On this episode of the Six Five Webcast – Infrastructure Matters, hosts Camberley Bates, Dion Hinchcliffe, Keith Townsend, and Steven Dickens share insights on the latest developments in AI, X86, and key takeaways from recent IBM, Lenovo, and BMC events.
Their discussion covers:
- The impact of AI on the nuclear sector and how it’s changing the landscape
- The formation and significance of an x86 consortium and its implications for the industry
- Key insights and announcements from the recent IBM event
- Highlights from Lenovo’s latest showcase and what it means for technology advancements
- Important takeaways from BMC Connect and how they’re shaping IT management strategies
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Disclaimer: Six Five Webcast – Infrastructure Matters is for information and entertainment purposes only. Over the course of this webcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors, and we ask that you do not treat us as such.
Transcript:
Keith Townsend: Welcome to episode 59 of the Infrastructure Matters Podcast, a podcast in which we count episode numbers because we’re all pretty much geeks. Welcome back. I have with me my good friends and colleagues, Steven Dickens, Dion Hinchcliffe, and Camberley Bates. Folks, this is the season, right? We’re all somewhere. I think I’m the only one that’s not somewhere this week because I tapped out. I have to tell you, I started the week off and I was supposed to go to HashiCorp and I just didn’t. I did not go. To my friends at HashiCorp, I’ll see you next time. But everyone has been somewhere, and we have a lot of news to get to, so let’s get to it. And Dion, we’re going to start with you because you were at a, analyst events are special, but you were at a special, special analyst event for IBM.
Dion Hinchcliffe: That’s right.
Keith Townsend: Talk to us about it.
Dion Hinchcliffe: Well, the setting was New York City and they brought people from all over the world. IBM is really on an upswing. Their CEO the last couple years, Arvind Krishna, has done an outstanding job making IBM relevant in the enterprise again, really reclaiming the lost glory, what they had with AI. They used to be an AI leader, as you remember, with Watson, and they really want to reclaim that space. They want to be the enterprise AI company, and they had lots of things on show, including large language models. Their Granite large language model can perform as well as all the well-known large language models, but at a fraction of the cost. And AI is expensive, and so this is their value proposition saying, “You may not have heard of it, Granite may not be famous but it’s going to work for you because it’s very inexpensive to run compared to all the other ones.”
So they had some very compelling models, and Arvind was very impressive himself. He sat an hour to come in front of the analysts. There was no slides. He spoke extemporaneously. It was an Ask Me Anything, so analysts could ask him anything for an hour, and we did. Our CEO, Daniel Newman, got a good one in. And he really defended the company and how they’re coming back and they’re resurging and the stock price has been doing well. They had lots of announcements, which are all under embargo and I can’t tell you about them yet. Maybe we can tip the hat next week on Infrastructure Matters. But I can tell you they’re mostly around AI and the things that they’re doing. But they did give a big update on quantum. IBM is convinced that quantum’s about to hit our data centers and be coupled, just like GPUs are coupled with CPUs.
They showed their Heron chip with 156 qubits. It’s just about ready to go into the data centers, and 156 qubits, especially when chained together with multiple Heron chips, is enough to get real work done. Before, quantum computers were really just toys. They could do simple, basic algorithms really, really fast, of course. But IBM has really demonstrated their lead in quantum. The Heron chip is very impressive, very low noise, very high accuracy compared to previous generations of quantum. And so I was pretty sure we’re not going to see Quantum for at least another five to eight years. We’re going to see it in the data center in two to three. It’s pretty interesting.
Camberley Bates: Dion, that is very impactful because, for a couple different reasons. One, the number one place that technology goes before it hits the public is nefarious applications.
Dion Hinchcliffe: Yeah, that’s right.
Camberley Bates: It’s either porn or it’s cybersecurity honestly. That’s where we see the videos, DVDs, all that kind of stuff, that’s where that went first. And when we were at Lenovo Tech World, we had their … Doug, I can’t remember his last name.
Steven Dickens: About an hour.
Dion Hinchcliffe: Yeah. Fascinating, fascinating stuff. And the big thing they’re talking about is, okay, so big thing, here’s the date that the government is saying we have to have quantum encryption capabilities, et cetera. And if this is coming online now, we are missing that date. You had to have the implementation and if that’s true, we are behind what we need to do for cybersecurity.
Dion Hinchcliffe: Well and there was –
Steven Dickens: There was news this weekend, they’ve been talking about quantum safe encryption for four or five years.
Camberley Bates: Yep.
Steven Dickens: So IBM’s been, maybe they knew that they were going to be out first with Quantum from a technology point of view. But I think it was, yeah, it’s four years ago that IBM started talking about quantum safe encryption.
Camberley Bates: That’s a big deal.
Keith Townsend: And the Chinese announced that they’ve broken part of RSA using the D-Wave quantum computers this week. That was the other big news. So we’re now entering this making quantum safe. That was one of the big messages that IBM had is for that exact reason, is that the e-commerce on the internet, cryptocurrency and a whole bunch of other things that we do private public key signing with, are all at risk with these quantum chips. And so it’s going to be CIOs are on notice that we got to start dealing with this right now.
Camberley Bates: Wow.
Steven Dickens: There’s four new NIST algorithms through and I think IBM has been involved in two of them and is actively involved in two of them. And then one of the others was done by an IBMer. So they’ve been at this for a while.
Keith Townsend: So as we’re thinking about as we given advice to CIOs, CTOs about infrastructure and protection around quantum, give me three things that they should probably pay attention to preparing for quantum. Not just from a quantum chip perspective, but from infrastructure readiness. I’m putting you three on the spot.
Steven Dickens: Yes. So I’ll take the first one. I think thinking about quantum safe algorithms get up to speed on what NIST is doing on those four algorithms that it’s updating. I think it’s thinking about encrypting data, knowing it’s going to be able to be hacked. So it’s a kind of harvest the data now, decrypt it later type approach that a lot of these nefarious actors are going to take. So just be thoughtful, get up to speed on those NIST algorithms. Be starting to ask your vendors what they’re doing around quantum safe encryption. That would be the –
Camberley Bates: Okay, so the anomaly detection becomes critical on the data side. And if you don’t have anomaly detection going on in your prime, not just the data protection side of it, which is where you recover from, but the primary storage, you’re in trouble, potentially in trouble. So I mean, we talked last week about maybe what the B of A issue was, was that an attack that nobody’s talking about? But that means that they’re going to be going after, and they’re going to be going after where the biggest ones are, which is the mainframe and the transaction areas. So every mainframe needs to button down IBM, so you know they’re bringing it out in the market. IBM needs to resolve the problems with the Z.
Steven Dickens: And that’s why they’ve been talking about, that’s specifically where they’ve been talking about quantum safe encryption for the last two circles of the box.
Camberley Bates: So as primary storage has got to have anomaly detection, and I’ll use another time to talk about encryption, because I had a great briefing from Broadcom about what they’re going to be coming out with on some encryption stuff that’s going to be going on. But I’ll stop there.
Dion Hinchcliffe: And I would just say CIOs need to start creating a list of areas they have to remediate in across their IT infrastructure. They need to know clearly where they need to quantum reinforce their encryption and reinforce their algorithms for quantum safety. And you need to get that list and then work it backwards based on technical debt, cost benefit, in terms of where the biggest bang for the buck is and get started.
Keith Townsend: And I’ll give a bonus when processes, this is going to impact processes. Do I have the processes to do new algorithms and everything that you folks just mentioned. Let’s move on the conversation to BMC. Steven, you’re a big mainframe guy. Mainframes are big, you’re a big mainframe guy and you attended BMC’s event. What went on there?
Steven Dickens: So they’d come out the week before their big conference announcing that they were going to split the business into two. So I’ve been tracking, BMC. I wrote a Forbes article mid last year. This is a roughly $3 billion software company, 40 years old as a startup if you will, private equity owned by KKR. So they’ve announced that they’re going to split the business into two. One of these names is going to have to change, BMC and BMC Helix. That’s just going to get confusing for people. But they announced the split, the mainframe and Control M business is going to go into the BMC business and their IT service management and observability business is going to be the BMC Helix business. I think for exactly the reasons of why you described Keith. Old BMC is a mainframe company. BMC is more than a mainframe company. It’s about 40% of their revenue is mainframe related. But I think given their history and their past, they’re seen as a mainframe company.
So I see this a trajectory for KKR to be able to realize value from the business that they own, spin out that observability and AI ops business. And where it goes from there once they’re separate businesses is going to be interesting. Then I was obviously out at their conference this week, recorded a lot of video with their team. I think the key takeaway there is AI, lots of focus on agentic AI, rolling that out across their product portfolios. Either from the observability perspective and the IT service management in the Helix portfolio, what they’re doing in control M with the scheduling and automation piece. And then also rolling out AI bring your own large language model to their AI assistants for the mainframe. It was a very on message on 2024 AI type announcement, and it was just on the mainframe.
So I think all the announcements and all the events I’ve been to this year, it was exactly on message with where they’re going. Code assistance, code explanation, bringing large language models and natural language interfaces to operational tasks. You could have been sitting in a Dynatrace briefing, you could have been sitting in a Hashicore briefing, you could have been sitting in any one of the industry vendors we all talk to. It wasn’t very mainframe specific, which I think is a net net and good news, A lot’s going on with BMC right now.
Keith Townsend: All right, and again, we have a lot of news to get to. So Camberley, talk to us about some liquid cooling goodness.
Camberley Bates: I can mention the liquid. Let me go over to Lenovo Tech World because we were at Lenovo had a public event and then they had a day and a half of analyst event and YY, and I am not going to try to pronounce his name because I would insult him I think. But YY, who’s the CEO EO kicked that off and we had a plethora of executives that were CEOs that were there on stage with him. Including Pat Gelsinger, and the CEO from AMD that was there, and talking about the Intel AMD X86 group that’s going to further the purpose of the X86 and its standards that are out there, which was really, really, really cool. But one of those things that was announced was some liquid cooling, the new Neptune device that is a vertically installed server system that is pretty pretty cool and it’s a hundred percent non-heat mean. And you use standard power for this thing. So maybe you want to take that a little bit, Steve, because you-
Steven Dickens: Yeah, liquid cooling’s got cool this week. I wasn’t on the show last week. I was coming back from HPE’s AI day. They took us a bunch of us out to their facility in Wisconsin to talk to us about their direct liquid direct fanless liquid cooling cray systems, and high-end AI and high-performance computing systems. This week we’ve had Supermicro make some announcements as well. Coolit has made some announcements, and then obviously there was the Lenovo announcements we were talking about. Ron Westfall and I have taken all these announcements and synthesized it into analyst coverage that’s going to be available on Futurum Intelligence for those subscribers. There’s a lot going on in this space.
I think the key takeaway is for me, you cannot run GPUs in a data center at scale and not worry about how you cool them. These things are power hungry beasts. You’re going to be pushing over 70 kilowatts in a rack, and once you get past 70 kilowatts you’re going to need to worry about how you cool it. And that’s where you’re going to need to be looking at liquid cooling options and different approaches. Is it liquid glycol? Is it water cooled? How do you do it? You then get into the physics and the properties of glycol versus water, the connectors, these things obviously don’t want to leak. Is it copper wiring? Is it plastic cables? There’s a whole bunch of stuff going on in this space, but it all comes down to that if we’re going to roll GPUs at scale, we’re going to have to have liquid cooling.
Dion Hinchcliffe: I’ve toured a lot of tier two data centers, other words, data centers not run by the hyperscalers and they’re all the new ones are designed to assume the entire building is going to consume water to cool it. It’s very interesting.
Camberley Bates: And one of the things that was very clear with them presenting and they understand that we have new data centers that are being built and data centers that we have to retrofit. And so they’re looking at ways so they have just like we talk about the stages of VMware or whatever, what you’re going to do with VMware potentially they’re talking about the same way of saying, okay, so I’ve got all this here and I need to accommodate for it. How do I do that? So they are rolling strategies out for customers to be able to do, whether or not or water-cooled systems that are partially and partially air-cooled, depending upon what folks have. And this was really, because I asked them the question about where is the break even on water cooling, figuring that it’s a big, huge, massive data center because my old brain about mainframes and everything else, and they said no. They have a college that is setting up a GPU closet essentially. It’s not a data center. It’s more or less like a closet that they’re putting in liquid cooling in there.
Dion Hinchcliffe: Exactly.
Steven Dickens: It interesting to me was interesting for me, the HPE and Lenovo both independently said 70 kilowatts per rack is the cut-over point. Once you get past 70 kilowatts, you’ve got to go liquid cooling. Apparently that’s the break even point.
Camberley Bates: Well, and there is the ROI that is there as well. I mean one of the things they talked about with this that they found and they quoted. I don’t know if it’s public knowledge, but one of the big movie theater folks, not theater designers, they have liquid cooling GPU environment. They can run it 40% faster. You think about what that means because they’re not burning the machine up when we run hot, it burns up. So I mean not only are you saving on the cost of the energy, but if you can push those machines that much faster. Wow.
Dion Hinchcliffe: And they’ll last longer, you might get a few more, more years out of them. So that’s good.
Keith Townsend: Yeah, our colleague Guy Currier is at Open Compute Platform. Their summit this week, which is, I’m a little jealous if I’m going to go anywhere and geek out it’s OCP because you see hardware on the floor. They’re talking not just 70 watt cabinets, which is a lot for a typical enterprise data center, but right now some of the hyperscalers have 250 watt, 500 kilowatt and 500 kilowatt, and now they’re talking about one megawatt racks. We’re seeing that density gets smaller and smaller. So we’re not talking about floor space. Dion, I know you’re old enough as me to remember when data centers colos charged on the number of tiles that you took up. Now it’s not about tiles at all and they’ll give you as much floor space as you want about power and power commitment.
So this is something to continue to watch liquid cooling, how are you going to cool the stuff? How are you going to accommodate denser cabinets? I would love to see how this university is just running the physical power cabling structure to get to the closet to provide enough power safely. And then kind of just the environmentals around having that much power and the fire risk that goes along with running that much power in a building not designed for it. Speaking about power and buildings not designed for it. Nuclear has become in vogue again. We’re looking at nuclear as the only clean option for providing all of the power needed for these one megawatt racks.
Steven Dickens: And the two are absolutely related. We were on the right trajectory. I think with ESG goals, the systems were coming more efficient. We were drawing less power in the data center. And then Nvidia starts putting GPUs in everybody’s boxes and we’ve gone completely back the other way and worse. So specifically the hyperscalers, you look at the four or five big companies that are buying GPUs at scale, it’s the three hyperscalers, it’s Meta and it’s Tesla. They’re probably hoovering up 80% plus of the GPUs that Nvidia is selling right now. So those guys are just purely struggling with power supply. We saw small-
Dion Hinchcliffe: And they all have net zero commitments.
Steven Dickens: Yeah, yeah.
Dion Hinchcliffe: I mean CIOs are depending on their cloud providers to help them reach net zero. Now the hyperscalers are having to spend way more on power than they ever expected. And so I think this is why nuclear is in the equation. Google just announced they’re going to buy six to seven micro nuclear reactors to power. Yeah, it’s very interesting.
Steven Dickens: Small modular reactors. I mean just the flip on nuclear, the speed at which it’s happened. We’ve seen Microsoft working with a power company to recommission Three Mile Island. We’ve got Google and AWS making announcements this week about looking to bring in small modular reactors. I think if this is a trend that’s come from nowhere in the last six months, I think they dipped their toe in the water. Somebody broke, you know Microsoft, kind of broke cover with with the three mile Island announcement. And then everybody has jumped on this bandwagon because what they thought-
Dion Hinchcliffe: They have to. They’re going to be painted the bad guys and they’re not going to be able to get their AI dividends. They’re hoping that AI is going to really pay off for them, but if they’re being forced to curtail it because of the massive amounts of energy and having to pull coal-fired plants or that could be a serious problem. This heads it all off at the past potentially. We’ll see.
Keith Townsend: Yeah, I thought it was a few weeks ago, but it was actually back in March. Amazon actually bought a nuclear power plant from Talon. I think they’re contracted to take 50% of the 960 megawatt power. So this is a trend that we’re going to continue to see. I’m sorry I cut you off there Camberley, you were about to mention something.
Camberley Bates: No, looking from a geopolitical kind of situation, Japan has always had continued to have nuclear. France is heavily invested in nuclear. The United States is kind of like, oh, it’s evil, it’s evil. And I’m sorry.
Dion Hinchcliffe: Germany’s out completely.
Camberley Bates: So it’s all of a sudden, but we will have to deal with the deposits.
Keith Townsend: We just can’t create enough clean energy in other areas to accommodate this much power.
Steven Dickens: It’s a little more nuanced than that as well, Keith. It’s around the regularity of that production of wind is great, but the wind doesn’t blow at the same amount every day. Solar, it’s sunny some days it’s not others. If you’re running a data center, you need it consistently. So that’s the other thing that nuclear brings to this equation. Just on the geopolitical piece, I’ve been looking into this a little bit. China is building 200 nuclear power plants.
Keith Townsend: Yeah, we aren’t there. Battery storage technology isn’t going to fix this problem. We have to be able to consistently maintain systems. Moving on the conversation, we hit on it earlier, AMD and Intel announced a new advisory group, X86 is X86, right? Well, not so much. If you’ve managed data centers, if you’ve managed any kind of IT infrastructure at scale that AMD leaps, Intel leaps, AMD, and ideally you’d like to mix and match your providers and buy from both. The nuance is that just taking a look at the Dell portfolio or Lenovo portfolio, you’ll see a box like the 9860, it’s the big AI box that Dell has been making hay off of. A little dorky nomenclature. Dell ends the last number of their servers with O for Intel and five for AMD. The number of-
Steven Dickens: XPE does the same.
Keith Townsend: They also do the same. And the number of options you have for O servers versus 5 servers is massive. Intel rules the roast when it comes to the number of SKUs that a customer can get from them based on Intel versus AMD, which means that you’re going to end up, even if you’re an AMD shop, if you want a 9860, it’s going to be an Intel chip. And so if you’re big on AI and you want the biggest baddest boxes that Dell presents, they’re going to be an Intel chip. And interoperability is a problem. If you’ve ever done VMware, being able to live migrate one VM to another requires it to be on the same processor. And this has created problems for enterprises as they refresh and buy from separate vendors. And the goal of group is to normalize some of that stuff is to be able for X86 to be X86. My question to you three is will this impact Intel’s ability to compete with AMD? Are they giving up kind of ruling X86?
Steven Dickens: I mean there’s two ways to look at that. I think first off, it is an acknowledgement that AMD is not the noisy small little competitor that it used to be 10 years ago. You could argue that they should have done this 10 years ago. It was interesting watching some of the risk five community kind of promoting this and saying, well, we’ve fixed this with risk five. That’s that open source community that does all of what this X86 group is planning to do. And they’ve been doing it across multiple different chip providers. We chat to the guys at Sci-Five probably the biggest chip designer and provider in that space. And some of their social posts this week were quite interesting. But I mean it’s certainly an interesting move by Intel to acknowledge AMD at this level. Arguments good for the industry.
Dion Hinchcliffe: I think it’s just going to push your workloads up the stack in the container model where you don’t have that type of issue and you have much more flexibility on where that workload can run. So virtualization is obviously not going away, but I think we’re going to see more, especially business workloads, be much more containerized to avoid any of this clustering or any of the issues around that.
Camberley Bates: So I don’t play that much into the CPU environment, but outside looking in, it seemed that this was a way to compete potentially against NVIDIA and Long Gate. We talk about the CPU or the X86 being a viable option for mid-range users, versus having a partner or what the competition that’s going on and how much they’re driving the market right now. This is a way to catch up.
Dion Hinchcliffe: Yeah, I agree. I think some of it is AI. Pat and Lisa mentioned in their interview with Pat and Dan that –
Steven Dickens: Which was an exclusive, by the way.
Camberley Bates: Very cool.
Keith Townsend: They mentioned the AI extensions AMX and AMD’s version. But I think a lot of this even goes down to the consumer level. All of these extensions are compatible, but at a software level, it matters. That interface, if we are talking about CUDA and the competition to CUDA, it matters how you are able to extract and get to what Dion is talking about that if I’m buying X86, I expect a consistent interface from a software perspective. And when I don’t get that consistent interface, you’re disrupting my operations. And now I’m going to look to a RISC-V group. I’m going to look to an ARM group who, I may not necessarily get the performance and the price value, but I am going to have operational consistency. So I’m looking at this as a operational consistent play.
All right, we’re out of time. I think we could talk about all of these topics for a half an hour. And if you want to get more of the half an hour, subscribe to the podcast. Tell a friend, I like to say, you know what, if your grandmother isn’t into tech, this is a great podcast for her to still not be into tech. Until next week, bye on behalf of all my friends.
Author Information
Keith Townsend is a technology management consultant with more than 20 years of related experience in designing, implementing, and managing data center technologies. His areas of expertise include virtualization, networking, and storage solutions for Fortune 500 organizations. He holds a BA in computing and an MS in information technology from DePaul University. He is the President of the CTO Advisor, part of The Futurum Group.
Camberley brings over 25 years of executive experience leading sales and marketing teams at Fortune 500 firms. Before joining The Futurum Group, she led the Evaluator Group, an information technology analyst firm as Managing Director.
Her career has spanned all elements of sales and marketing including a 360-degree view of addressing challenges and delivering solutions was achieved from crossing the boundary of sales and channel engagement with large enterprise vendors and her own 100-person IT services firm.
Camberley has provided Global 250 startups with go-to-market strategies, creating a new market category “MAID” as Vice President of Marketing at COPAN and led a worldwide marketing team including channels as a VP at VERITAS. At GE Access, a $2B distribution company, she served as VP of a new division and succeeded in growing the company from $14 to $500 million and built a successful 100-person IT services firm. Camberley began her career at IBM in sales and management.
She holds a Bachelor of Science in International Business from California State University – Long Beach and executive certificates from Wellesley and Wharton School of Business.
Dion Hinchcliffe is a distinguished thought leader, IT expert, and enterprise architect, celebrated for his strategic advisory with Fortune 500 and Global 2000 companies. With over 25 years of experience, Dion works with the leadership teams of top enterprises, as well as leading tech companies, in bridging the gap between business and technology, focusing on enterprise AI, IT management, cloud computing, and digital business. He is a sought-after keynote speaker, industry analyst, and author, known for his insightful and in-depth contributions to digital strategy, IT topics, and digital transformation. Dion’s influence is particularly notable in the CIO community, where he engages actively with CIO roundtables and has been ranked numerous times as one of the top global influencers of Chief Information Officers. He also serves as an executive fellow at the SDA Bocconi Center for Digital Strategies.
