International Business Machines Corp at RBC Capital Markets Technology, Internet, Media and Telecommunications Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Matthew Swanson - RBC Capital Markets - Analyst : And so I guess what was your perception of IBM when you joined? And how has it changed since you've been part of the team?

Question: Matthew Swanson - RBC Capital Markets - Analyst : Well, and that leads us straight kind of into where I want to go next, where it feels like Red Hat is kind of the central cog to a lot of what IBM does, be involved in consulting, being involved in hardware. Can you just talk about how you think about Red Hat as a part of the broader IBM ecosystem, especially enabling those two pillars, the hybrid cloud and AI? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 19, 2024 / 4:20PM, IBM.N - International Business Machines Corp at RBC Capital Markets Technology, Internet, Media and Telecommunications Conference

Question: Matthew Swanson - RBC Capital Markets - Analyst : And then when we're thinking more on the economics of it, I guess, you're coming off a really strong quarter for Red Hat, reaccelerating growth up 14%. Can you just talk a little bit more about kind of the strengths and drivers of that? And then how you're thinking about that setting up for the future?

Question: Matthew Swanson - RBC Capital Markets - Analyst : Well, and maybe speaking to a value prop you're very familiar with and thinking about AI, so IBM made the decision earlier this year to open up the code base and the Granite models. You qualify as an expert on open source, I would say. Can you just talk us through kind of the reasoning behind the decision and why you think that's the right strategy?

Question: Matthew Swanson - RBC Capital Markets - Analyst : Yeah. I've been trying to be a big supporter of being RBC tattoos, but there's been (multiple speakers)

Question: Matthew Swanson - RBC Capital Markets - Analyst : There are worst logos. Yeah. So we now know why you want to get to open source. But given Red Hat's success of actually driving that, harnessing the global power, what do you see as like the early steps that you're starting this over again within GenAI to recreating that same momentum? And what do you look at to know if you are capturing the attention of developers?

Question: Matthew Swanson - RBC Capital Markets - Analyst : Maybe staying on Gen AI. One thing we talk about within our team sometimes is how different this trend might have looked in 2021 when we were going through like the huge software spending booms. Today, it feels like we're in a much more cost-conscious environment. IBM seems to be taking a very ROI-focused approach to Gen AI. And can you just kind of talk about why you think that's the right model, what you're hearing from customers that lead you towards that, and just kind of the flavors of small versus large models?

Question: Matthew Swanson - RBC Capital Markets - Analyst : Yeah. No, that's super helpful. In some of my checks, the idea is almost due to query costs, that some projects, the biggest fear is it's too successful because if you're losing money on it every time someone uses it, then that's a rough project.

Question: Matthew Swanson - RBC Capital Markets - Analyst : Maybe one more on efficient GenAI. Can you just talk about your proposed acquisition of Neural Magic?

Question: Matthew Swanson - RBC Capital Markets - Analyst : So I feel like we've been going to the other pillar of hybrid cloud. We've been in this conversation about the right balance of hybrid over the last decade. I guess post-cloud optimization, how are you seeing conversations change about the idea of the balance between on-prem, cloud, private, Edge, all the flavors?

Question: Matthew Swanson - RBC Capital Markets - Analyst : And then on virtualization, so we've heard a lot in the market recently about some changes that Broadcom has made post buying VMware. VMware traditionally a provider of virtual machines. How does this opportunity to the extent you feel there is one match up with Red Hat's product set?

Question: Matthew Swanson - RBC Capital Markets - Analyst : So we're at about 4.5 minutes. It's a full room. Are there any questions from out in the audience? All right. (multiple speakers) REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 19, 2024 / 4:20PM, IBM.N - International Business Machines Corp at RBC Capital Markets Technology, Internet, Media and Telecommunications Conference Unidentified Participant Red Hat under IBM platform helped many, many, many companies improve their operating efficiency. Now we are seeing, or at least that's the plan, the government would like to improve the efficiency of massive government operations. And so how can you help them?

Question: Matthew Swanson - RBC Capital Markets - Analyst : All right. Maybe a good way to kind of end this is when you're thinking about Red Hat over the next five years, what are some of the things that you're most excited for? And then maybe topic du jour, like how do you see maybe Gen AI evolving in the next five years?

Question: Matthew Swanson - RBC Capital Markets - Analyst : Well, we're staring our red lights. I think we're out of time. But Matt Hicks, thank you so much for spending time with us.