Surface Disruption

It’s gonna be a very busy day…in the markets, and in tech.

On the markets front, I would urge you to stop looking at the ticker tape — it’s October, it happens.

On the tech front, Microsoft is making some new announcements in its Surface line, with expectations there will be a new Surface Pro 7, an AMD-powered Surface Laptop 3, and an ARM-powered Surface Pro with all day battery life. You know, so you can watch that ticker tape drive deeper into the bear-filled ditch!

Microsoft is also expected to announce a kind of “Windows Lite,” which is slated to be ready for dual-screen and foldable devices.

Here’s a thought: Can I get one of those foldable devices and use Windows Lite to only see the part of the ticker that has positive news?!

Out west, TechCrunch Disrupt 2019 kicks into high gear at Moscone North in SF later this a.m.

Disrupt positions itself as “the original startup conference,” but with so many unicorns being scared off by their investor expectation’s long shadows — and the ticker headed south — ’twill be very interesting to see what memes and headlines emerge.

Expect a whole lot of AI, blockchain, and pivots! (Hint: If there in person, keep an eye out for the IBM Developer presence and learn more about the Code and Response initiative!)

Quantum Leap

IBM is ramping up its investments in quantum computing.

Today it announced the opening of the IBM Quantum Computation Center in New York state, one which expands the company’s fleet of quantum computing systems for commercial and research activity that exist beyond the confines of experimental lab environments.

To date, the global IBM Quantum user community has run more than 14 million experiments on IBM’s quantum computers through the cloud, and published more than 200 scientific papers. To meet growing demand for quantum hardware access, ten quantum computing systems are now online through IBM’s Quantum Computation Center, composed of five 20-qubit systems, one 14-qubit system, and four 5-qubit systems.

Within a month, IBM’s commercially available quantum fleet will grow to 14 systems, including a new 53-qubit quantum computer, the single largest universal quantum system made available for external access in the industry, to date.

Advances in quantum computing could open the door to future scientific discoveries such as new medicines and materials, vast improvements in the optimization of supply chains, and new ways to model financial data to make better investments.

You can learn more at http://www.ibm.com/ibmq

No Debate

If you didn’t hear about IBM’s Project Debater earlier in the year when it debated a real live (and really smart) human, here’s your chance to learn more about what you missed out on the first time around.

Reader’s D: Project Debater uses machine learning and AI to form arguments and rebuttals in debates with humans. The technology was developed over a 6 1/2-year period, and drew on expertise in fields ranging from philosophy to NLP.

One of my favorite must read emails, “Morning Brew,” has a derivative called “Emerging Tech Brew,” and they just added some more color to the Project Debater palate:

“Six months ago, Debater squared off with a top-ranked human counterpart on the merits of preschool subsidies. Though the AI system lost, it strung together minutes-long speeches, crafted a rebuttal, delivered its points persuasively, and even cracked some jokes.”

What’s next:

“IBM’s not scheduling any rematches soon. Now, it’s “pursuing other directions to commercialize the technology and further the science,” [IBM Researcher Noam] Slonim said. That means converting the advanced research into language-comprehension tech for large companies.

There’s no debate in my mind whatsoever it’s a big step up in the field of AI.

Think Again

So much has happened since last I wrote!

I got sick as a dog (apparently spurred on behind the early blooming of the Texas juniper cedars), but then I got well enough to travel out to San Francisco for IBM’s Think event (more on that in a moment).

The Mars Opportunity rover finally decided to call it quits after surviving 5,111 sols (the Martian day equivalent), after it was expected to only last 90! Talk about underpromising and overdelivering.

Opportunity, thanks for all the pics and memories and pics of the Martian surface — and please send Marvin our regards.

I can’t even remember what all else happened, so let me get back to Think.

I’ve attended more IBM conferences over the years than I care to count, and this was the first year in 10 years that our signature event wasn’t being held in Las Vegas.

San Francisco was a nice break from the desert landscape, but we also got lots of rain in the middle of the week.

No sooner had I landed on Monday PM that I quickly made my way over to Think land around the Moscone Center so that I could watch the Project Debater debate.

Some history: I was in the audience in NYC for one of the Deep Blue vs. Kasparov matches in 1997, and followed the chess action closely via our (then) brand new Java applet.

In 2011, I watched with amazement when IBM Watson beat the world’s best in “Jeopardy!”

But for my two cents, Project Debater takes things to the next level — using machine learning and AI to form both arguments and rebuttals in debates with a human opponent.

You can read more about Project Debater here.

If you want to learn more about the technology, check out this interview IBM Developer conducted with Dr Ranit Aharonov, the project’s team lead.

Dr. Aharanov explains that IBM’s “third grand challenge” was to develop a system that can hold its own in a full debate with a human.

One week ago Project Debater proved that she was up to the challenge.

IBM Earnings: Rising Demand for AI, Cloud

Different chatter coming in from different sources on IBM’s 4Q18 earnings.

One of my favorite email newsletters that I actually try to read most days, the “Morning Download,” from The Wall Street Journal, had this to say:

Good day, CIOs. International Business Machine Corp.’s  fourth-quarter financial results reflect the continuing rise of artificial intelligence and cloud computing as central to corporate technology investment.

The big financial picture. Overall, revenue fell 3.5%, a second consecutive quarterly drop that underscores significant challenges the technology giant faces in recapturing growth, the Journal’s Jay Greene reports. Even so, IBM said it expects adjusted per-share earnings to hit $13.90 in the current fiscal year, compared with $13.81 for 2018. Shares rose more than 6 percent in after hours trading.

Where’s the growth? It’s in the company’s four so-called strategic imperatives. Those businesses—cloud computing and data analytics, among others—grew 5% in the quarter to $11.5 billion, the Journal reports. The cloud business grew 12 percent to $19.2 billion in 2018, according to Reuters. Last fall, IBM announced it would buy Red Hat Inc. to boost its efforts in the cloud. It recently struck new cloud deals with Vodafone Group PLC’s business services division and French bank BNP Paribas.

Cognitive leap. “The company’s cognitive software business, which houses artificial intelligence platform Watson, analytics and cybersecurity services, reported sales of $5.46 billion, compared with analysts’ expectation of $5.25 billion,” Reuters reports.

There was this from CNBC: 

Earnings: $4.87 per share, excluding certain items, vs. $4.82 per share as expected by analysts, according to Refinitiv.
Revenue: $21.76 billion, vs. $21.71 billion as expected by analysts, according to Refinitiv.

IBM’s largest business segment, Technology Services and Cloud Platforms, posted $8.9 billion in revenue. Analysts polled by FactSet were expecting $9.04 billion in revenue from the segment.

The next-largest business segment, Cognitive Solutions, did $5.5 billion in revenue. That exceeded the FactSet consensus estimate, which was $5.27 billion.

IBM’s Global Business Services segment collected $4.3 billion in revenue, exceeding the $4.15 billion estimate, and the Systems segment came in at $2.6 billion, below the $2.77 billion estimate. The Global Financing segment contributed $402 million in revenue, under the $426 million estimate.

In the quarter IBM announced its intent to pay $34 billion to acquire Red Hat, announced a chip manufacturing deal from Samsung and sold software assets to HCL Technologies for $1.8 billion. The Red Hat deal is expected to close in the second half of 2019.

And this from The Street: 

IBM Corp. (IBM – Get Report) shares were indicated sharply higher in pre-market trading Wednesday after the iconic tech firm posted stronger-than-expected fourth quarter earnings and said its recent acquisition of Red Hat Inc. (RHT – Get Report) would help boost cloud computing sales in 2019.

 IBM said adjusted earnings for the three months ending in December came in at $4.87 per share, down 5% from the same period last year but ahead of the Street consensus of $4.82 per share. Group sales were also softer than the prior period, falling 1% to $21.76 billion, but the figure topped estimates and IBM said it sees free cash flow for 2019 of around $12 billion, largely in-line with its tally over the past year.

Cloud computing sales, too, were impressing, rising 12% to $19.2 billion over the whole of 2018, helping build an overall backlog of orders across its businesses to around $116 billion as of the end of last year. Looking ahead, IBM sees 2019 operating earnings of $13.90 per share, but said that figure won’t include the impact of its $34 billion takeover of software group Red Hat last October.

“We see the strong bookings Red Hat recently reported as further evidence of clients’ confidence in the value,” IBM CFO Jim Kavanaugh told investors on a conference call late Tuesday. “Remember, the quarter ended a month after the transaction was announced. From a value perspective, in addition to the growing Red Hat business itself, we see an opportunity to lift all of IBM by selling more of our own IBM Cloud and by selling more of our analytics and AI capabilities on OpenShift across multiple platforms.”

30 Feet Off the Right Wing

The drone-initiated flight halt called yesterday afternoon at Newark Liberty International Airport was all but inevitable.  

Meaning, I just assumed after the Gatwick drone incident late last year in the U.K. it was only a matter of time before The Beatles came to America.

This was the sit rep according to a report from The New York Times: The drone was spotted about 3,500 feet over Teterboro Airport in New Jersey (a smaller airport 17 miles north that handles private planes).

Hobby drones are, by law in the U.S., not supposed to fly over 400 feet and “operating restrictions include no flights near airports, no flights near or over people, no flights in controlled airspace” without a permit, according to FAA 14 CFR 107.

In this particular case, one airline pilot reported the drone was about “30 feet off the right wing.”  Too close for drone comfort.

Flight operations were impacted at Newark for about 90 minutes before flights resumed.  

Better than Gatwick’s three days, but alarming nonetheless. 

IBM Reports 2018 Third-Quarter Results

IBM today announced its 2018 third-quarter results, generating its best year-to-year gross margin performance in three years, which reflected the company’s move towards higher value businesses.

Highlights are as follows:

• GAAP EPS from continuing operations of $2.94; Operating (non-GAAP) EPS of $3.42
• Revenue of $18.8 billion, down 2 percent (flat adjusting for currency)
• Strategic imperatives revenue of $39.5 billion over last 12 months, up 13 percent (up 11 percent adjusting for currency)
• Cloud revenue of $19.0 billion over last 12 months, up 20 percent (up 18 percent adjusting for currency) 
• As-a-service annual exit run rate for cloud revenue of $11.4 billion in the quarter, up 21 percent year to year (up 24 percent adjusting for currency)
• Strong services gross profit margin expansion year to year
• Maintains full-year operating (non-GAAP) EPS and free cash flow expectations

“IBM’s progress and momentum this year in the emerging, high-value segments of the IT industry are driven by our innovative technology, deep industry expertise and commitment to trust and security,” said Ginni Rometty, IBM chairman, president and chief executive officer.  “Our leadership in the technology and services that deliver hybrid cloud, AI, blockchain, analytics and security has helped drive our overall performance, and is helping our clients unleash the full business value of these innovations.”

IBM 1Q18 Earnings: EPS Beats @ $2.45

IBM’s 1Q18 earnings were just announced, and beat estimates on EPS of $2.42 per share at $2.45, and revenue at $19.1 billion (vs. estimates of $18.84 billion).

CNBC’s report highlights:

Last quarter, IBM announced revenue growth from the year-ago quarter for the first time in more than five years. That streak is now continuing for a second quarter.

But the company reaffirmed its previous guidance of $13.80 in earnings per share, excluding certain items, for the full year of 2018, while analysts polled by FactSet had expected $13.83 per share, according to Thomson Reuters.

Cantor Fitzgerald analysts led by Joseph Foresi said in a Friday note that they expect IBM to report gains from companies upgrading to IBM’s latest mainframe computer, the z14.

IBM continues to seek growth from its strategic imperatives, which include social, mobile, analytics and cloud. In the fourth quarter that group contributed 49 percent of all revenue, and the Cantor analysts expect that balance to be unchanged in the first quarter.

With respect to guidance, for the second quarter analysts expect IBM to forecast $3.05 in earnings per share, excluding certain items, on $19.9 billion in revenue, according to Thomson Reuters.

A Bit More Blockchain

Happy Thursday.

According to a story from Fortune (who were reporting a story from The Times of London), Twiter CEO Jack Dorsey is on the record saying that Bitcoin (despite the recent bubble) will come to replace all currencies.

“The world ultimately will have a single currency, the Internet will have a single currency. I personally believe that it will be Bitcoin.” But the timeline will be “probably over ten years, but it could go faster.”

Miners, start your computers (but watch that electricity bill!)

Meanwhile, also across the pond, the UK Chancellor of the Exchequer, Philip Hammond, was expected to announce a government “crypto assets task force,” along with a host of other fintech initiatives earlier today, according to a report in CoinDesk.

The initiative, part of the government’s larger Fintech Sector Strategy, “will help the U.K. to manage the risks around Cryptoassets, as well as harnessing the potential benefits of the underlying technology,” he said in the statement.

Back here in the U.S., Blockchain Capital, which is an investor in fintech companies like Coinbase and Ripple, has raised $150 million for its fourth fund. 

According to a story from Axios, this new fund appears to be the largest venture capital fund raised to focus exclusively on blockchain and cryptocurrency technologies.

So my logical question: Was the new round raised in Bitcoin or cash??!!

Inquiring minds want to know.

For those more interested in the crypto pick and shovel play, IBM Think this week in Vegas had a number of sessions focused on blockchain.  

If interested, check out this replay of IBM’s Jerry Cuomo, who lays out a number of actual blockchain use cases that do everything from save energy to cut food waste.

IBM and Salesforce Strengthen Strategic Partnership

IBM and Salesforce today announced an expansion of their strategic partnership, bringing together IBM Cloud and Watson services with Salesforce Quip and Salesforce Service Cloud Einstein to enable companies to connect with their customers and collaborate more effectively with deeper insights.

With this expansion, Salesforce has named IBM a preferred cloud services provider and IBM has named Salesforce its preferred customer engagement platform for sales and service.

“Naming IBM as a Salesforce preferred cloud services provider demonstrates the power of the IBM Cloud to help companies fundamentally change the way they do business,” said Ginni Rometty, chairman, president and CEO, IBM. “This expanded partnership builds on the combined power of Watson and Einstein to help enterprises make smarter business decisions.”

“The success of our customers drives everything we do at Salesforce, including our strategic partnership with IBM,” said Marc Benioff, chairman and CEO, Salesforce. “The combination of IBM Cloud and Watson services with Salesforce Einstein and Quip will deliver even more innovation to empower companies to connect with their customers in a whole new way, leveraging the power of the cloud and AI.”

As a part of this extended strategic partnership, IBM will build new​IBM Watson​Quip Live Apps, bringing the power of Watson and Quip together. These interactive custom-built applications will be embedded directly into any Quip document to increase the effectiveness of sales teams across the lifecycle of an opportunity.

With ​Quip’s document creation and editing platform, customers are able to bring relevant content, for any project, into a centralized document, removing the need to toggle between multiple windows and apps to get work done.

Building on the first IBM and Service Cloud integration, the companies will bring together the power of IBM Watson and Service Cloud Einstein to deliver new AI-driven recommendations for next best actions.

Now, with AI driven predictive analytics, companies will be able to create personalized, customer-triggered interactions based on the latest call or messaging chat they had, to help build stronger connections with their customers.

Today’s news strengthens the partnership previously announced by IBM and Salesforce to deliver joint solutions that leverage the power of AI and enable companies to make smarter decisions, faster than ever before.

With more than 4,000 joint customers, the partnership has already helped companies, such as Autodesk, implement new Watson solutions to connect more deeply with their customers.

“There is a perfect marriage between Salesforce and IBM,” said Rachael Cotton, senior manager, machine assisted service engagement, Autodesk. “Salesforce is where many companies like Autodesk house enormous amounts of customer data, most of which goes untapped. Combining the AI power of Watson and IBM Cloud with insights from Salesforce has helped Autodesk better understand its customers and ultimately create a transformed customer experience.”

You can earn more about the new, expanded strategic partnership between IBM and Salesforce here: https://www.salesforce.com/campaign/ibm/

And more about how to surface data from IBM Watson Discovery in Salesforce with Salesforce Trailhead here: https://trailhead.salesforce.com/en/projects/surface-data-from-ibm-watson-discovery-in-salesforce