Dell recently made a big investment to acquire an iSCSI-based storage company, EqualLogic. Is IBM also interested in acquiring its own second-generation storage technology company to fill in any product/service gaps it might have?

As you know, we acquired XIV recently, and that is where we believe ... well, the market's extremely different from the way it is portrayed by IDC, Gartner or anybody else. It's not about price classes anymore, and it's not really about Unix, Linux and Windows. It's about hypergrowth, as people are now understanding tiering. I would say that ILM [information lifecycle management] was the most over-hyped thing in the industry, because nobody actually deployed it. 

This was because the software capabilities weren't there, and, frankly, the other interesting issue, of who sets the policy inside the company, wasn't clear. Does IT set the policy, or does the line set the policy?

What we think is going to happen in what we call traditional transaction workloads--and the storage required in that space--is this: Workloads will continue to grow, but we're now smart enough in the industry to have good-enough software to be able to leave data that belongs there [in Tier 1 storage] and to move off data that doesn't belong there. We're actually moving off of that [Tier 1 storage] faster than the growth in the workloads. So that space is not going to have high growth.

What is going to have high growth is nearline storage: Tiers 2, 3 and 4. That has a whole different set of capabilities and requirements in the marketplace, and that's where XIV fit in.

What is IBM doing that is new in regard to iSCSI-based storage?

We think this multiprotocol [technology] will be the future, so, yes, we'll continue to invest there.

Given IBM's shift to a services-led business model, how important does that make IBM's technology portfolio? We've seen IBM divest itself of a number of tech businesses over the years, such as PCs, disk drives, etc. How does IBM figure out what to keep investing in and what to divest itself of?

Great question, because it allows me to say something about which I have a very strong opinion.

This idea that hardware is commoditizing and the value is moving to software and services, which is sort of a mantra, is complete nonsense. Elements of hardware commoditize, elements of software commoditize, elements of services commoditize, as they move to global resource pieces of service capabilities.

So I think evidence of investment in the IBM storage business speaks for itself: XIV, Softek, Novus, Arsenal, FileNet--all around this space in the last two years we have had a series of very specific investments. And I wouldn't call any of these niche, point-play investments. These are real, honest-to-God capabilities that we're bringing to this portfolio.

A conversation I have with a lot of clients is about the IBM value proposition. I don't come with an agenda of what to sell. We can come with an agenda to listen—because, in the end, I'm responsible for all of it.