IBM at Morgan Stanley Conference

Our cloud business

“when you think about within the cloud business as an example, we have built private clouds for our clients and the solution of our private cloud when you put it together for a client it has some of our hardware, it has some of our software. It comes together and works like a cloud.”

5 or 10 years ago they would have built it themselves

“Likely 5 or 10 years ago we would have sold them the hardware, we would have sold them software and they would have built this for themselves, so that’s an element of shift I think that, we would have gotten anyway but now in a cloud format still a cloud deployment but they are building, you’re asking us to build it for them. So some shift and some lift in the cloud business.’

What differentiates us in the cloud: hybrid, data and security

“differentiation in cloud I think really comes down to three elements that we see as vitally important to our client base, first, hybrid. And we have all seen this movie in the past. We know our clients are putting things on to the cloud, on to different clouds and they are creating pools of data in these clouds and they also have their back office systems that are running and have all of their existing data that they need to get value out of.

So the view that SoftLayer provides and that our Bluemix, our platform as a service provides is that hybrid cloud is where the value is because you will now be able to link together both your clouds as well as link together all of the important information that your business has built up and your systems of record. So a point of differentiation number one for us in cloud is this idea of hybrid and how hybrid important will be not only to our clients but how important it will be for us to stay in the high value space here.

Secondly it’s data, so as I mentioned data is getting pooled in different places. If we had a technologist here, a technologist who would tell you all about how data has gravity and data tends to gravitate toward itself and the real value is in the gravity of the data. Our view of data is and our differentiation on data is both our ability to handle the data which right now is a big deal obviously as you’re trying to get value from these clouds.

Our ability to move data to where you want to get the work done, but importantly as we see the next step as data builds into these pools that are so big, they are no longer feasible to move. You now have to and we have announced last week, an ability to move the application to the data so you’re not moving your data around. You move the application to the data it does it’s work and then you obviously take the answers and then bring it together with what else you have. So hybrid is important, data and how we handle and the kinds of data we can handle are real differentiator and then in our client base, enterprise clients and then you can pick the paper up every day, it’s about security and how do I secure my data, how do I have visibility to my data in a regulated industry where we have been dealing for decades.”

Monetizing watson

“we see Watson as part of what maintains our lead in analytics and what drives growth going forward. We will monetize Watson really in three ways. So we do a series of highly customized deployments in certain industries, healthcare is a good example. So those are we have to bring consulting skills, we’ve to understand the domains they are implementations that require, months and months to get those data sources into a position where you can actually get some insights out of it. But once you start to get insights and we used an example in our Investor Day, once you get those insights you can now achieve things that an entire industry couldn’t achieve in a year, we can do in months.”

“Secondly we have a series of I will call them less customized so they are much more standard implementations and as you may be aware we have kind of opened up if you will the Watson platform through API, so we have a series of clients who are deploying Watson in a number of applications, financial services and advisory, in call center application.”

” the third way we monetize Watson is by opening and creating an Watson eco-system. Now in the Watson eco-system we have again given developers and other our client access to building any application they want and so we see applications in travel. ”

Understanding the Apple partnership

“deploying for instance an app for maintenance crews and apps for how flight attendants interact with their clients, their ability to do that without any kind of training is phenomenal but in order to make that an enterprise grade and an enterprise functionality that now will change the way the workflow happens we have to mask if you will, we have to get a lot of the work behind the scenes done in a way that the users don’t see. So to make the Apple partnership successful they will continue to build apps that are stunning and simple and easy to use and powerful from a user standpoint but we bring to that now and understanding of an enterprise and how does that data in a secure way going to link back to their systems of record.”

The value of IBM

“Remember moving — changing flights onboard a plane means you’ve to get back into the company’s reservation systems that means you’ve to be able to tell your client, your customer on a plane I’ve got that seat for you and nobody else will take, that means you’ve to interact with those records and the systems of record which is not trivial and you’ve to make sure that you do it in a secure way. That’s just a system side. Then you get into — think about a roll out and we do and we deploy and we manage and we upgrade and keep those systems moving. So when you have a fleet or you’ve a labor force of thousands and thousands of these that you want to deploy you have to get them into the hands of the users, when it breaks you’ve to be able to deal with a broken machine. As an enterprise you don’t want to go to a retail store and give all your corporate data to whoever happens to be in the retail store. So we provide the service around that.”

Our software business is not declining

“Some of it’s cyclical because of our hardware business, some of it is engineered if you will because again we’re shifting resources and we’re divesting. What it really isn’t it’s not our software business, our software business is not a dramatic contributor to that decline. Our software business for that part of it is fairly flattish.”

Mainframes will be driven by increasing number of transactions

“our clients are experiencing massive transaction growth. It runs on a mainframe platform because of the technical capabilities of that platform from a security and a reliability and a scalability in these high growth workloads”