>> Narrator: Live from San Francisco, celebrating 10 years
of high tech coverage, it's theCUBE.
Covering VMworld 2019.
Brought to you by VMware and its ecosystem partners.
>> Welcome back to San Francisco, day three of our coverage
here on theCUBE of VMworld 2019.
I'm John Walls, glad to have you here aboard
for our continuing coverage here.
Dave Vellante is also joining me
as is the sartorially resplendent, Eric Herzog,
CMO of, and Vice President of Global Storage Channels
at IBM Storage.
Eric, good to see ya and love the shirt.
Very nice. >> Thank you, well I--
>> John: Good to see you again.
>> Eric: Always have Hawaiian shirts
when I'm on theCUBE.
>> I love it.
And a long time cuber too, we might say.
I'm sure-- >> I think he's got the record.
>> Yeah it might be.
>> You and Pat are neck and neck.
>> We'll go to the vault and see what we could do.
>> Well since Pat used to be my boss I better, kowtow to Pat
on that, let him win.
>> Well that's okay.
It's his show at IBM,
maybe we'll flip that. >> Okay, there we go.
>> Well, all right, let's just start of with the big picture.
We're hearing all this hybrid, multi,
all this discussion went on this week, obviously.
Just your thoughts about general trends.
And where the business is going now
as opposed to where it maybe were two, three years ago.
>> Well the good thing for IBM Storage,
and we actually came to your partner entity, Wikibon,
when our new General Manager, Ed Walsh joined in.
We came and we saw Dave and John at the old office,
or at your offices.
And we did a pitch about hybrid multicloud.
Dave gave us some feedback of how to create
a new slide so we created the slide based on Dave's input.
And we were doing that two and a half years ago.
So we were running around telling the storage analyst,
storage press, about hybrid multicloud based on IBM Storage,
how we can transparently move data.
Things we do with backup of course and archive.
We've got about 450 small and medium cloud providers.
Their backup is a service engine is our Spectrum Protect,
and so we talked about that.
So Dave helped us craft a slide to make it better
because he said we left a couple things out.
>> So you guys, well, Eric owes you.
>> There were a few other analysts I'm sure you talked to
and got input, but you guys really were the first
to combine those things in your marketing presentations.
But let's, I'd love to get an update on the business.
>> John: Yes, okay.
>> Help people understand the IBM Storage organization.
You guys created the storage business years, and years,
and years ago.
You've got your core business
which is, I call 'em arms dealers,
but there's a lot of reach into IBM.
The cloud division, you've got the services division.
So help us understand the sort of organizational structure
and the business.
>> Sure, so the IBM Storage division is part of IBM systems
which includes both the mainframe products Z
and the power server entities.
So it's a server and storage division.
The Z guys in particular have lots of software
that they sell.
And not just mainframe.
So they have a very, very large software business as do we,
as you know from looking at people that do the numbers.
We're the second largest storage software company
in the world and the bulk of that software
is not running on IBM gear.
So for example,
Spectrum Protect will back up anyone's array,
Spectrum Scale, and our IBM Cloud Object Storage
are sold as software only, software defined,
as is Spectrum Virtualize.
You could basically create a Jbotter/Jbof
through your favorite distributor or reseller
and create your own array.
It's our software but all of the infrastructure
would actually not be ours, not branded by us,
and you'd call us for tech support for the software side,
but if you had a bad power supply or fan,
you'd have to call the reseller or distributor.
So there's very robust storage software business.
Obviously we make sure that we're always compatible
with the other server elements of IBM systems,
but the bulk of our storage is actually sitting
connected to some server
that doesn't have an IBM logo on it.
So that's the bulk of our business,
connected to Intel servers of all types.
That used to include of course, IBM's Intel server division
which was sold off to Lenovo.
So we still have a very robust business in the array space
that has nothing to do with working on a power machine
or working on a Z machine, although we clearly work
very heavily with them and have a number of things
going with them,
including something that's coming very shortly
in the middle of September on some new high end products
that we're going to do.
>> When IDC counts all this stuff, do they count,
do they give IBM credit for all the storage that lives
inside of the IBM cloud?
Do you get credit for that?
>> We do not get credit for that.
So when they count our number, it's only the systems
that we sell and the storage software that we sell.
So if you look at it, if we were a standalone company,
which would include support, service, everything,
some of which we don't get credit for, right?
The support and service is a different entity at IBM
that does that.
The services group, the tech support,
that all goes to someone else,
we don't get revenue credit.
>> So, hypothetical, and I don't think this is the case,
but let's say hypothetically,
if pure storage sold an array into IBM cloud,
they would get credit for it? >> Right.
>> But if your array, and I'm sure this happens,
is inside of the IBM cloud you don't get credit for it.
>> That's true. >> Interesting.
So it somewhat undercounts--
>> Part of that is the way we internally count.
'Cause we're selling it to ourselves.
>> But that's accounting. >> So it's not.
Yeah, it's more of an accounting thing,
but it's different when we sell to anybody else.
So for example, we sell to hundreds of cloud providers
who, in theory, compete with the IBM cloud division.
>> So you get credit for that,
but you don't get credit for your own cloud.
>> That's exactly the way, that's the way it works.
But if we were a standalone company,
for sake of argument, we were Zogenstore,
and I bought the company away,
we'd be about a 6.3 billion dollar
standalone storage software company.
That's what we would be if we were all in
because support service means if we were our own company
with our own, right, legal entity, just like NetApp
or the other guys, we'd be standalone, we'd be in that,
low six billion dollar range, counting everything all in.
When we do report publicly,
we only report our storage system business.
We don't even report our storage software business.
And as you noticed a few times our CFO has made comments,
if we did count the storage software business it would be x.
And he's publicly stated that probably at least two times
since I've been at IBM
where he talks about the software element.
But legally, we only talk about IBM storage systems
when we publicly state our numbers out onto Wall Street.
That's all we publicly report.
>> So, you're like a walking sheet of knowledge here.
But I wonder if you could take the audience
through the portfolio.
'Cause it's vast.
How should we think about it?
And the names have changed.
You talk about 250 arrays or whatever it is.
It's the old sand volume control
and now it's a Spectrum Virtualize.
So take us through the portfolio, what's the current?
>> Sure, it's pretty straightforward.
We have really three elements in the portfolio,
all built around if you will, Solution Plays.
But the three real elements in the portfolio
are storage arrays, storage systems.
We have entry, mid-range, and high-end,
just like our competitors do.
We lead with all-Flash, but we still sell hybrid
and obviously for backup and archive,
we still sell all hard drive, right, for those workloads.
And we have file, block, and object,
just like most the other guys do, for an array.
Then we have a business built around software,
and we have two key elements there.
Software defined storage,
and we sell that software completely standalone.
It happens to, by the way, be embedded on the arrays
so for example, Dave you mentioned Sprectrum Virtualize.
That ships on flash systems in-store wise.
But if you don't want our arrays, we will sell you
just Spectrum Virtualize alone for block,
Spectrum Scale for big, big data AI file workloads,
and IBM cloud object storage which can,
all of them can be bought on an array,
but they also can be bought as just
standalone software. >> Single component.
>> Yes, as software.
So part of the advantage we feel that delivers
is some of the people that have software defined storage
that are array guys, it's not the same software.
So for us, A it's easier for us to support and service.
It's easier for us to actually develop
and have leading edge features
'cause we're not running two different pieces of software,
we're running one that happens to have a software-only
version or an array embedded version.
So we've got that.
And then the third is around modern data protection,
and that's really it.
So a modern data protection portfolio
built around Spectrum Protect and Protect Plus
and some other elements.
A software defined storage where we sell the software only.
And then arrays, that's it.
It's really three things in a nutshell.
Now there's all kinds of components underneath the hood,
but what we really do is we sell,
we don't really run around and talk about all flash arrays.
We talk about hybrid multicloud.
Now, all of our all-flash arrays
and a lot of our software defined storage will automatically
tier data out to hybrid multicloud configurations.
We just, so we lead with that.
Same thing, we have one around cyber resiliency.
Now the one thing that spans the whole portfolio
is cyber resiliency.
We have cyber resiliency in arrays,
we have some software on the mainframe
called safeguarded copy that creates a immutable copies
and has extra security for the management, right?
So you got management control.
And if you have a malware or ransomware attack,
you can recover to these known good copies.
So that's a piece of software that we sell
on the mainframe only.
>> How much growth have you seen in that, in terms of--
>> Cyber resiliency is resonating.
>> If you've got it in, if it's pervasive.
>> It's pervasive.
So we've got for example, malware and ransomware detection
also in Spectrum Protect.
So let's take an example.
So I'm going to steal from theCUBE and I'm going to ask Dave
and for your, I want a billion dollars.
And Dave's going to laugh at me
'cause he uses Spectrum Protect,
he's going to start laughing.
But if I'm the ransomware guy, what do I do?
I go after your snapshots, your replicas,
and your backup data sets first.
I make sure I've got those under control.
And then when I tell you I'm holding you for ransom,
you can't go back to a known good copy.
So ransomware goes after backup, snaps, and replicas first.
Then it goes after your primary storage.
So what we do in Spectrum Protect for example,
is we know that at Wikibon and theCUBE
you backup every night from 11:30 to 1:30.
Takes two hours to back you up every night.
It's new.
There's tons of activity in the backup data sets.
What the heck is going on?
We send a note to the admin.
So the admin for theCUBE, Wikibon takes a look
and says, no server failure.
So you can't be doing a lot of recovery
'cause of a bad server, no storage failures.
What the heck is going on?
Could be a possible malware or ransomware attack.
So that type of technology we encrypt at rest
on all of our storage arrays.
We have both tape and tape and cloud air gapping.
>> I was going to ask you about that.
>> So we've got both types of air gapping.
>> I used to hate tape, now I love tape.
>> Everybody loves, yeah right.
>> No I used to hate it, but now I love it
because it's like the last resort, just in case
and you do air gapping.
When you do air gapping with your customers
do you kind of rotate the, it's like,
the yaserara fad.
You used to move every night.
You'd sleep in a different place, right?
You kind of rotate the, weird analogy.
>> Yeah, you do some stuff around, yes.
There's a whole strategy of how we outline
how you would do a tape air gap.
When you do a cloud air gap, of course you're replicating
or stepping out the cloud anyway
so they can't get to that.
So if you have a failure you have a known good copy
depending on what time that is, right?
And then you just recover back to that
and even something simple.
We have data at rest encryption, okay.
A lot of people don't use it or won't use it on storage
'cause it's often software based
and so there's a performance hit.
Well, in our ds platform on the mainframe,
we can encrypt with no performance hit.
On our flash system products,
we can encrypt with no performance hit.
On our high end store wise,
we have four models on the two high end store wise models
we can encrypt with no performance penalty,
so why would you not encrypt all our data?
When there's a performance penalty
you have to sort of pick and choose.
Oh my God, I'm going to encrypt this valuable financial data,
but boy I really wish it wasn't so slow.
With us, there is no performance hit when you encrypt.
So we have encryption at rest, encryption at flight,
malware and ransomware detection,
we've got WORM which is important obviously.
Doesn't mean I can't steal from Wikibon, Cube,
but I certainly can't go change all your account numbers
for all your vendors for sake of argument, right?
So, and there's obviously heavily regulated industries
that still require WORM technology, right?
Immutable on the file, and by the way you could always,
if it's WORMed, you could encrypt it if you want to, right?
Because WORM just means it's immutable.
It's not a different data type,
it's just an immutable version of that data.
>> So the cyber resiliency is interesting
and it leads me to another question I have around, just R&D.
So a lot of the companies in this industry
do a lot of D, developing, next generation products.
I think, look at EMC, when you were there, you know this.
There wasn't a ton of core R.
They had a lot of patents and stuff like that,
IBM does core R.
Lot of research. >> Yes.
>> You got a lot of research facilities, braniac scientists.
I wonder if you could talk about how the storage division
takes advantage of that.
Either specifically as it relates to cyber resiliency,
but generally.
>> Yeah so, as you know IBM's got,
I think it's like 12 or 15 research-only sites
that that's all they do.
And everyone in there (mumbles).
In fact my office happens to be at the Almaden Labs,
and there's two labs actually here.
The Almaden research lab and the Silicon Valley lab,
which is very close, about five miles away.
>> Beautiful Almaden, gorgeous.
>> And almost everything there is research.
There's a few product management guys.
I happen to have a desk there, every once in a while
I'll see a sales guy or two.
But essentially they're all research
with PhDs from the leading universities.
Now, at Almaden and many sites,
all the divisions have their own research teams there.
There's a heavy storage contingent at Almaden as an example.
Same thing in Zurich.
So for example, we just announced last week as you know,
staff that will work with quantum on the tape side.
So you don't have to worry about.
'Cause one of the things, obviously that people complain
about quantum computing, whether it's us or anyone else,
the quantum computing you can crack,
basically any encryption.
Well guess what?
IBM research has developed tape that can be encrypted.
So if you're using quantum computer, whether it be IBM
or someone else's, when you go with quantum computing,
you can have secure data
because the quantum computer can't actually
crack the encryption that we just put into that new tape.
That was done at IBM research.
>> How far away are we from quantum actually being able
to be deployed in even minor use cases?
>> Well, we've got availability right now
at ibm.com for betas.
So we've got several thousand people
who have been accessing and entities.
We've been talking publicly
in the three to seven year time frame.
for quantum computing. >> Close.
>> And there's- >> Scares the crap out of me.
Should it?
>> Well no because if you do the right service security,
you don't.
But the power.
So if you're envisioning, one of my favorite movies, iRobot.
>> Yeah. >> Right?
Where she's doing her talking, and that's what I,
that would really be quantum computing in all honesty.
But at the same time, the key thing IBM is all about ethics
and all about how we do things.
Whether it be what we do
with our diversity programs and hiring.
And IBM is always at the forefront of doing and promoting
ethical this and ethical that, safe usage.
>> And what you do with customer data is huge.
>> Yeah, and what we do with the customer data sets, right.
We do GDPR for example, all over the world.
We're not required by law to do it.
Really only in Europe.
We do it everywhere.
And so if you're in California,
if you happen to be in Zimbabwe, or you're in Brazil,
you get the same protection of GDPR
even though we're not legally required to do it.
And why are we doing that?
'Cause we're always concerned about customer's data
and we know they're paranoid about it.
We want to make sure people feel comfortable with IBM
and what we do.
Quantum computing will end up in that same vein.
>> But see, I don't worry about you guys.
I worry about the guys on the other side of the fence.
>> Well they uh-- >> Those are the ones
that I worry about 'cause those capabilities new.
>> Pat was on of course and he talked about it in his speech
and he talked about it actually on theCUBE yesterday
about some of his comments on Bitcoin.
And he mentioned that was based on Blockchain.
What he said was, "Blockchain is a great technology."
They've got Blockchain.
As you know IBM is a big believer in Blockchain,
we promote it all over the place.
And in fact we've done
all kinds of different Blockchain things.
We just did one, announced it last week with Australia,
with the Australian, I think it is with their equivalent
of Wall Street.
We've done some stuff with Merrick,
the big shipping container thing, and it's a big consortium.
That's all legal stuff.
Pat was really talking about someone using it the wrong way
and he very specifically pointed out
that Blockchain is a great technology if used ethically.
And IBM is all about how we do that.
So we make sure, whether it be quantum computing,
Blockchain, etc, that everything we do at IBM
is about helping the end users,
making sure that we're making the right,
for example, Open Source.
As you know well, the number one provider
of Open Source technology, pre Red Hat acquisition is IBM.
We submit more into the open community than everyone else.
Now are we able to make some money off of that?
Sure, we are.
But we do it for a reason, because IBM believes,
as Dave pointed out, is core research.
Open computing is core research.
And we just joined the Open foundation last week as well.
So we're really big on making sure that what we do,
our sales are ethical.
Now we try to make sure that what happens
in the hands of the people who buy our technology,
which we can't always track, is also done ethically
and we go out of our way to join
the right industry associations, work with the governments,
work with whatever we need to do to help make sure
that technology could really be iRobot.
Anyone who thinks that's not true,
if you talk to your grandparents.
Go to the moon, what are you talking about?
>> Watch Star Trek, it's all become true now.
>> Yeah, our iPhone is basically the old communicator.
The transporter is the only thing I wish I could have
the transporter now.
As you know, Dave knows I'm afraid.
>> Dave: Give us up.
>> I'm afraid of flying.
I've got like two million miles on United
and Dave always laughs about how I fly all over.
So I'm waiting for the transporter.
I need that so that I don't have to fly anymore.
>> Oh there's a cone over here, go stand there
maybe with a little bit of light.
>> I'm still not selling my Bitcoin.
>> No, no, hang on, just the case.
>> I'm holding on. >> There's always a comeback.
Not always.
There could be a comeback.
>> Bitcoin's doing well. >> Eric, I always enjoy it.
You're always insightful. >> Thank you.
>> Thanks for the time. >> Thanks a lot, man.
>> Dave: Good seeing you as always.
Back with more VMworld 2019, theCUBE,
live in San Francisco.
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