 It's theCUBE, covering VMworld 2015. Brought to you by VMware and its ecosystem sponsors. And now your host, Dave Vellante. We're back at Moscone. This is theCUBE, this is SiliconANGLE, Wikibon's continuous coverage of VMworld 2015. This is our sixth year at VMworld. The first time we've been in Moscone North at the street level, we got two huge sets. VMware really did it up, tricked us out this year. Really excited to have Mike Kuhn and Eric Herzog from IBM, longtime CUBE alum. Great to see you guys. Good to be back. Thank you, Dave. So, Eric, we had you on the other day, love the shirts, you know, you must have a closet full of them. Same shirt. Yeah. TMI. So, we got the good Kool-Aid injection the other day, so Mike, let's start with you. What's going on here at VMworld? Generally, but also, you know, IBM, give us the update. Sure. So, IBM is certainly expanding its Flash portfolio across all of our products. What we're talking about here at VMworld is how we're integrating by design all of our products with key partners across the ecosystem, VMware being a key one that we're doing with all of our spectrum control, spectrum protect families, all of our vCloud, all of our vSphere products that they have. We actually did a cool session yesterday called Project Capstone. It was something with vSphere and IBM and HP Superdome, IBM Flash Systems. We talked about how we put some unbelievable benchmark performance with their new product, collaborating on an Oracle database environment with HP Superdome and IBM Flash Systems. So, some unbelievable numbers. It goes to show the presence and the scope of Flash and how Flash is transforming the storage industry and the alternate use cases that are being deployed every day. So, we talked to a couple of shows ago. You were talking about Dave, we are going to lead in Flash. That came true. We talked yesterday about, you got leadership in units and terabytes, revenue, not there. Your premise was because you're pricing fairly, aggressively, you're not giving this stuff away, you're IBM, you don't give this stuff away. We know that, but you're pricing the value. Talk about that dynamic a little bit. Well, I think the key thing is when Flash first came out, everyone thought it was a revolution and it's actually an evolution. First computers, hmm, punch cards, then tape, then hard drives. Just look at the old 80 movies where you see all tape and then at the end of the 80s, you see all hard drives in a Schwarzenegger spy movie where they show the data center or any other movie where they show the data center. Now it's gone to Flash. So, we felt that in order to empower Flash to really capture the data center, we had to price it right. Price it fairly, we have real time compression, we have incredible effective capacity, no reason to overcharge a customer for something that's a wave. As we've been saying all show, there's oceans of data out there and we're riding the wave of Flash right on the head. We are number one as we ride that surfboard in to the data center into people's clouds and we do that by charging a fair price for what we deliver with extensive software capability and incredible performance and availability for all Flash solutions. So Mike, it was my pleasure to actually be down in New York City when you guys announced the billion dollar investment that Mills announced with his playbook. I loved it. I had dinner with some of your customers that night and sort of tracked what's going on there, but let's take us back to that April, back a few years ago when you guys made this announcement, you said we're going to plow up, chips are in, we're all in, billion dollars. What's transpired since then? How have you been spending that big bag of money? Well a lot. So we talked in August 2013 about a billion dollar investment around all Flash technology. The all Flash solution, we're on a third generation product right now, the V9000 and that's done extremely well in the marketplace. Since we did that launch a little over two years ago, we've shipped over 6,000 systems in the marketplace. So it's had phenomenal success. But I think the story is that all of our IBM storage products, solutions today, all have some kind of Flash inside. So we're no longer delivering disk solutions, we're delivering hybrid solutions, we're delivering all Flash solutions. So that's certainly where the marketplace is. So we're starting to see some of the same technology and the same things that IBM's been able to do with the hard stuff around making it rock solid, ready for the enterprise, ready for the data center, and solving some of the endurance issues. Those are actually transcending into broader parts of the IBM storage product line as well. So when you think about the R&D investments that you make, obviously you have to spend some money in making the Flash reliable, like you mentioned, endurance, a lot goes into software. You've obviously got some integration and some packaging. How do you sort of spread the wealth, if you will? Well, you spread it based on where the market's going. And we talked about this, when we made the strategic acquisition, we bought a really hardware optimized design. We've now called that a Flash core technology, because as you know, there's only a handful of people in the industry that do what we do, which is actually take the NAND Flash chips directly and drive innovation on top of that. So we do a hardware optimized IBM engineer design off of that innovation. But we wanted to have a rock solid enterprise ready software stack. We didn't want to have a startup stack, a software stack that was two years old, right? So we spent a lot of time, a lot of money on Flash optimizing and bringing forward our software products like Spectrum virtualize and Spectrum control to truly make it optimized for Flash. What that means is it just runs really, really fast with the Flash system, right? So we've spent a fair amount of money in the software portfolio as well as all part of our overall overarching strategy. We launched the IBM Spectrum family, as you know, earlier this year, announced a billion dollar initiative around that. That's in addition to what we announced previously on the Flash design. And of course, we're seeing some of that Flash technology from a solution layer also cut across our store wise line, our DS8 line or XAV line as well. I want to unpack that a little bit because sometimes we get lost in the product names. And I promise, Eric, I will get to you, but this is sort of a little bit of history in my VMs. You're relatively newbie still. So what you're talking about is when you first acquired the Texas memory system product, you allowed customers to have a stack by putting that product behind a sand volume controller. We had a decade plus robust stack hardened. You've now integrated that software capability, which was the sand volume controller into a new product that has that embedded, right? Is that the right description? I just to get you caught up, I mean, sand volume controller was the previous name, now Spectrum virtualize, right? And of course, initially it was SVC plus the Flash system, but we've done a lot of things in this additional integration, integration management code to actually make the experience a lot simpler to deploy, right? A lot easier to deploy. So it wasn't just about having the fastest performance and having a robust software stack with all the functionality. It was all designed around making it very easy to deploy as well. And so I think there's lots of value to having sort of a single software stack, whether it's our store wise line or V5000, V7000, all the way up to our all Flash design, which is the V9000. We have also announced earlier this year, as you probably know, an all Flash V7000 store wise. It's an SSD based design, much like some of the startups still have out there, but it sort of fits that part of the marketplace as well. So having all on a single stack, what you called sand volume controller, now Spectrum virtualize, is a lot of where the investment has gone as well. Yeah, so now, Eric, you sort of own this portfolio now and there's a lot in there. David Fleury just wrote a piece sort of delineating latency storage and capacity storage. And so to participate in all of those, you got to have a spectrum of products, no pun intended. So talk about the importance of the portfolio and why you're comfortable or confident that IBM's portfolio is a winning one. Well, I think the key thing is at IBM, it's all about the right tool for the right job. So in certain deployments, the best solution is a store wise V5000. In other deployments, it's our upper end six nine box, the DSA 1000 for workloads that always need to be available, always reliable. We have our full set of software, scale out NAS and scale out block with both spectrum accelerate, scale out block, scale out NAS with spectrum scale. So we want to make sure that whatever the workload is, we can handle it. We've also done that by expanding with our ecosystem partners. We're here at VMworld. We're going to be at Oracle world. We have lots of integration with VMware, VASA support, VAI support. In fact, at one o'clock today, I'll be presenting on our integration of spectrum virtualize with the new SRM from VMware. And as Mike mentioned, yesterday he spoke about the CapTone project on virtualizing high end Oracle workloads. We've expanded it beyond that. We have other partners, Atlantis, Catalogic for data copy management services. And we work with Catalogic, for example, through our channel partners. It's a channel play. It allows for test and dev and the ability to manage all those copies of data cost effectively. It can be easily done by both storage admins, but also by the end users of the customer. So you don't have to have the storage expert managing copies of data all over your data center. So we work with our ecosystem partners like VMware, like Catalogic, like Atlantis. We do lots of work with Oracle to make sure that we cover our broad base. It's all about the data. As much as I love storage after 30 years in storage, it's all about the data. It's not about the storage. It's how the storage optimizes their data for business value. And working with partners like VMware, Catalogic, Oracle, we do lots of work with Microsoft. It's all about making sure our storage makes all those applications work better. I love it. Your buddy's at Oracle. I remember Joe Tucci a couple of years ago stood up at Oracle Open World and was introduced by, I mentioned my friend, Stafford Katz. I said, oh yeah, this is the industry we live in, right? We fight and we collaborate. So talk about how you go to market with the catalog, the Catalogic piece. Where does that fit into the whole stack? So look, let me just sort of bring it back to sort of how we look at the marketplace right now. There's this hot edge and there's cold core of data, right? Data's exploding. So you've got flash and the fastest tier of storage on the hot edge. And you've got this core of data that you have on cheaper storage in between. You have to have the software and the intelligence to be able to manage that because data isn't always hot or always cold. It gravitates, right? So what we're seeing is that hot edge of data is starting to expand with these new use cases. So we've been doing lots and lots of partnerships across our ecosystem to expand out these use cases. Catalogic is a great example. Copy data management, right? There's lots of use cases around copy data management. How do you do a better job at understanding and managing and orchestrating and self-provisioning that? And so one of the key things about Catalogic, just to give you a couple of data points is, we're able to, when we do copy data management, we're able to do it in place, which means it stays on the V9000, the flash system. It doesn't have to move off it. It's agent-less, so there's nothing that gets into the data path, so it runs really, really fast. And of course, it's got lots and lots of orchestration and self-provisioning that makes it very easy for the system administrators to set the policies, but to have the app owners and everybody else sort of say, I want this, I need this, I can get it now. Okay, so they're essentially a developer in your ecosystem, right? So is that right? Correct, and they made some major announcements this week and they launched that it's available, it works with IBM, both our store-wise line and our flash system line, and it's available on the channel right now. It's a meet and the channel play. To me, the flash is interesting, because, and we've written a lot about this, is because of the developer angle, the test dev use case, where you can actually start spinning up copies and give developers more current copies so they're not working off of old data, they're working near production level data. Have you started to see that? Have you had conversations with customers? Absolutely, there's a demand for that, and as you can spin up these copies so fast, you can approach real-time, you can do not real-time analytics, but close to real-time analytics, right, when you spin up these copies so fast and you leave them in place on the flash storage array. So you spin them up very quickly, we're seeing that you can move your deployments, you get DevOps movement or deployments back into production, we're taking these fast snapshots of data and actually doing analytics right there on the flash. So I buy that from IBM, I buy that from the channel, I buy that from CataLogic, where do I? It's available right now in the channel from all of our partners, other partners are our partners, I think it's available as well from CataLogic today. They have a free download off of their website, you can download it today, play with it, buy it from them, or buy it in the channel. But it's a solution that I can buy it as part of my IBM portfolio. Can buy it today. Right. So what else has happened in it, VMworld? You got, this is day two, what's the action like at the IBM booth and customer conversations? So it's been very good. As we've done that's unusual as we are actually having theater presentations, but not the traditional theater presentation, which is all about our software does this or our solution does that. For us, it's all about the end user. So we have several of our channel partners and several of our other partners like Cisco making presentations at our booth about how IBM storage customers optimize their VMware environment, virtual server, virtual desktop, or a VMware based cloud using IBM storage. So instead of talking about our stuff, we're talking about really their stuff. What are the users really doing? And that's a unique way. Everyone else is pontificating about their array does this or their software does that. And we're really pontificating how do we optimize VMware environments and the data that sits on those VMware environments with real customer examples. Not what we say, not what our competitors say, what the customers really say they're doing. And we think that's a powerful measure. This is an end user show, not an industry show. The end users want to come and understand how do you make my data better, my VMware better, my cloud based on VMware better. That's what they want to understand. We're doing that. What do you make of VMware's moves, particularly with regard to VSAN? What are customers, did they ask you about that? So when you look at our product line, we're really in the mid range and above. We don't really have low end things. And we would see that while VSAN is talking about a future expansion, right now they're pretty much in the lower end of the storage space where we're not there. And remember, as you already pointed out with the Oracle example, my competitor also may be my friend. So while that group may be doing certain things, we're working with a group that's all focused on high performance Oracle workloads and we're the only flash array they're partnering with in that environment. So yes, VSAN and everyone's got stuff like that. So what, we've got software to find at the upper end with Spectrum Accelerate and Spectrum Scale that something VSAN can't do. So they can be in a certain part of the market, we're in another part of the market and we can still work together on a number of projects. So essentially, I mean, it used to be at EMC, but you know EMC would not sub-optimize its relationships, sub-optimize VMware and sacrifice its relationships in order to optimize EMC. There's maybe some internal discussions around that, but VMware's the asset, right? But what's your relationship with VMware? I mean, you're going bigger this year at VMworld. Right. And you know, you certainly, IBM is a server vendor. You used to have a big presence here, but the storage presence is bigger this year. What's behind that decision? Well, again, VMware is a huge workload in the virtual environment. By the way, we support other virtual workloads as well. OVM, KVM, Hyper-V, the open initiative, open stack support as well as VMware. So what we want to do is make sure that our customers, particularly enterprise customers, which may have multiple hypervisors can support things. At the same time, we have custom integration with VMware across the board, whether it's VASA, VAI, the Capstone project in particular is a very high-end market expansion for VMware and we're riding that wave with them. We're both on the same surfboard, riding that wave towards virtualizing high-end Oracle workloads in very broad deployments, which right now is hard to do, not with the partnership of VMware and IBM Flash Systems. We now can get customers there. We can get our business partners there. We can get cloud providers there. Whatever the end user deployment is, we can get them now into these environments. So partnering with VMware for us is very critical. And by the way, while there was a server division in the X86 space, the storage division is participating with VVOLs and VASA and VAI and all those programs for years and years. It just was a story that wasn't being told. So we're now here to shout from the rafters that IBM is optimized for VMware environments, server, VDI, cloud, whatever it is, we have the right solution to meet the needs of the end user, which is what it's all about end users and how they get value from that virtualized data. That's a big part of what you bring is communicating what you guys are doing there. Marketing is what we call it in New England. Mike, I wanted to ask you about the organization. A lot of times companies don't like to talk about the internal plumbing of the organization, but I believe that if you can get the organization right, a lot of really good things can happen. Ginny made some major changes in the organization I don't know, recently. I've been out so recently. So it's starting to take shape now. You know, the Rosamilia group, it looks, you know, the software group was split into many, you know, Watson, Watson analytics, you know, Pitchiano's organization, the cloud group. So she really tried to align, you know, she, we put it on her, it was a team effort, I'm sure, with the trends in the marketplace. What have you seen as an IBM executive in terms of the results of those organizational changes and the momentum that it's created? I think the value of the shift was about providing clarity for the markets moving, right? So some of the big bets we put around cloud, around analytics, around security, I mean, those are big bets that IBM has made. You talked about, you know, Tom Rosamilia's IBM systems group. I mean, there's as much software in that business unit as there is hardware today, right? We don't sell hardware anywhere, we sell solutions. So we're sort of setting the strategy based off of, you know, a client point of view, a client perspective. It's about workloads, it's about applications, about use cases, it's about the value to the client. I mean, most of the last time you saw IBM's story drawn stage at VM where, with HP Superdome, in Oracle, right? In Oracle. Yeah, I mean. Never. But it's the best thing from a client. It's a client-led client view from a strategy standpoint. And it's about providing clarity with the bets that we're placing for where the markets moving. Great. And we've got to leave it there. Thanks so much for coming to theCUBE. I was a pleasure having you both. Great. Thanks for the rest of the show. All right, keep right there, everybody. We'll be back with our next guest right after this word. This is theCUBE, we're live from Moscone, VMworld 2015, right back.