On this episode of The Six Five – On the Road, hosts Daniel Newman and Patrick Moorhead welcome Lenovo‘s Kirk Skaugen, Executive Vice President and President, Lenovo ISG, for a conversation on Lenovo’s role in transforming the telecommunications industry with innovative Edge AI technologies.
Their discussion covers:
- Overview of Lenovo’s announcements at MWC and their implications for the telecommunications sector
- Lenovo’s specific engagements and advancements within the mobile communications industry at MWC
- How Lenovo stands out in the AI market, particularly in competitive environments like trade shows
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Transcript:
Patrick Moorhead: The Six Five is On the Road here in Barcelona, Spain at Mobile World Congress 2024. We are in the Lenovo booth. Dan, MWC is back. I could barely get through the hallways of hall three where we are right now, yesterday. And I don’t remember, maybe five years ago, it was like this.
Daniel Newman: Yeah, we’re back to full steam, Pat. And look, this show is sort of the epicenter of the way the world works. Look, sometimes we want to be all cloud-centric, and over the last 12 months it’s been, 18 months it’s been like AI is the only thing in focus. But as you’re walking around with whatever device, you’ve got the watch, you’ve got the pad, you’ve got the phone. We got to connect that. And by the way, we don’t have wifi everywhere.
So this show is all about connecting the world and bringing all the applications, the ones that we’re talking about in the future. Those goggles that everyone’s wearing around town now, or just being on your smartphone, being able to connect with your friends on Meta, Instagram, Facebook, WhatsApp. This is the show where all the companies around the world come and talk about how to make that possible, make that scalable, make that accessible. So yeah, we’re back. But were we ever really gone?
Patrick Moorhead: Not really. The other thing that dawned on me in a lot of our conversations is how much the architecture of this ecosystem, which goes from the endpoint all the way to the core network, has become very similar. We’re talking containers, we’re talking VMs, we’re talking Edge compute, we’re talking public cloud, private cloud, and of course AI. And with that, want to introduce our guest, Kirk Skaugen. Great to see you again. Gosh, I feel like chronicling the success that you guys have had has been a lot of fun. We were there, I feel like at the very beginning. A lot of doubters who came in, but we get our quarterly update with you. We do a lot of briefings with you, and it’s really been a pleasure to do that.
Daniel Newman: Last year, one of our day opening keynotes of The Six Five summit here. I mean, this is a legend of The Six Five. Yeah, yeah.
Patrick Moorhead: It’s exactly… Yeah.
Daniel Newman: But no, by the way, I was just going to say you know everyone drinks coffee every day. Of course, if you’re normal. And I have my little coffee whole mug, you hold it on. It says success is the best revenge. So you said if there’s any doubters out there every single day, success is the best revenge. And I think in our conversations watching the success of your business and the infrastructure group, I think that’s kind of how you’re running it. You’re like heads down, build it, grow it. And if there are doubters… Success.
Kirk Skaugen: Well, this is a great show. I was talking to one of the people that put this event on last night, and 50% of the attendees now are really outside the tech industry. They’re people that are out figuring out how to make their businesses more productive and efficient with folks like us in the technology industry. But that was a surprising statistic to me.
Patrick Moorhead: That is interesting. It’s funny, surprising, not surprising, is that with all the heat and light that’s on the Edge and the ability for whether you’re in manufacturing, retailer or whatever on the Edge, you’re finding new ways to monetize that. Or if you’re into lowering your costs, you could do that too.
Kirk Skaugen: Yeah. So I’ve had multiple days now talking to some of the largest telecommunication companies in the world, and we all know data is doubling and 75% of that computes moving to the Edge. So probably after years of tire kicking, this whole concept of AI at the Edge, to take AI to the data is really becoming the core of most of the conversations here.
And you probably know, what was it three, four years ago, we moved five different divisions into one at Lenovo. So that the management and orchestration of all these devices, whether you’re a very low end compute all the way up to a multi GPU server, can all be orchestrated in a simple way. So we’re now talking to these folks about scale in the tens of thousands of units, including here in Barcelona where we were doing the smart city for the last couple of years.
Patrick Moorhead: Right.
Daniel Newman: It’s interesting. We actually, we talked orchestration with this Rakuten Symphony. And some of your team earlier on this show, Kirk, and by the way, that 50% number outside the industry, it is really interesting. But God, it goes back to a decade ago. I said something, and I think you’ve been saying this too, Pat, is every company’s a tech company. There’s not a single company on the planet that can’t improve itself through the utilization of technology. In the last year with AI has only further proliferated that. But this event, it’s focused to mobile communications curve. Talk a little bit about Lenovo’s perspective on this industry and what’s happening at Lenovo specific to the telecommunication mobile space.
Kirk Skaugen: Yeah. So I think we have been focused on the Edge, as you said, for many years, and there’s no greater Edge than telecommunication. So we have just crossed a milestone where with Deutsche Telekom, we’ve had 17 million subscribers now running 2 billion voice minutes a year on Lenovo infrastructure in a disaggregated way. So it really, as you know, our vision is most trusted partner. This was an incredible example of getting multiple vendors in the industry to take a distributed network and make it grow at scale.
So that was a really fun one. We’re working with Huron now to demonstrate through our innovation lab that we’ve had for six years, how you can have a cloud network, 25% lower power. We’ve been working with AMD on this new SE 455 Edge server, where we’re now demonstrating a 10 million user O ran at 50% lower power. So one of the other things here in Europe especially, is just the whole focus on sustainability and the circular economy. And everybody’s got their different net-zero targets. So when you walk in with a value proposition of 50% lower power, and I think right now we’re probably the only one in the world with this AMD based Edge server, it’s really getting the attention.
Patrick Moorhead: You made some early bets and they’re paying off. And this is also much more than hardware. It’s hardware, it’s software, it’s services that you’re laying on top of that really for an end-to-end solution. But I want to drill down on some of the announcements that you made here at the show. I know you love all of your announcements the same, but can you talk about some of the highlights that you brought out?
Kirk Skaugen: Sure. So with Deutsche Telekom, we just continue to innovate, as we talked about. With Telefonica here, we were running the Barcelona Smart City. So I was running around here over the last year or two with thousands of street kiosks that can do automatic traffic collision detection for faster first responders access. We’re helping the blind navigate the streets to know if there’s bicyclists coming at them, or hazards that are out on the street. We’re having smart shoppers where you can actually dial in and have somebody taste the olives at the Boqueria Market. And if they’re a good tasting olive, have them ship it to your apartment real time, but with professional shoppers that you’re watching through augmented reality glasses.
So Barcelona has been an amazing smart city, but now we extended that to Madrid with Telefonica where we’re using their 5G network. And push to talk with Motorola all the way to our Edge servers, where they’re actually running drones and using the street cameras to detect smoke and fire again for faster police response. That’s just another example where every city in the world is going to get there. And I think Spain is one of those that’s on the bleeding edge of that.
Patrick Moorhead: Just another reminder of how important this technology is in improving people’s lives. It’s funny, I’ll steal Dan’s comment where he was talking about… Dan and I are working on the weekends and it’s like, “Hey, why do we do this? It’s not life or death.” And then you astutely brought up, well, this technology and the implementation sometimes is life, or death, or life transforming. There was a compute on the Edge in an ambulance in one of your partner’s booths. And how they’re cataloging the equipment that has to be in that ambulance using RFID. And just example, after example.
Kirk Skaugen: That’s the thing is we’re working with a lot of companies. We have this AI innovators program where the challenge we’re hearing is there’s 16,000 or so AI startups out there. We’ve gone and partnered now with what we think are the 50 most compelling, built 165 certified solutions on this in various retailers. So for example, we’re running every Kroger self-checkout in the United States. We expanded that into other geographies to help theft and just missed scanning at the Edge. Even working with one of the largest Pacific Ocean fishing fleets to be able to measure the fish as things get dropped in, make sure they’re not catching endangered species.
But this is the extreme far Edge. But you talked about software, this isn’t really just all about the hardware server. We did an announcement on the Intel Edge compute platform integrated in with our Lenovo open cloud automation because people are getting things to 2030 store POCs and then they say, “I want to go into 180 markets in the world and expand to 10, or 20,000 stores.” So when that happens, it’s that management and orchestration. So we have an announcement with Intel on that. We have an announcement with Rakuten on that. We’re working with VMware on their cloud platform. So the software pieces of it are compelling. And then Lenovo from a service perspective, also trying to bring in the deployment. Because some of these people just don’t have the resources to go, like Lenovo went 180 markets and get these out into the marketplace.
Daniel Newman: So Kirk, I want to take some time in this conversation to go back to our focus from last year at our keynote, the keynote you delivered at Summit. AI was kind of rising into the… Well, 23, it was like by the time our conference happened, it had gone from a thing when OpenAI launched to everything. And this year we’re going to unleash AI and it’s going to be like AI, plus everything. But I know MWC is very telco focused, and we’ve hit on that a little bit.
But you leading the whole ISG business, AI has to be one of the biggest things on your mind. Talk a little bit about the Lenovo evolution, how you’ve taken on the challenge of shifting the company’s perception as technology into AI, and how you’re differentiating. I think right now, Pat, you and I have run a whole Six Five On AI series literally to just get the tech companies to come out and say, “What’s different?” Okay, you make servers, how are you differentiating? How is Lenovo tackling this?
Kirk Skaugen: Yeah. So I think we’ve moved from the server group, to the data center group, to the infrastructure group, which was really a naming convention of knowing that most of the data is going to move to the Edge. So I think we did take an early view on the think Edge, but from a journey perspective, since 2016, we were number 11 I think, in the world. If you look at all the ODMs and OEMs, we’ve grown to number three. Same in storage now. So AI, I think was the next big thing. We were really excited that IDC now for the second publication has driven us from number six to number three in the world in AI. So how did we do that? A few years ago, Y.Y. our CEO had the vision to invest a $1.2 billion. So that’s nice when your CEO gives you that kind of money, we just announced another billion dollars. So really what did we get out of that when we were investing early?
Well, we put in four AI innovation centers around the world in Beijing, Stuttgart, Taipei, and Raleigh, North Carolina. We were able to bring in hundreds and hundreds of ISVs, analyze what they had, see if they had an anchor tenant like a Kroger, or a big fast food chain, or a big car company, and then optimize their solution around our hardware and simplify the deployment through our services. So as a result of that, we have this AI innovators program, 50 ISVs, 165 solutions, all certified all the way down to the Edge. So we’re running every Enoch gas station and United Arab Emirates, as an example. We’re doing either production or proof of concepts in more than 50% of all the fast food chains in the United States now for everything from drive-through automation, to kiosks, to just line and wait time management, to safety, these kinds of things.
So I think differentiating has really been how do you simplify it? Because some of these companies may have four or five people trying to work on AI. The other thing is I think you know, we have had this ODM plus model, which means all of our board development is going in house. So we’re really priding ourself on becoming a reference design partner for the silicon teams. And when GTC arrives with NVIDIA here in a few weeks, we’ll be there with some of the cutting Edge reference designs and how to optimize into these really small form factors. Because especially when you get to the Edge, people want these to be wall mounted, shelf mounted, ceiling mounted, but they want to have all that GPU power.
So at the hardware level, we’ve worked for 18 months on oil refinery specs for safety, for grease specs in the kitchens of some of these big fast food chains on the acoustics. So now our products are half the acoustics of our competition, meaning you can put them into a small manager’s office and still be able to do a conference call without a server screaming at you. So all of these things fit into the Edge and AI paradigm. But as you know, we’re trying to be most trusted partner and we’re trying to grow to be the largest infrastructure company in the world. I think AI and Edge are going to be the two ways that ultimately get us there.
Patrick Moorhead: The numbers speak for themselves and the investments are paying off. And as analysts, we need to be very careful about absolutes. But I absolutely went on the record to say that Lenovo does have the most comprehensive Edge solutions. And you put a lot of work into it. And it’s very expensive to do multiple form factors that go in multiple environments, that have different dust thermal characteristics, and all of this. I wanted to do a boomerang on AI.
So in the history of tech, very infrequently does the technologies go away. It’s typically “and”. When machine learning came, that doesn’t mean analytics went away. When deep learning came, we still had machine learning analytics. When generative AI, we were still using everything. What are some of the differences with generative AI that applications with your customers or maybe some areas of heat and interest that you’re seeing?
Kirk Skaugen: Yeah. Well, it was great at our Tech World, we had Jensen, Lisa Su from AMD, Pat Gelsinger, and Christiano from Qualcomm all there. And one of the major concepts for us around AI in general is that it’s not just going to live in the cloud world. We’re a unique company in that about 50% of our business is public cloud and 50% of infrastructure is on-prem. So we’re quite neutral in this hybrid AI world, but we defined three different kinds of AI going forward. There’s obviously public AI that you get out of the public cloud. There’ll be private AI or enterprise AI, that you want with just your enterprise data because of sovereignty issues or government regulations.
And then we think there’ll be private AI where there’s things you want to keep specifically on your new AI PC, or your AI phone, or AI tablet. So from that perspective, I think we’re looking at LLMs of all sizes, and as you get more and more performance in the Motorola form factor, and the tablet, and the pc, you’re going to see more and more personal twinning of your device. And ultimately, you’re going to ask a question. You’re going to want to have the contextual knowledge of what’s public, what’s enterprise, and what’s private in the answer that you want? And you’re going to want to probably know the sources of where you got that answer from as well.
Daniel Newman: It’s very interesting to see how it all comes together. I know the Motorola of the handset business has been pretty explosive. I know that’s one of your sister divisions. But I think it was Qualcomm’s AI hub and being able to drop very quickly LLMs for developers on a device to create apps. You see how quickly this is all proliferating, but I love your point because the walls that need to be created between data, some of the biggest fails of the early LLMs was the fact that people really didn’t understand how the models were being trained.
And you heard about companies dumping their entire business strategy plans in to get a… And by the way, great tool, right? I want a summary, but you don’t want to use the public LLM for that. You want a private LLM that’s been built on the right governance, and the right compliance, and has guardrails to specifically be sure that yes, it’ll help summarize, but no, it won’t be used to help train a model that your competitors are using. It’s fascinating.
Kirk Skaugen: Well, I think here at MWC it is very unique for Lenovo because we’re in 180 markets in the world. And we have the Edge to cloud, or pocket to cloud, as we call it. And we’re having these AI conversations. So it’s great for me as the infrastructure guy who’s challenging our competitors. When you’ve had a decade long relationship with Motorola, or a two decade long relationship with Motorola because you’re walking in and they understand the Lenovo culture a little bit. And it’s a lot easier to talk to them about infrastructure then.
And that’s some of the success we’ve seen of getting some of these large, large telecom wins around the world is it started with Motorola. But you can also have an AI conversation from the largest cloud, to completely rearchitecting their network around O-RAN, to what is the next generation smart device look like? How do phones, tablets, and PCs interact in a Windows and Android ecosystem? These conversations have been really exciting.
Daniel Newman: Yeah, absolutely. I like pocket to cloud, by the way.
Kirk Skaugen: It was good. I like that.
Daniel Newman: Yeah.
Patrick Moorhead: Even though we only usually like the things we create, Daniel, but I got to give Lenovo credit for that. pocket to cloud, it works.
Daniel Newman: Selfish.
Patrick Moorhead: It does, it does. Yes.
Daniel Newman: Well, Kirk, I think we’ll be seeing you at GTC.
Kirk Skaugen: Yes.
Daniel Newman: Very excited to hear what you’ve got coming for us. And thanks again for sitting down. You’re one of the regulars here on The Six Five and we love having you.
Kirk Skaugen: Appreciate it you guys.
Patrick Moorhead: Thanks.
Kirk Skaugen: Doing good work.
Patrick Moorhead: Appreciate that.
Daniel Newman: All right, everybody, hit that subscribe button. Join us and follow all of our coverage here at MWC 2024. And of course, follow and check out all the episodes here that we’ve done with Lenovo and with all the great partners here at The Six Five. But for this episode, for Patrick Moorhead and myself, it’s time to say goodbye. We’ll have to see you later.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.