 From Las Vegas, expecting the signal from the noise. It's theCUBE, covering InterConnect 2016. Brought to you by IBM. Now your host, John Furrier and Dave Vellante. Okay, welcome back everyone. We are here live in Las Vegas for IBM InterConnect 2016. This is Silicon Angles theCUBE. It's our flagship program where we go out to the events and extract the signal from the noise. I'm John Furrier, my co-host Dave Vellante. Next guest is Doug Bailoff, CUBE alumni general manager of power systems. Good to see you again. It's great to be back on theCUBE. Every year you're always on giving us the update but this year more than ever is the power of the cloud, power of the hybrid cloud. Software value proposition's clearly been out there for a while. What's the update? What's the progress on power and specifically the software aspect of it because we kind of heard some things in the keynote today, cheaper compute, get closer to the hardware. I mean, I'd say inexpensive compute. But what is this all happening? Yeah, so I mean, what a difference a year makes from the last time we got together here at this event last year was, I mean, we were still sort of progressing through the power transformation. If you remember, you know, we sort of had called a bold set of plays around power, which was one, completely go open, fully embrace open source software, open standards. We created the open power foundation and we jumped it up to hardware and obviously power rate was coming to market, right? So here we are now a year later. We had four quarters of growth in 2015 for the power business. First time we've had that in four years. So that was, you know, validation of the strategy we're on. In fact, we saw Linux on power really drive, you know, triple digit, millions of revenue based on solutions, right? And really all around big data. So now here we are in 16 and... Solid revenue growth too, right? Solid revenue growth, right? 4% at constant currency for the full year. In fourth quarter... 9% in the fourth quarter. It was 8% in the fourth quarter, right? So we sort of saw an acceleration. Acceleration, nice, yeah. You know, so a lot of folks say, G-Stug, you just got to do it again. And I'm like, actually we don't. Because this is everything we did over the last two years to transform the business, the bricks in the foundation we laid, the new applications we ported. Those are done, we don't have to do those again. We need to take those now and continue to accelerate in 2016. And give us the update of the community too. Well, you know, open power now is, you know, no matter what number I say, I'm sure it's wrong. It's 180 plus members now. And you know, we were reflecting back here two years ago in April of 2014 when we launched this. It was like 24 guys, you know, scribbled on bar napkins. We had like Rice University signing up at the event to join. So 180 plus members later, 100 plus innovations, 30 hardware products out there. This thing really seems to have pretty good legs. And it just keeps growing. And it really is all about, you know, so you say why? Let's bring it back to the Apple comment from this morning, right? Of software getting close to the hardware to bring value to clients. You know, we all know there's a headwind in the marketplace around Moore's law, right? The thing we've all grown up with, which is the processor doubles in transistor density, doubles in performance every two years. And every other part of the system just tries to keep up. Memory IO, that's changing. And yet we're heading into a period of the cognitive business era where that demand for compute, that demand for memory, that demand for algorithmic computation is becoming so intense just as the thing we've all countered on is sort of winding down. So there's gotta be... It's not a category like high performance computing. It's native, it's table stakes. It is table stakes. I mean, cheap storage common could be more of a lines of, you know, storage is gonna be infinite and compute it potentially infinite. Right, right. Lower cost, maybe not cheap, but that means, okay, still high performance is table stakes. So I'm feeling good we've sort of caught this thing right, which is we recognize to deliver ongoing sort of Moore's Law in a new way. We needed to create a community of innovators. Acceleration is critical to this. If you think about, you know, what we're doing with accelerators, whether it be FPGAs or with our partnership with NVIDIA and Melanox around IO, or we had a company, Edeco, who does genomic acceleration on stage with me here today. The point is in this cognitive business era where things wanna run faster while Moore's Law is kinda winding down, it comes down to new ways in which that occurs and acceleration equals cognitive for me. Let's talk about that. Let's talk about the value because this is where it's interesting because you can say I'll pay a price for higher performance, better security, better design chips where you got some native capabilities. And then you got the software model where you got open source going on. How do you guys reconcile that? Because that is really the key dynamics going on. People wanna have bulletproof boxes now because of security threats, for instance. Open source is pervasive. It's home of the generation. How do you guys talk about that? I mean, is that on your business roadmap? Are you gonna charge more? I mean, people will pay for compute. They will, but it's all gonna come together in a context of price performance. So as we look at, one of the things I've learned over the last year is coming in with my Linux infrastructure is better than theirs. There's being x86. It's not a great story. You gotta bring it in in the solution context, right? Where that solution has a price performance value to the client. And if you can deliver better performance at a better price performance, that's a real winner. And that's what we've been able to do with this. So no spec wars. It's simply solution. The spec is a micro benchmark, right? It sort of measures one thing and it's principally the process. So now, a lot of the hyperscale cloud companies use that as a starting point, but it's a long journey with them from where you start to when you actually get deployments underway. But you've got an inherent advantage in running analytic pipelines. I mean, that's very clear from the architecture. And it's interesting to hear what you're saying about Moore's Law. I was down at Spark Summit last week and all you heard about as well, storage with flash is not the bottleneck anymore. Networking's increasing dramatically. The compute is now the bottleneck. That's right. And so your architecture is such that you can really drive some of those data, intensive data analytic applications, even especially if I want to bring the analytics and transactions together. So talk about the business impact that you're seeing with your clients there. Yeah, the thing I have a client conversation with is around big data analytics, which is what everybody's been working on, sort of leading up to this cognitive era. And when you can deliver a platform like Power that's got four times the number of threads versus Intel, four times the amount of IO bandwidth, four times the amount of memory bandwidth, you've got a system that's killer for this era of big data. And that has been what's been fueling sort of the Power, sort of resurgence we saw in 2015. And we'll continue to play forward as we get into this cognitive business era where we sort of take all that and expand it. So we're people saying, okay, I can do things with Power that I either can't do with alternatives, Intel obviously would be the big one, or they say I can do them for cheaper, better, faster. What's the business driver there? Yeah, it really comes down to economics at the end of the day. Performance is a contributor, but again for the client looking to buy a solution, they're looking at what does it cost me to buy the solution for the performance I need, right? Performance, SLAs, all those other characteristics, but it is really price performance at the end of the day. That is a consistent conversation. If I can buy half the amount of hardware at a lower price performance, it's a winner. So, and what about the old tried and true UNIX market? As in the earnings call, your executors talked about, UNIX is not a growth market, but it's still. It's still a pretty big market out there. Right, and we're very fortunate after all the work we've done for years and years and years, we're number one in that market, 60, 70% market share, but it is a slowly declining market. You know, it comes back to the principal reason, the new applications are being driven around an open source stack of software. You know, we talked about some rapid application model. Swift was talked about today, right? And the open source and the Swift. Good news is Swift runs on Linux on power already. It's out in GitHub. We ported it in a weekend. You couldn't have done that with sort of a different code stack, right? That's the benefit of open source software. So the open play is really paid off for you guys and it's beginning to build a sort of a foundation that you can grow on. You have hundreds of thousands of open source packages now, thousands of ISVs that are ported, dozens of solutions. So, you know, there's never enough. I mean, you know, every time I run into a client, they're like, yeah, but you don't have this. Okay, I got it, right? We'll go work on that now, right? But we've got quite a bit out there to actually fuel the momentum going on. It's gotta feel good, because when you first announced that initiative, people are like, oh, it's game over, it's desperation. There was some skeptics, let's just say, there was some skeptics. You put the bay log in charge. You know, the timing of his announcement was when the announcement on the x86 was. So you had that over on top of you too. But that's gotta feel good. I mean, you gotta really... The team feels great about our progress. But again, you know, this is a battle we fight against until every day in the marketplace, right? And we're up for that battle. We know we've got the right moves underway. We're continuing to pivot the position of the power from data to cognitive, delivered in the cloud, underpinned by openness. Consumers want competition. Let's talk about the cloud. So, cloud obviously is the big focus here. So, I'm a cloud provider. What's the pitch for PowerAid? Because there's been some conversations here at Interconnect of people switching. Yeah, Power. Yeah. System, PowerAid in particular. And it's just magic was one of the quotes someone said on one of the sessions, customer sessions you've had. What is the value proposition for the cloud providers? Yeah, so I think there's a couple plays. One is, you know, we've got this tremendous on-premises asset called Power Today, right? You know, it could be Power 7 or 6 or 5. And as we talked about, the role for that is hybrid. Getting those clients to upgrade to PowerAid and then take full advantage of software, right? That could be Power and software, which we started delivering in December last year. It could be x86 and software, but it's really kind of connecting those worlds together and managing it seamlessly with some of the tools we have. You know, we IBM announced a relationship with VMware in the x86 space. A lot of folks don't realize because of OpenStack, VMware vRealize orchestration now manages power. So you can bring power with Linux into an x86 data center and have it be managed by all the same operational tools. That's pretty cool stuff. That's very cool. Well, so that's good. I mean, and you did something similar with Little Indian last year, a year before. That's right, that's right. So has that taken hold? I mean, has it? Well, so all the applications I talked about has been on Little India. That's the port of Swift I mentioned a second ago. Yeah, so that's... We could do that in a weekend because Little India made it, you know, we knocked down a barrier with Little India. That was game changer, explain that because I'm not sure if the audience knows what we're talking about. Little Indian, Big Indian. We're talking about software compatibility. It's kind of working, right? I mean, it's critical. It really is critical. I mean, and it kind of goes back to, you know, origins of Unix and Intel memory architectures, right? Where neither was right nor wrong. They were just different. And it was which bid in the memory structure was high order and which was low order, which was most important, which was least important. Unix did it one way, Intel did it a different way, which made the porting either direction difficult because, as I like to say, heaven forbid you get one of those bits wrong. That could be if you were in the banking business, you know, you're a winner and I'm a loser because of that, right? So by us going Little Indian, which is the memory mapping that Intel has, it made those ports from Linux on Intel to Linux on power be completely seamless. Yeah, virtually seamless. I mean, think of a Mac user, doesn't even think about, you know, the software compatibility. We ported WebSphere, roughly 10 million lines of code. We had to change two lines. That's phenomenal. Yeah. That's phenomenal. So what's next? We're going on here for the show for you guys. What is some of the outlook look like? What are some of the things you're going to knock down in the market with customers, the team, and benefits to those guys? So I'd say for us this year, you know, it's continuing to grow, of course, as a business objective, continuing to leverage open power and Linux on power. Those are the growth engines for new applications and new revenue sources. So how do we do that? It really is continuing to sort of build out power in the hybrid and public cloud. You know, I think you'll look forward to seeing a bunch of public cloud providers in addition to software start to deploy this year after all the years of work. And at the same time around analytics, it's sort of, you know, cognitive, which is, you know, analytics, you know, with an advanced degree. It's really bringing accelerators to the cognitive market and a lot of work around that sort of portfolio of accelerators that we're working on. I'm curious, what events do you guys go to for you go to market? When you guys go out, is it LinuxCon? What events do you guys participate in? Yeah, I mean, we're at the Spark conference. We're at OpenStack these days. It's all the places you would historically never seen power at. That's where we go now. So you're going to stay with all the IBM kind of... We go to the IBM, but I'll get set to all the... Come to the industry shows. You see IBM's sparks on that. All the industry opens shows, right? I mean, we're in all of those. Awesome. All right, and final thought here on the show this year. Obviously day one, we're wrapping up here. What's the vibe for the folks that are watching? What do you share out here? What's the vibe here? People who couldn't make the show. Yeah. What's the vibe here this year? I think from an IBM perspective, I'd say, the clarity I see, first off, in our point of view of cognitive business delivered in the cloud with an industry context, I see a lot of excitement around that clarity and how business partners, ISPs and clients can really get business benefit from that clarity of purpose. A year ago, I'd say a lot of folks were struggling with, well, what does cognitive mean for me? We saw three great client examples on stage today from a startup to a hundred-plus-year-old company that say, I've got to embed cognitive into my business flows. That is a testimony. It really is a testimony to the progress. Well, that's IBM's heritage. I mean, their business partnerships, the channel, they have VARs. We have people who want to call it back in the day. They enable people to make money. That's right. And you see that here as a theme. And power is going to be at the heart of this cognitive era. I am truly believing in that. Your community, your goals for the community this year continue to grow the number, events, outreach, and he kind of tweaks to that approach. I think the big focus, as I mentioned this year, is obviously continue to get more members, more innovation. It's really about deployment, starting to demonstrate in the public cloud power, open powers being deployed. That's the big focus. Flex your muscles a little bit. Absolutely. Doug Bailoff, general manager. Thanks for spending the time. I really appreciate you coming on theCUBE. And Cube Madness starts March 15th. Go to SiliconANGLE.tv. We're going to set the brackets of all of our nominated Cube guests. And they all go against each other in a tweet war. Of course, everyone hacks the ballast. So it's basically a hackathon this year. Hopefully see you on theCUBE, Madness. We'll be right back with more coverage. All the big names coming in on theCUBE. Tomorrow we've got Bapachiano. We have CEO from GitHub. Many more great people. See you tomorrow.