CAN MAKE GO, NO GO DECISIONS.
MARIA: YOU ANNOUNCED R BIGGEST
ACQUISITION EVER, RED HAT.
YOU SOLD ASSETS TO H.C.L.
YOU DID A DEAL, MANUFACTURING
DEAL WITH SAMSUNG.
FIRST, LET'S TALK RED HAT.
WHAT DOES THAT DO FOR IBM?
WHERE DOES THAT PIVOT THE
COMPANY?
>> AS YOU KNOW, WE HAVE BEEN
REVENTING IBM.
50% OF THE COMPANY HAS MOVED
INTO THESE NEW PRODUCTS AND
SERVICES.
BUT YOU'RE ALWAYS REDOING THE
PORTFOLIO.
ONE OF THE THINGS WITH THE
ACQUISITION I'LL GET TO, THEN
THE DIVESTITURES, BUT THE
ACQUISITION WAS REALLY ABOUT
WHAT WE SEE IN FRONT OF US FOR
WHAT I CALL CHAPTER 2 OF THE
CLOUD.
I BELIEVE FOR MOST ENTERPRISES
CHAPTER 1 WAS EASY THINGS THAT
THEY MOVED, PRETTY LOW DANG
HANGING
-HNGING
-HANING
-HANGIG
-HANGINGFRUIT.
20% MOVED TO THE CLOUD.
THE OTHER 80 BECOMES NOT JUST
MORE COMPLEX, IT'S GOT A
DIFFERENT COMPLEXION.
MOST COMPANIES WEREN'T BORN
YESTERDAY.
IF YOU'VE GOT A HOUSE ALREADY,
YOU'VE GOT YOUR HOUSE.
THEY SAY OKAY, THESE ROOMS I'M
NOT GOING TO TOUCH, I'LL LEAVE
THEM AS THEY ARE.
THESE WILL GET REMODELED, MOVE
TO THE PUBLIC CLOUD.
THESE, YOU KNOW WHAT, THEY'RE SO
SENSITIVE I'M GOING TO KEEP THEM
RIGHT HERE AND PUT THEM IN A
PRIVATE CLOUD.
MARIA: THAT'S A GREAT WAY TO
PUT IT.
>> THAT'S WHAT RED HAT AND US
TOGETHER SAYS FOR ALL YOU
CLIENTS OUT THERE, THIS JOURNEY,
YOU'LL HAVE MULTIPLE CLOUDS.
THEY HAVE BETWEEN 5 AND 16.
THEY'RE DIFFICULT TO MANAGE, THE
SECURITY, MOVE THE DATA.
AND DON'T GET LOCKED INTO ANY
ONE.
AND SO WHAT WE NOW BECOME THE
GREATEST PROPONENT OF OPEN AND
OPEN SOURCE.
PART OF RED HAT IS HOW YOU BUILD
THINGS, SO THEY CAN MOVE FROM
CLOUD TO CLOUD IN PRIVATE AND
AROUND.
SO THIS ALLOWS CLIENTS TO MOVE
TO A MULTI-CLOUD ERA, OPEN SO
THEY'RE NOT LOCKED IN, IN A VERY
SECURE WAY SO THEY MAKE THEIR
CLOUD JOURNEY FROM WHERE THEY
START.
AND IT REALLY ALLOWS US TO OWN
THE STARTING POINT AND THE
ENDING POINT OF A CLOUD JOURNEY.
THAT'S PART OF THE PORTFOLIO.
MARIA: BEFORE WE GO TO THE
REST, IN MATERIALS OF THE
DIVESTITURES AND YOUR PLANS, HOW
DO YOU DIFFERENTIATE YOURSELF IN
THAT BUSINESS?
BECAUSE YOU'VE GOT ALL THESE
GUYS NIPPING AT YOUR HEELS.
YOU'VE GOT MICROSOFT HERE AND
GOOGLE THERE AND THEN THERE'S
AMAZON.
AMAZON WANTS TO TAKE MARKET
SHARE FROM EVERYBODY.
SO TELL US THE SALES PITCH OR
HOW YOU DIFFERENTIATE AT IBM.
>> WELL, FIRST OFF, WHEN YOU
THINK OF IBM THINK OF MISSION
CRITICAL WORK AND THINK OF US --
WE BELIEVE IT WILL BE A
MULTI-CLOUD WORLD.
WE BELIEVE WE'LL HAVE THE MOST
SECURE PUBLIC CLOUD.
WE'LL ALSO HELP YOU MANAGE AND
INTEGRATE ALL THESE OTHER CLOUDS
TOGETHER.
SO WE ARE THE I WOULD CALL THE
CLOUD FOR BUSINESS IS HOW I
DIFFEREN P SHAT
DIFFERENTI SHAT
DIFFERENTIATHAT
DIFFERENTIATEAT
DIFFERENTIATE US BIG BUSINESS
AND SMALL AND MID CAP.
>> AS WELL AS SMALL.
MARIA: THAT'S A BIG PART OF THE
CASE.
>> WE HAVE SMALL CLIENTS AS
WELL.
YOU'LL SEE A DIFFERENT MIX
BETWEEN WHAT PERCENTAGE RUNS ON
A PUBLIC CLOUD VERSUS A PRIVATE
CLOUD.
YOU PROBABLY DON'T REALIZE THAT
MOST CLIENTS MAY HAVE THEIR CRM
SYSTEM WITH SALES FORCE, HR
SYSTEM WITH SAP OR WORK DAY.
THEY ALREADY HAVE ALL THESE
DIFFERENT REAL ESTATE.
BUT ALL US OF KNOW THE BIG JOB
IS HOW TO MANAGE IT, ACCESS
CONTROL, SECURITY, KNOW WHAT
DATA IS WHERE AND HOW MUCH DATA
DO YOU WANT FLOWING.
THESE ARE ALL THE THINGS THAT --
ACTUALLY THIS IS WHY I SAY IT'S
CHAPTER 2.
IT'S A TRILLION DOLLAR MARKET,
CHAPTER 2.
WE'LL BE NUMBER ONE IN THE
HYBRID CLOUD, THAT'S CHAPTER 2.
WE'LL BE NUMBER ONE.
MARIA: IS THERE A CULTURAL
DIFFERENCE, RED HAT AND IBM, TWO
DIFFERENT COMPANIES.
HOW DO YOU GET THE CULTURE
RIGHT?
>> I'VE ALWAYS HEARD THIS AND
I'VE KNOWN JIM WHITEHURST AND
RED HAT FOR MANY YEARS, WE
PARTNERED WITH THEM FOR -- GOES
BACK TO -- OUR FAMILIARITY AND
INVESTMENT IN LINUX GOES BACK 20
YEARS.
LINUX IS THE OPEN OPERATING
SYSTEM WHAT PEOPLE MOSTLY THINK
OF WHEN THEY THINK OF OPEN.
WE'RE ONE OF THE TOP
CONTRIBUTORS OF ALL THE PROJECTS
OUT THERE.
I THINK COUNTER TO WHAT MAY BE A
PERCEPTION,ISM BM IS THE
GREATEST SUPPORTER OF OPEN
SOURCE.
THERE ARE SOME THINGS WE HAVE
THAT ARE PRO PRY TERRY.
WE -- PROPRIETARY.
WE TALKED ABOUT BLOCK CHAIN.
IT'S OPEN SOURCED.
RED HAT'S GOT LINUX, THE NUMBER
ONE OPERATING SYSTEM IN A
COMPANY ON PREMISE AS WELL AS
NOW IN THE CLOUD.
THIS YEAR TOOK OVER NUMBER ONE
OVER THE OTHERS.
SO WE VIEW THIS AS PART OF OUR
DNA TO BE OPEN AND ONE OF THE --
I DON'T SEE IT CULTURAL BUT I DO
SEE TWO THINGS.
WE'RE GOING TO PRESERVE FOR
THEM, THOUGH.
IT'S REALLY IMPORTANT WHAT THEY
DO NOT JUST RUNS ON IBM, IT'S
GOING TO RUN ON ALL OF OUR
COMPETITORS AND FRIENDLY
COMPETITION AS WELL.
THESE ARE OUR CLIENTS USE ALL
THESE.
IT WILL BE ON ALL THE OTHER
CLOUDS.
WE WANT THAT.
WE WANT TO PRESERVE THAT AND
MAKE SURE THAT THEY HAVE EQUAL
OPPORTUNITY ON WHAT THEY DO AND
THEN WHAT WE DO IS WE TAKE THE
SAME PRODUCTS FROM RED HAT, WE
ADD TO IT AND THEN WE'LL COMPETE
IN THAT WORLD.
MARIA: YOU'VE CALLED THEM THE
STRATEGIC IMPAIR TOUGH.
>>
IMPERATIVE.>> AROUND CLOUD, ANAY
IMPERATIVE.>> AROUND CLOUD, ANAI
IMPERATIVE.>> AROUND CLOUD, ANAS
IMPERATIVE.>> AROUND CLOUD, ANAA
IMPERATIVE.>> AROUND CLOUD, ANAD
MOBILITY.
THAT'S PART OF THE BUSINESS
THAT'S GETTING 50% NOW.
MARIA: ANYTHING ELSE YOU WANT
TO SAY ABOUT HOW YOU'RE
REPOSITIONING THE PORTFOLIO.
>> AS AN INVESTOR WOULD EXPECT,
WE GO BACK OVER THE PORTFOLIO.
WHATISM
WHAT IM
WHAT IBM, IT'S A HIGH VALUE
COMPANY.
WE'RE AROUND 108 NOW, TO BE
ANOTHER 100, YOU'VE GOT TO KEEP
MOVING THE PORTFOLIO AND OUR
VALUE PROPOSITION TO INVESTORS
IS THAT IT'S ABOUT WE ALWAYS
MOVE TO HIGHER VALUE.
IT'S NOT ALWAYS ABOUT GROWTH FOR
US.
WE WILL REMOVE PRODUCTS THAT ARE
STARTING TO COMMODITIZE SO WE
CAN FUEL INVESTMENT IN THE NEXT
ERA.
YOU SAW PRODUCTS THAT WERE
STANDALONE AND THEY WEREN'T
GROWING AND WE SAID LOOK, OUR
VALUE PROP TO A CLIENT IS WE
INTEGRATE THINGS FOR THEM.
IF THEY'RE STANDALONE THERE'S A
BETTER FIT FOR THEM.
WE DID A DIVESTITURE, ABOUT
$2 BILLION OF DIVESTITURES THAT
DON'T LINE UP.
THEY'RE INDIVIDUAL WITH OUR