 Live from Las Vegas, it's theCube covering Edge 2016. Brought to you by IBM. Now, here are your hosts, Dave Vellante and Stu Miniman. Welcome back to IBM Edge, everybody. Stu Miniman and I are going to wrap up. This is theCUBE, the worldwide leader in live tech coverage. All right, Stu, this is the wrap on day one. Classic IBM event where you get the main tent in the morning, got a really polished IBM exec in Tom Rosemilia, hosting the event. It started exactly at 8.30. IBM's never late on these things. We go to a lot of these big data shows, they start 15 minutes late. Hey, how you doing? IBM, like clockwork, really strong presentations in the main tent. We've had a number of guests on today, like Jason at MIT Technology Review and others. But here's what it comes down to. This franchise of IBM, the roots of IBM are in this group and it's completely transformed. You really got three lines. You got the mainframe, you got power and you got storage. And the mainframe is all about leveraging the install base and opening it up so that you can bring in, maintain applications, maybe bring in some new apps, but really managing those highest end transaction systems, maybe bringing in some analytics as well and blending those together. Power, it's all about analytics. We heard that from Stephanie. Analytics, analytics, analytics. Moore's Law run out of gas. We're going to open up and create this ecosystem. Totally viable strategy when people first heard about open power, they said, oh, there's IBM's Hail Mary. But IBM thought it through very successful initiative that continues to grow. And it's storage is a business that's being transformed. New manager in Ed Walsh. It's all about software defined. It's all about flash. It's all about getting R and D into the product pipeline. And for all three of those businesses, it's about going through the services channel, whether that services channel is cloud or the IBM global services group. So it seems like steady as she goes. Yeah, Dave, really impressive day. I mean, IBM does a really good job of with just the breadth and the depth of people at this conference. When we talk to the IBM people, what they're really proud of is that it's mostly the customers telling the story, talking about the business in back, talking about what they're doing. And wow, just some guests really that blew us away. You mentioned Jason from the MIT Technology Review. I mean, great publication. Started in 1899. I mean, look at where technology's come since 1899 to our last guest here. We had Mike from TechScape just talking about, just in the last decade or two, some amazing things that have changed what we're doing. Stephanie on talking about everything from down in the little Indian stuff to the power of open source and Linux transforming. So great customers, execs, and really not taught. We talked about some of the bits and bytes and of course some of the products that IBM has. But Dave, it's about really some of the transformational things. I was thinking back to the Jeff Hammabucker line that it's a shame that the sharpest minds of our generation are working on how to get better click rates on ads. That's not what we're talking about here at the IBM show. It's really how cognitive computing, how IoT, how all of these massive trends, cloud, and infrastructure are going to impact business and make it, Dave, what's it, it's a smarter planet is at the end of the day, the old IBM tagline. Well, that was a great campaign. But you're right, Jason Ponton's TED Talk was all about solving big technology problems or big problems with technology. And so, it's interesting, Stu, I mean this division, I think one of the biggest challenges this division has is the way in which IBM accounts for stuff. IBM wants to show growth in analytics, growth in cloud, all the new thing cognitive, that's where IBM wants the show, it's revenue to the street. They don't want to show, I mean they're not like motivated to show revenue and mainframe and storage and power. They want to show momentum, they are great. But those businesses, the fact is they throw up a lot of cash, they throw up a lot of profit. They're important, they're strategic. Ed Walsh definitively said, no, they didn't bring me in here to sell the division. You know, I'm here to transform it and that's a big part of what he does. So that's interesting, like I say, that's oftentimes it's those internal challenges. We heard from Jamie Thomas today talking about some of the R&D activity that's going on in IBM. It's always been a mainspring of IBM R&D is this group because a lot of the work that they're doing in core chips is fundamental to innovation. We heard about Moore's Law peeking out, Pat Gelsinger maybe disagrees, but I think it's kind of a fact that the physics of Moore's Law are reaching the end. David Floyer has written about that. So IBM's challenge is, okay, how do we maintain relevance and growth with this business and how do we support the growth areas of IBM? And at the same time, grow our business and be able to fund the R&D required and kind of good leadership to do that. We'll have Doug Baylog on tomorrow, Tom Rosamilia who runs the entire division of formerly big mainframe guy. So he's got a perspective there. Ed Walsh obviously on today. So we've heard from each of the, or will have heard from each of the division heads, some of the gaps, kind of dancing around hyperconverged, clearly something that they're going to partner with looks like Cisco, although Cisco we think has its own designs on hyperconverged. So that's sort of a question mark. Maybe IBM's thinking about leapfrogging that, they're not going to show too much leg about what's next down the road, but what's your take on the whole HCI play? Yeah, I mean, very much a focus at IBM on the software components. So, you're right, they danced around hyperconverged because they have a converged solution today in partnership with Cisco. And while today, converged infrastructure is much larger than hyperconverged, hyperconverged has a great growth rate. It'll take a few years for it to catch up, but where IBM has to play, we say our server sand, there's the enterprise server sand and then there's the hyperscale environments. And IBM of course looks to play in both of those environments. So they've got soft layer, they've got architectures there, they're pushing their software, they're working with partner technology to make sure that they've got a good basis with soft layer and in Bluemix, but today, if you say, okay, I want to buy VMware vSAN, I'm looking at that, I'm looking at Nutanix, which by the way, since we did our intro this morning, it looks like the IPO for Nutanix is finally happening, valued somewhere, what's one and a half to $2 billion. So that means hyperconverged with kind of the value of the IPO. Really, that's what they're saying the current value is. So not dramatically higher than, well, of course they went out and originally in December, the market tanked. They're not looking to do a big raise with the IPO. So they've got cash in the bank and they've got their growth rate, but yeah, they're not trying to go too big with the IPO. Well, it's interesting. So one of the things about IBM, and we've said this before, it's classic crossing the chasm, right? The new stuff isn't big enough, even though it's growing super fast, offset the decline in the old stuff, we've seen virtually every large technology company face this challenge. The difference with IBM is, unlike HP, which we said, had to shrink to grow, they split in two, they just sold off the software business, now maybe they're in a position to grow. IBM has yet granted it's sold off some businesses and it hasn't grown the top line, but it's been able to continue to hit its earnings, throw enough cash to do some mega stock buybacks. I mean, some people have criticized that, but you know, it's like Warren Buffett says, stock buybacks are a good deal when the stock is undervalued. And so, a lot of people think that IBM as a company has been undervalued for a while now, and probably is if you believe that IBM and Ginny, Rometti and her team's strategy is the right one that it was undervalued. Big acquisition of Softlayer several years ago after the whole CIA, Amazon, you know, kerfuffle, that was a wake up call for IBM, big investment there. Restructuring the analytics business, taking the services business, which is really, IBM was and continues to be largely a services led business, but bringing that into the different businesses, splitting up, you know, that software group as it were, bringing analytics, cloud and cognitive as different divisions, aligning with the different industries. So in other words, taking the industries which were within global services and aligning some of the software there. So, completely new strategies and streamlining the systems and technology, what was then the systems and technology business. Getting rid of the microelectronics business, we heard Jamie talk about that, they essentially paid to have that happen, but it cleaned up the operations. Getting rid of the x86 business, jettisoning that to streamline that business. So my point is if you believe in that strategy that has taken five years really now to finally see to fruition, you're starting to see that come into focus. And if that starts taking off, which it looks like it very well may do, then IBM is an undervalued company. A lot of people have written about that and could get back to the mojo that we've seen over the years from IBM. Takes IBM a while, it goes through these cycles. You know, you saw Gersner go through it, now, now Ginny's going through it. Certainly Palmosano continued the legacy of Gersner. He got out of the time when you sort of could see, uh-oh, something big has to change. Ginny put that in motion. It's funny, I was, you don't get it so much anymore, but the number one question about IBM that you used to get was, how long does Ginny have? Now that was a lot of competitive fud. A lot of the journalists like to talk about that. And my answer was always, I think long enough to prove that she was right. Because I think that the strategy was right on. Let's invest in the future, cognitive, AI, cloud, make some bets, buy some companies and go. And I think that the future is pretty bright here, Stu. Yeah, IBM's a real big company, Dave, so it does take time for it to move. There's so many different moving pieces inside there, but it's impressive. When we talk about the history lesson, Dave, and you talk about all the companies that have been felled over time. And IBM seems to be the exception that kind of proves the rule almost, as to every time there's been a major change, IBM's still there. It's funny, when I talk to peers of mine out there, they'll be like, oh, I'm going to the IBM Edge, which is power, mainframe, and Linux in storage. And many are like, what, mainframe's still around? It's like, there's still people that didn't realize that you could run Linux on mainframe, which I knew 15 years ago. So we talked today, containers came up a bunch. All the kind of latest things that we're talking about can live in power and mainframe. They all can live in IBM's cloud. So it all kind of comes together. And IBM just kind of has this big broad portfolio that they can pull it all together. Well, there's so much custom code built up in mainframes. It's just, it's too expensive to convert it. It's too risky to the business. So IBM and Oracle are so similar and so different. I mean, they're similar in the sense that they go after value. They don't chase volume, they chase profits, but they're so different in the way in which they approach ecosystems and markets. I mean, essentially, Ellison's trying to become the iPhone for the enterprise. IBM is trying to leverage open, and it's open system plays and other plays that it's made in the past to compete to lever this franchise that is IBM. And we've talked about a lot today. We haven't talked much about Amazon. Talked a lot about Dell, EMC, because it's sort of a quasi storage show here. You're seeing a whole new wave of storage innovation. Startups are still there. IBM wants to be a player there. So we'll see if Ed Walsh can actually bring back IBM to the top spot. They mentioned number two in storage. Everybody slices. And everybody's number one or number two in storage. It's sort of interesting how they slice and dice the IDC numbers. But the bottom line is can they grow again? And that really is what the street wants to see. I'm sure that's what Ginny wants to see. I'm sure that's what Ed Walsh wants to see and Tom Rosamilia. But big business, still highly relevant and supportive of the cognitive and analytics initiatives that IBM has. Anything from the IBM Go website that you've been seeing, Dave, I love kind of a tweet velocity. He's got some of the influencers. Lots of things move in there. So ibmgo.com is the sort of collection and compendium of all the content associated with the top five or six IBM events. And so what we do is the cube model. We pump in cube videos, cube gems, maintain content, breakout session content, all floated into IBM Go and the way it works is you got to sign in to see the main tent videos. You don't have to sign in to see the cube videos, of course. But all kinds of Silicon Angle commentary will flow in there, third party articles. So check out ibmgo.com. Obviously check out siliconangle.com, wikibon.com for all the research and crowdchat.net slash IBM Edge. This is a wrap stew day one, IBM Edge. We'll be here tomorrow. We start off at 10 30. 10 o'clock, 10 o'clock tomorrow, 10 o'clock. Local time, we're in Pacific time. Thanks for watching everybody. We'll see you tomorrow.