 Live from Las Vegas, it's theCUBE. Covering IBM Think 2018, brought to you by IBM. Hello everyone, I'm John Furrier. We're here inside theCUBE, studios at Think 2018. We're extracting the signal from the noise. Obviously they're a live event coverage leader covering IBM Think. The Big 10 event, taking six shows down to one. Big 10 event, everyone's here. The customers, developers, all the action. My next guest is Jamie Thomas, general manager of IBM Systems Strategy and Development. Good to see you, CUBE alumni. Thanks for coming, bye. Good to see you. It's always one of the highlights of my parts of these meetings is getting a chance to talk with you all about what we're doing. We've had, I can't remember how it's eight years now, but we've been on pretty much every year getting the update. And I was just riffing on the opening about blockchain, the innovation sandwich at IBM. I'm calling it the innovation sandwich. That's not what you guys are calling it. But it really is about the data. And then blockchain and AI, that's the main thing with cloud as the foundational element. You're in strategy, systems. So you have all the underlying, enabling technology with IBM and looking at that direction. I mean, part of the innovation sandwich is systems. Absolutely, and I think fundamentally what we're seeing is all of the work and innovation we've invested in over the last few years is finally culminating in a really nice conclusion for us, if you will, because if you look at the trajectory of those forces you spoke about, right? Which is how do we harness the power of data? Of course, to harness that data, we have to apply techniques like artificial intelligence, machine learning, deep learning to really get the value out of the data. And then we have to underpin that with a multi-cloud architecture. So we really do feel that all of the innovations we've been working on for the last few years are now coming to bear to help our clients solve these problems in really unique ways. Yeah, and then we've had many conversations. We've gone down the weeds. We've been under the hood. We've talked about business value. But I think what I'm seeing and what theCUBE is reporting over the past year and more recently is there's now a clear line of sight for the customers. And the interesting thing is the models flipped around as we've always been saying, but it's clear. DevOps enable cloud to be successful where you have a programmable infrastructure. You've been doing software-defined systems for a long time. But now with blockchain, cryptocurrency, and decentralized application developers, you have inefficiencies being disrupted by making things more efficient. So we're seeing the business logic be the intellectual property. So users, business users, business decision makers are looking at the business model of token economics. It's kind of at the top of the business stack that have to manage technology now. So the risk is flipped around. Used to be the technology was the risk. Technology purchase, payback period over 10 plus years, more longevity to the cycle. Now you got agile, now going real time. This requires everything to be programmable. The data's got to be programmable. The systems have to be programmable. What's the IBM solution there? How do you guys fit that formula? Do you agree with it? Your thoughts? Well, absolutely. I think that fundamentally you have to have infrastructure that can really meet the needs and characteristics of these next generation killer applications, right? So whether that's blockchain or whether we're talking about artificial intelligence across numerous industries and every industry is looking at applying those techniques, you have to ensure that you have an architectural approach with your infrastructure that allows you to actually get the result from a client perspective. So when we look at the things that we've invested in, we're really investing in infrastructure that we feel allow clients to achieve those goals. If you look at what we've done with things like Power9, the ability to create a high-speed interconnect with things like GPU acceleration using our partner NVIDIA's technology as an example, those are really important characteristics of the infrastructure to be able to enable clients to then achieve the goals of something like artificial intelligence. What's different for the people that are now getting this coming in? How do you summarize the past few years of strategy and development around the systems piece? Because systems programming is all about making things smaller, faster, cheaper, more as law, but also having a network effect in supply chains or value chains, blockchain or whatever that is, that's the business side. What's new, how do you talk about that to the first time of someone who's now going, okay, I get it, it's clear? What's the system equation? How do you explain that to someone? Well, I think it's a combination of focusing on both economics, but also having a keen eye on where the puck is going. And in the world of hardware development, you have to have that understanding at least a year and a half, two years back to actually culminate in a product offering that can serve the needs at the right time. So I think that we've looked at both of those combinations, so it's not just about economics, it is about also being specialized, being able to serve the needs of the next generation of killer applications and therefore the programmers that support those applications, right? What's the big bet that you guys have made? If you can look back of the past three, four years in the trials and tribulations of storage, compute, cloud, and it's been a lot of zigging and zagging. I mean, not pivoting, I mean, because you guys have been innovating. What's the one thing you can, a few things you can point to, one thing or a few things to say, that was a good bet. That's now fruits coming off the tree and this new equation. Well, I think there's a few things and all of these things were done with the context that we believe that artificial intelligence and cloud architectures were here to stay. But if you look at the bets we made around the architecture of Power9, which was really, how do we make this the best architecture in the world for artificial intelligence execution? All those design points, all of the thought about the ecosystem around the partners, open power, the connectivity between the GPU and the CPU that I mentioned, all of that and the software stack, the investments we've made in things like PowerAI to allow developers to easily use the platform for that, I think have been fundamentally important. Then if you look at what we did in the Z platform, it's really about this notion of pervasive encryption, allowing developers to use encryption without forethought, ensuring that performance would always be on, that they would not have to change their applications. That's really fundamentally important for applications like blockchain. To be able to have encryption in the cloud, the kind of services that we announced yesterday. So these bets of understanding that it's not just about the short term, it is about the long term and this next generation of applications. And as we all, as you and I know, you can't serve those kind of applications without having an understanding of the data map. How are you going to manage the just huge amounts of data that these organizations are dealing with? So our investments for years now in software-defined storage, our spectrum storage family and our flash have served us well. Because now we have the mechanisms, if you will, at our fingertips to manage storage and data in these multi-cloud architectures as well as improved data latency, access to data through the things we've done. So performance is critical there. Yeah, absolutely. The things we've done with flash and the things we've done with our high end storage with the mainframe, the Z hyperlink capability that we've built in there between the Keck and the storage device, those are really, really important in this new world order of these kinds of next generation applications. Yeah, skating through where the puck is is great and then sometimes you're still there and the puck comes to you. However, you might remember when we look at it. But take a minute to explain your role now. What specifically does systems mean? Is that, where does it begin? When does it stop? We mentioned software stack. It's obviously software-defined storage. We get that piece. What's the system portfolio look like for you? We're focused on the modern infrastructure of the future. And of course that infrastructure involves hardware, involves systems and storage, but also fundamentally involves infrastructure-related hardware, software stacks, right? So we own and manage critical software stacks, the creation of things like PowerAI, the work with the IBM Cloud team to ensure that IBM Cloud Private can support our platforms, Power and Z, out of the box. Those are all fundamentally important initiatives. We of course still own all of the operating systems everybody loves, whether it's Linux, AIX, ZOS, as well as the work around all the transactional systems. But first and foremost, there's a really tight tie as we all know between hardware and then the software that needs to be brought to bear to execute against that hardware. The two have to be together, right? Yeah. What about R&D? What's the priority on R&D? It's the continuation of something you just mentioned, but is there anything on the radar that you can share on R&D that's worth noting? Well, I think clearly we're working on the next evolution of these systems already. The next series of power nines, we have new machines rolling out this month from a power nine perspective. And we're always working on the next generation, the main frame of course. But I say that our project that's gotten a lot of note at the conference is our quantum project. So IBM Systems is partnering with IBM Research to create the quantum computer. That would be the most leading edge effort that we have going on right now. So that's pretty exciting. And that's always good stuff coming out. Smaller, it's just small. How big is this quantum? You can put it on your finger. Was that the big news? The lot of great action there. Well, the quantum computer is a very different form factor. It's a truly revolutionary event, if you will, from a hardware perspective, right? Because the qubit itself has to run at absolute zero. So it has to run in a very cold environment. And then we speak to it through wave-based communications, if you will, coming in from an electronic stack. But it's fundamentally a huge change in hardware architecture. What's that going to enable for the folks watching? Is it more throughput, more data, new things, what a kind of enablement? You guys have a vision. Well, first of all, the quantum computer will never replace classical computers, because they're very different in terms of what they can process. But there's many problems today in the world that are really not solvable, right? Where it's problems around chemistry, material science, molecular modeling. There's certainly certain financial equations that really are processable, but not processable in the right amount of time, right? So when you look at what we can do with quantum, I think there will be problems that we can solve today that we can't even solve, as well as it will be an accelerator to a lot of the existing traditional systems, if you will, to allow us to accelerate certain operations. So if we think about the creation of more intelligent training models, for instance, to apply against artificial intelligence problems, we could anticipate that the quantum computer could help speed up the evolution and development of these models. And so there is a lot of interest in working on this evolution of hardware, because it's somewhat like the 1940s era of the mainframe, where the very beginning stages, and we all know that when we evolved the mainframe, it was through significant partnerships, helping the man get to the moon, working with airlines on the airlines reservation system. It was these partnerships that really enabled us to understand what the power of the machine could be, and I think it will be the same way with quantum as we work with our partners on that endeavor. Talk about the, because performance is critical, and blockchain has been criticized as having performance problems writing to the chain, if you will, so there's clearly there's a problem opportunities basis you can work on there. What are the problems in blockchain? Is that your area? Do you work on that? Are you vectoring into blockchain? Well, of course, we're very involved in the blockchain efforts because IBM Secure Blockchain is running on our Z14 processor. One of the things we want to take advantage there is not only the performance of the system, but also, once again, the security characteristics, the ability to just encrypt on the fly, the exploitation of the fast encryption, the cryptology module, all of that is really key, fundamental in our journey on blockchain. I also think that we have a unique perspective in IBM on blockchain because we're a consumer of blockchain. We are already using it in our CFO office, and I've spoken to you guys before about supply chains. I own the supply chain manufacturing for IBM, and we are also running a shadow process for blockchain where we're working on customs declarations just like Meersk was talking about yesterday, because customs declarations is a very difficult process, very manual labor intensive, a lot of paper, and so we are doing that as well, and we'll be a test case for IBM's blockchain work. And I heard from last night, you have 100 customers already. You heard my opening. I was ranting on the opportunity that blockchain has, which is to take away inefficiencies. And supply chain, you guys know stranger to supply chain. You've been bringing technology to solve supply chain problems for generations at IBM. Blockchain brings a new opportunity. It does, and my team fundamentally realizes this, of course, as a supply chain organization. We ship over five million pieces of stuff every year. We're shipping into 170 countries. We have tight but dispersed manufacturing operations, so we see this every day. We have to ship products into every country in the world. We have to work with a very dispersed network through our partners of logistics. So we see the opportunity in blockchain for things like customs declarations as a first priority, but obviously the logistics network, there's just huge opportunities here where far too much of this is really done. You guys can run the table on this area. I mean, blockchain supply chain chain, I mean, similar concept, it's just decentralized and distributed. Well, I think supply chain is such an area ripe for this kind of application, something that's really going to break through what has been so labor intensive from a manual perspective, even if you look at how ports are managed, and Meers talked about that yesterday. So you're long on blockchain. I'm excited about it because I'm a customer of blockchain, right? And I see the issues that occur in supply chains every day, and I fundamentally think it will be a game changer. Yeah, I'm biased, I mean, we're trying to move our media business to blockchain because everything's decentralized. I'm excited by the application developer movement that's starting now. You're starting to see with cryptocurrency token economics coming into play around the business model innovations. Do you guys talk about that internally when you do R&D, you have to cross connect the business model logic, token economics with the technology? Well, of course, that's a fundamental part of what the blockchain focus on, right? It's just like any new project that we're embarked on, you've got to get the underlying technology right, but you always have to do that in the context of the business execution, the business deployment. So we're learning from all the engagements we're doing and then that shapes the direction that we take the underlying technology into. Jamie, talk about the IBM Think 2018, it's a big event. I mean, you can't multiply yourself times six. You go to all the events, this is a big event. You must be super busy. What's the focus, what's your reaction? What have you been talking about? Well, it's kind of nice to talk to you kind of towards the end of the event. Sometimes I talk to you guys at the very beginning of the event, so they all kind of have a retrospective of the things that have happened. I think there was a great event in terms of showcasing our innovation, but also having a number of the key CEOs from various firms talk to us about how they're really using this technology. Great examples from RBC, from Meersk, from Verizon, from the NVIDIA CEO yesterday, and also really pointed discussions around looking into the future. So we had a research talk about, Irvin Krisha spoke about the next five big plays, which artificial intelligence, blockchain, quantum were on that list, certainly. As well as now, we'll be having a quantum keynote later today, so we'll dive into quantum a little bit more in terms of how the future will be shaped by that technology. But I think it was a nice mix of hearing about the realization of deploying some of the things that we've done in IBM, but combined with where are things going and stimulating thought with the client, which is always important in these kind of meetings, right, is having that strategic discussion about how we can really partner with them. Real conversations. Yeah, real conversations about how we can partner with them to be successful as they leave this conference and go back to their home offices. Well, congratulations on a great strategy. You've been running strategy, we know we've talked in the past, kind of had to bring it all together and bring it into one package, one message, but still have the ability and flexibility to manage the tech. So my final question for you is, where's the puck going next? So where are you skating now, strategy-wise, to catch that next puck? Well, I think that what we'll see is a continued progression, if you will, and speed around some of the things that we've already talked about here. I think there's been a lot of discussion, for instance, around multi-cloud architectures, but I really think we're still at the tip of the spear in fundamentally getting the value out of those architectures. And that real deployment of some of those architectures as clients modernize their applications and really take advantage of cloud, I think will drive a different utilization of storage and it will require different characteristics out of our systems as we go forward. So I think that we're at the tip of a journey here that will inform us. So modernization and business model innovation, technology enablement all coming together. We were talking about that, right? So think about the primary use case of IBM Cloud Private right now is modernization of those applications. So as those clients modernize those applications and then start to deploy these new techniques in combination with that, around artificial intelligence and blockchain. There's just a huge opportunity for us to continue this infrastructure innovation journey. International business machines, the name of the company, obviously, you know my opinion on this, we are reporting that the real critical, industrial property is going to, for customers, it's going to be the business innovation, business model opportunities and blockchain, AI really accelerate that piece. And as Jenny said yesterday, we're here to serve our clients to make sure that they're successful in moving from where they have been and the continuation of this journey. And so that will be where we keep our focus as we go forward. Well, I'm looking forward to talking about token economics. I think that's going to be a continued conversation. As you guys create more speed, more performance, the business model innovations around token economics, and then decentralized application developers will probably impact IoT, will probably impact a lot of these fringe emerging use cases that need compute, they need power, they need network effect, they need data. Absolutely, so I mean there's been a lot of discussion this week about making sure that we move the processing to the data, not the data to the processing because obviously you can't move all that data around. That's why I think a fungible architecture and agile architecture will give clients the ability to do that more effectively. And as you said, we always have to worry about those developers. We have to make sure that they have the modern tools and techniques that allow them to move with speed and still take advantage of a lot of those. Business users. Exactly, exactly, yeah. Well, are you having fun? I'm having great fun. This has been a great conference. It's always great to talk with you guys. We really appreciate your friendship and always coming on theCUBE and sharing your insights. Always great to get the data out there. Again, we're Data Driven. This Data Driven interview with Jamie Thomas, general manager of system strategy and development here at IBM Think. Inside theCUBE studios, we're on the floor. Here in Las Vegas, I'm John Furrier. We'll be back with more after this short break.