(upbeat music) >> Covering InterConnect 2017,
brought to you by IBM.
>> Welcome back.
We're here live in Las Vegas from Mandalay Bay
for the IBM InterConnect 2017,
this is Cube's exclusive coverage
with SiliconANGLE media.
I'm John Furrier, my co-host Dave Vellante here all week.
We missed our kickoff this morning on day two
and, because the keynotes went long
with Ginni Rometty.
Great star line up,
you had Marc Benioff,
the CEO of AT&T,
and CEO of H&R Block,
which I love their ad with Mad Men's guy in there.
Dave let's wrap up day two.
Big day, I mean traffic on the digital site,
ibmgo.com was off the charts
and the site just performed extremely well,
excited about that.
Also the keynote from the CEO of IBM,
Ginni, really kind of brings us themes
we've been talking about on theCUBE.
I want to get your reaction to that,
which is social good is now a purpose
that's now becoming a generational theme,
and it's not just social good in terms
of equality of pay for women,
which is great and of course more STEM,
it's everything, it's society's global impact
but also the tagline is very tight.
Enterprise strong,
has a Boston strong feeling to it.
Enterprise strong, data first, cognitive to the core,
pretty much hits their sweet spot.
What did you think of her keynote presentation?
>> I thought Ginni Rometty nailed it.
I've always been a huge fan of hers,
I first met her when she was running strategy,
and you know the question you used to always get
because IBM 19 quarters of straight declining revenue,
how long is Ginni going to get?
How long is Ginni going to get?
You know when is her tenure going to be up?
My answer's always been the same. (laughs)
Long enough to prove that she was right.
And I think, I just love her presentation today,
I thought she was on, she was engaging,
she's a real pro and she stressed the innovation
that IBM is going through.
And this was the strategy
that she laid out, you know, five, six years ago
and it's really coming to fruition
and it was always interesting to me
that she never spoke at these conferences
and she didn't speak at these conferences
'cause the story was not great you know,
it was coming together the big data piece
or the analyst piece was not formed yet.
>> So you think she didn't come
to these events because the story wasn't done?
>> Yeah, I think she was not-- >> That is not a fact,
you believe that. >> No, this is my belief.
She was not ready to showcase you know,
the greatness of IBM
and I said about a year ago,
I said you watch this whole strategy is coming together.
You are going to see a lot more
of Ginni Rometty than you've seen in the past.
You started to see her on CNBC much more,
we saw her at the Women in Tech Conference,
at the Grace Hopper Conference,
we saw her at World of Watson
and now we see her here at InterConnect
and she's very good on stage.
She's extremely engaging,
I thought she was good at World of Watson,
I thought she was even better today.
And a couple of notable things,
took a swipe at both AWS
and maybe a little bit at HPE,
I'm not so sure that they worry about HPE.
Sam Palmisano, before he left
on a Wall Street Journal interview,
said "I don't worry about HPE, they don't invest in RND.
"I worry about Oracle."
But nonetheless,
she said, it's not just a new way, cloud is
not just a new way to deliver IT.
Right that's the Amazon you know.
>> HP.
>> And certainly new way of
you style by IT. >> You style by IT.
>> Is Meg's line.
She also took a swipe at Google basically saying,
look we're not taking your data
to inform some knowledge draft
that we're going to take your IP
and give it to the rest of the world.
We're going to protect your data,
we're going to protect your models.
They're really making a strong statement in
that regard which I think is really important
for CIOs and CDOs and CEOs today.
Thoughts?
>> I agree.
I first of all am a big fan of Ginni,
I always kind of question whether she came in,
I never put it together like you intuitively around her
not seeing the story
but you go to all the analyists thing,
so I think that's legit I would say
that I would buy that argument.
Here's what I like.
Her soundbite is enterprise strong,
data first, cognitive to the core.
It's kind of gimmicky, but it hits all their points.
Enterprise strong is core in the conversations
with customers right now.
We see it in theCUBE all the time.
Certainly Google Nexus was one event we saw this clearly.
Having enterprise readiness is not easy
and so that's a really tough code to crack.
Oracle and Microsoft have cracked that code.
So has IBM of the history.
Amazon is getting faster to the Enterprise,
some of the things they are doing.
Google has no clue on the Enterprise,
they're trying to do it their way.
So you have kind of different dimensions.
So that's the Enterprise, very hard to do,
table stakes are different than having pure cloud native
all the time 100%,
lift and shift, rip and replace,
whatever you want to call it.
Data First is compelling
because they have a core data strategy analytics
but I thought it was interesting that they had
this notion of you own your own data,
which implies you're renting everything else,
so if you're renting everything else,
infrastructure (laughs) and facilities
and reducing the cost of doing business,
the only thing you really got is data,
highlighted by Blockchain.
So Blockchain becomes a critical announcement there.
Again, that was the key announcement here at the show
is Blockchain.
IOT kind of a sub-text to the whole show
but it's supported through the Data First.
And finally Cognitive to the Core is
where the AI is going to kind of be the shiny,
silly marketing piece with I am Watson,
I'm going to solve all your health problems.
Kind of showing the futuristic aspect of that
but under the hood there is machine learning,
under that is a real analytics algorithms
that they're going to integrate across their business
whether it's a line of business in verticals,
and they're going to cross pollinate data.
So I think those three pillars,
she is a genius (laughs) in strategy
'cause she can hit all three.
What I just said is a chockfull of strategy
and a chockfull execution.
If they can do that then they will have a great run.
>> So I go back to Palmisano's statement
before Ginni took over
and it was a very candid interview that he gave.
And as they say, you look at when he left IBM,
it was this next wave was coming like a freight train
that was going to completely disrupt IBM's business,
so it was, it's been a long turn around
and they've done it with sort of
tax rates, (laughs) stock buybacks,
and all kinds of financial engineering
that have held the company's stock price up, (laughs)
and cash flow has been very strong
and so now I really believe they're in a good position.
You know to get critical for just a second,
yes there's no growth
but look who else isn't growing.
HPE's not growing, Oracle's not growing,
Tennsco's not growing,
Cisco's not growing,
Microsoft's not growing.
The only two companies really in the cartel
that are growing showing any growth really
are Intel a little bit and SAP.
The rest of the cartel is flat (laughs) to down.
>> Well they got to get on new markets
and I mean the thing is new market penetration
is interesting so Blockchain could be an enabler.
I think it's going to be some resistance to Blockchain,
my gut tells me that but the innovative entrepreneur side
of me says I love Blockchain.
I would be all over Blockchain if I was an entrepreneur
because that really would change the game
on identity and value and all that great stuff.
That's a good opportunity to take the data in.
>> Well the thing I like is IBM's making bets,
big bets, Blockchain, quantum computing,
we'll see where that goes, cloud,
clearly we could talk about, you know you said it (laughs)
InterConnect two or three years ago
you know SoftLayer's kind of hosting.
True, but Blu makes the investments hoping--
>> SoftLayer's is not all Blu makes.
>> That's right, well yeah so but any rate,
the two billion dollar bet
that they made on SoftLayer has allowed them
to go to clients and say we have cloud.
Watson, NAI, Analytics, IOT
these are big bets which I think are going to pay off.
You know, we'll see if quantum pays off in the year term,
we'll see about Blockchain,
I think a lot of the bets they've been making are going
to pay off, Stark, et cetera.
>> So let's talk about theCUBE interviews Dave,
what got your attention?
I'll start while you dig up something good
from your notes.
I loved Willie Tejada talked about this,
they're putting in these clouds journey pieces
which is not a best practice it's not a reference
architecture but it's actually showing the use cases
of people who are taking a cross functional journey
of architecture and cloud solutions.
I love the quantum computing conversation
we had with believe it or not the tape person.
And so from the tape whatever it was, GS.
>> GS8000. >> GS8000.
>> It's a storage engineering team.
>> But in terms of key points,
modernizing IOT relevance was a theme that popped out at me.
It didn't come out directly.
You start to see IOT be a proof point
of operationalizing data.
Let me explain, IOT right now is out there.
People are focused on it because
it's got real business impact,
because it's either facilities, it's industrial
or customer connected in some sort.
That puts the pressure to operationalize that data,
and I think that flushes out all the
cloud washing and all the data washing,
people who don't have any solutions there.
So I think the operationalizing of the data with IOT
is going to force people to come out with real solutions.
And if you don't, you're gone,
so that's, you're dead.
The cultural issue is interesting.
Trust as now table stakes
in the equation of whether it's product trusts,
operational trusts, and process trusts.
That's something I saw very clearly.
And of course I always get excited about DevOps
and cloud native, as you know.
And some of the stuff we did with data as an asset
from the chief data architect.
>> A couple I would add from yesterday,
Indiegogo who I thought had a great case study,
and then Mohammed Farooq,
talking about cloud brokering.
60% of IBM's business is still services.
Services is very very important.
And I think that when I look at IBM's big challenge,
to me, John, it's when you take that deep industry expertise
that they have that competes with
Accenture and ENY and Deloitte and PWC.
Can you take that deep industry expertise
and codify it in software and transform
into a more software-oriented company?
That's what IBM's doing, trying to do anyway,
and challenging.
To me it's all about differentiation.
IBM has a substantially differentiated cloud strategy
that allows them not to have to go head to head with Amazon,
even though Amazon is a huge factor.
And the last thing I want to say is,
it's what IBM calls the clients.
It's the customers.
They have a logo slide, they bring up the CEOs
of these companies,
and it's very very impressive,
almost in the same way that Amazon does at its conferences.
They bring up great customers.
IBM brings in the C-Suite.
They're hugging Ginni.
You know, it was a hug fest today.
Betty up on stage.
It was a pretty impressive lineup of partners and customers.
>> I didn't know AT&T and IBM were that close.
That was a surprise for me.
And seeing the CEO of AT&T up there really tees it out.
And I think AT&T's interesting, and Mobile World Congress,
one of the things that we covered at that event was
the over the top Telco guys got to get their act together,
and that's clear that 5G and wireless over the top
is going to power the sensors everywhere.
So the IOT on cars, for instance, and life,
is going to be a great opportunity for,
but Telco has to finally get a business model.
So it's interesting to see his view of digital services
from a Telco standpoint.
The question I have for AT&T is,
are they going to be dumped pipes
or are they actually going to move up the stand and add value?
Interesting to see who's the master in that relationship.
IBM with cognitive, or AT&T with the pipes.
>> And, you know, you're in Silicon Valley
so you hear all the talk from the Silicon Valley elites.
"Oh well, Apple and Amazon
"and Google and Facebook,
"much better AI than Watson."
I don't know, maybe.
But IBM's messaging-- >> Yes.
>> Okay, so yes, fine.
But IBM's messaging and positioning in the enterprise
to apply their deep industry knowledge
and bring services to bear and solve real problems,
and protect the data and protect the models.
That is so differentiable, and that is a winning strategy.
>> Yeah but Dave,
everyone who's doing-- >> Despite the technical.
>> Anyone who's doing serious AI attempts,
first of all, this whole bastardized definition.
It's really machine learning that's driving it and data.
Anyone who's doing any serious direction to AI
is using machine learning and writing their own code.
They're doing it on their own before they go to Watson.
So Watson is not super baked when it comes to AI.
So what I would say is, Watson has libraries and things
that could augment traditional custom-built AI as a kernel.
Our 13-year-old guest Tanmay was on.
He's doing his own customizing, then bring it to Watson.
So I don't see Watson being a mutually exclusive,
Watson or nothing else.
Watson right now has a lot of things that adds to the value
but it's not the Holy Grail for all things AI,
in my opinion.
The innovation's going to come from the outside
and meet up with Watson.
That to me is the formula.
>> Going back to Mohammed Farooq yesterday,
he made the statement, roughly,
don't quote me on these numbers, I'll quote myself,
for every dollar spent on technology,
10 dollars are going to be spent on services.
That's a huge opportunity for IBM,
and that's where they're going to make Watson work.
>> If I'm IBM and Watson team,
and I'm an executive there and engineering lead,
I'm like, look it,
what I would do is target the fusion aspect
of connecting with their customers data.
And I think that's what they're kind of teasing out.
I don't know if they're completely saying that,
but I want to bring my own machine learning to the table,
or my own custom stuff, 'cause it's my solution.
If Watson can connect with that and handshake with the data,
then you got the governance problem solved.
So I think Seth, the CDO,
is kind of connecting the dots there,
and I think that's still unknown,
but that's the direction that I see.
>> And services, it remains critical
because of the complexity of IBM's portfolio,
but complexity has always been the friend of services.
But at the same time,
IBM's going to transform its services business
and become more software-like,
and that is the winning formula.
At the end of the day, from a financial perspective,
to me it's cash flow, cash flow, cash flow.
And this company is still a cash flow cow.
>> So the other thing that surprised me,
and this is something we can kind of end the segment on is,
IBM just reorganized.
So that's been reported.
The games, people shift it a little bit,
but it's still the same game.
They kind of consolidated the messaging a little bit,
but I think the proof point is that the traffic
for on the digital side, for this show,
is 2X World of Watson.
The lines to get into keynotes yesterday
and today were massive.
So there's more interest in InterConnect
than World of Watson.
>> Well we just did. >> Amazing, isn't it?
>> Well then that was a huge show, so what that means is,
this is hitting an interest point.
Cloud and data coming together.
And again, I said it on the intro yesterday.
IOT is the forcing function.
That to me is bringing the big data world.
We just had Strata Hadoop and R event at BigDataSV.
That's not Hadoop anymore,
it's data and cloud coming together.
And that's going to be hitting IOT and this cognitive piece.
So I think certainly it's going to accelerate at IBM.
>> And IBM's bringing some outside talent.
Look at Harry Green who came from Thomas Cook,
Michelle Peluso.
Marketing chops.
They sort of shuffled the deck
with some of their larger businesses.
Put Arvind Krishna in charge.
Brought in David Kenny from the Weather Company.
Moved Bob Picciano to the cognitive systems business.
So as you say, shuffle things around.
Still a lot of the same players,
but sometimes the organization--
>> By the way, we forgot to talk about Don Tapscott
who came on,
my favorite of the day. >> Another highlight.
>> Blockchain Revolution, but we interviewed him.
Check out his book, Blockchain can be great.
Tomorrow we got a big lineup as well.
We're going to have some great interviews all day,
going right up to 5:30 tomorrow for day three coverage.
This is theCUBE, here at the Mandalay Bay
for IBM InterConnect 2017.
I'm John Furrier and Dave Vellante.
Stay with us, join us tomorrow, Wednesday,
for our third day of exclusive coverage
of IBM InterConnect 2017, thanks for watching.