more customers. It's a little bit wild west now, but they want to really move as much of their data to that as possible and solutions, either open-stack or S3 kind of environments are really where they want to move to do that. Yeah, let me just add to that. So that's a little bit about the product dynamics, the shifts going on, but even just from a general business model, I think it's ripe for disruption. We've had a number of folks come into our briefing centers and a lot of folks with EMC and their environments, and I think the business model is kind of a bit tiring. We've talked to them and the game is that if they don't re-up with the latest VNX generation, they get hammered on their maintenance costs and that sort of thing. So I think even one customer who had talked about that they have some small version of Stockholm syndrome. So I think, no, literally, they did. That was their word, so I thought it was awesome. But I think the whole thing is ripe to be disrupted, not just from a product perspective, but also just the business model. I mean, Dave, one of the things, we've commented for years, I mean, storage is not homogeneous. It's a very fragmented marketplace. Seems to be coming even more so. So even if you just talk kind of, what type of customer is you've got, you've got the SMB, you've got Enterprise, you've got service fighters, and you've got the hyperscale guys. What pieces of those does Lenovo look at? How do you rationalize, is the different strategies across the board? Yeah, I mean, I would say, I don't know that word. So we have a hyperscale business unit that's targeting the big seven here locally and then you add the big three in China. We have an unbelievable business going in China. I want to say that I think we had like 40% market share for the quarter that just ended, something like that in China. So we're trying to leverage a lot of those best practices that we got going in China, we're bringing that here outside of China. But for the kind of general purpose sales, we're, I don't know that we're, I think we're, any customer that likes, that cares about TCO, choice, customer service simplicity, we're targeting them. I don't know that we're- I don't know any of that. I don't know any of that. Particularly like, what do you think? Absolutely. All right, maybe so we talk about at the event here, you meeting some users that mostly partner discussions and maybe if you can give us a little insight as to how users talk about OpenStack Store. Yeah, I think they talk about OpenStack as a way to free up and deliver more innovation than what they have today. So we view it as very compatible with industry standard hardware and industry standard software. As they're looking to innovate and provide new functionality, the innovation ability in an OpenStack environment is much quicker than going to a traditional provider for compute application software or storage software. And we look at it as it simplifies their model from a development model as a customer and to provide solutions, a simpler development model because they've got the base already there. For us, when we partner with the providers, it allows us to provide a great story with them because we can innovate in the latest, greatest, the great, compared to a traditional model where if you want to add functionality, performance, whether it be the next generation flash or processor, that's really like a two year development cycle for traditional customers, traditional providers. For us, that's almost instantaneous. When you get on the open world where we can deliver the next generation of performance at a very affordable price with a software innovation, it really frees them up to take advantage and deliver a business value immediately as opposed to waiting 24 months. You talked a little bit about China. Lenovo is obviously an international company. Sometimes we get a little bit siloed here. We think about the US company, sort of the US market. What do you see outside of the US, not just in China, but that might surprise some people or that you guys feel like also gives you an advantage because you've got broader reach, broader visibility into sort of the challenges of the world? Yeah, it's absolutely a different market. Just, I mean, that is a little bit off topic, but just the for you market and high end markets very different than say what we see outside. So the buying preferences for that market is very different, but not surprisingly, I would say that going down market kind of bang for buck price performance is absolutely, I think, the number one in that space. It's just Stuart, any commentary on just kind of open source? Globally, as Brian said, from kind of cloud, we tend to look very North American centric first and then kind of the globe catches up. Anything you can comment on kind of some of the global impacts of cloud? I think we're probably sitting here a little bit myopic on the North American market. I would say in Asia and China specifically, there's a tremendous focus. So on that, the hyperscale companies there are very large. And while we may not hear of them, that often in the US, they have tremendous scale and they have the same problems that any large hyperscale company has here. So the innovation and development is very aggressive. And I think from a general application perspective and being able to develop more homegrown solutions, the open stack and the open environment is critical to those because they've already got the foundation, right? So it allows them to develop a solution for their unique customer environments. Yeah, the software defined storage market is interesting because as much as you're talking about, like you said, control plane and data plane and gigabytes and so forth, you're also talking about APIs and you're talking about DevOps and deploying things faster. Are you seeing the customer makeup? Who's in the room when you're having discussions or are you starting to see developers be there? Is it still driven by ops teams just trying to deliver capacity faster? How does the dynamic change when it's software defined storage versus kind of the old two head box mentality? Yeah, that's a good question. I think as we often say in technology, it depends. And it depends on the flavor. When we look at a true straight up storage solution, it's kind of still the same people, the people who own the storage infrastructure. And they're looking for, a lot of times not to replace what they have, but to add to it and augment it. And I think their strategy over time is to replace it. But the number one thing is, give me a REST API, let me plug into that. I don't wanna know about what's going on underneath the covers, but let me integrate my stack with that. And then the other realm is where we see the convergence of compute and storage together. So what we would call hyperconverged. And that market is, I think still absolutely growing today. It's more application focus or your traditional VDI or virtualized environments. That, getting that to scale, I think is the next. And the customers there are a little bit different, right? That may be not your traditional storage person, but the server or business unit. So Dave, to wrap up, I wonder if you can, as we look out a little bit, how people thinking about Lenovo and I guess maybe how will things be changing as we look going forward? Yeah, well from an overall data set in the entire division, we'll be coming across as much more of an end-to-end solution provider, not just a one-trick pony with servers. We're gonna harness and leverage that server-based, particularly as it writes to server-based sand. We announced the Nutanix relationship that we had back in October. Lots of things come in from a storage-specific target later next month in May. So be on the lookout for that, but internally, we talked a little bit about how this is following a lot of the, kind of that classic innovators dilemma kind of thing where existing incumbents are offering more than what the market actually requires. So we're gonna target, and a lot of these ransom-like profits that the incumbents are garnering today, we're looking to bring a little bit, bring value back to the market. So stay tuned, we're gonna get pretty noisy pretty quickly. All right, Stuart, can you give you the last word here? You know, share some things people might not know about Lenovo or a product that kind of stands out in the marketplace. Yeah, I think to build on what Dave said, Lenovo's storage, most people would say, well, Lenovo's storage? I've never, I have no idea what that is. We're one of the top three server providers in the world. Storage for us is a new business, right? So we're on a crawl-walk run, we're very focused on delivering value where customers can adopt that. The great thing is, we have no legacy to protect, right? So we're gonna be very disruptive, right? We're gonna be, I think when you look back two years, you know, people say, man, they were the bad boy of the data center for storage, because they came in and did stuff counter to what everyone else was doing, right? But for us, it's a market that's ripe for changing the dynamics. Certainly the economic model, and that doesn't mean just cheap, cheap, cheap, but delivering value to customers that they can really trust, right? To be the number one trusted data center provider for storage as well as servers. All right, Dave Lincoln, Stuart McCray, thank you so much for joining us here. We'll be back with more coverage here from OpenStack 2016 in Austin. This is theCUBE.