Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Oppenheim and she and coverage on IBM with an outperform
Speaker 2: writing expecting double digit revenue growth in its software portfolio
Speaker 2: that stocks up about a quarter of one percent. Let's
Speaker 2: stick with IBM. Let's head to the World Government Summit
Speaker 2: in Dubai, where bloombags Geamunta BASESSI. She is with a
Speaker 2: special guest, Jamana, I have.
Speaker 1: A CU.
Speaker 3: Guys, thanks for that. Yes, so joining me right now
Speaker 3: is the IBM CEO, Arvin Krishner. Great to have you
Speaker 3: with us here the World Government Summits in the UAE
Speaker 3: of all places. But look, I just want to start
Speaker 3: off with a question that I think is dominating the
Speaker 3: discussions these days, and that is visa VI Artificial intelligence.
Speaker 3: You can't be a US tech company these days if
Speaker 3: you're not seen to have a growing presence in AI.
Speaker 3: How does innovation keep up with demand for a company
Speaker 3: like yours?
Speaker 1: Look, I mean innovation is our life.
Speaker 4: No star there, And I do think that AI is
Speaker 4: a transformative technology. So no company can be in tech
Speaker 4: without having to have to play a role in AI.
Speaker 4: If I look at the role that we want to play,
Speaker 4: we are focused on the B to B market, So
Speaker 4: we do not want to do B two C. So
Speaker 4: B to B means you've got to take advantage of
Speaker 4: an enterprise's private data.
Speaker 1: Here's a shocking statistic.
Speaker 4: Only one percent of enterprise data has found its way
Speaker 4: into any form of AI model so far.
Speaker 1: So that is the unlock that we want to do.
Speaker 4: And as we bring that private data into models, whether
Speaker 4: it's used to refine models or to construct unique use cases,
Speaker 4: it unlocks a huge amount of value for the enterprise.
Speaker 3: Yeah, how has the arrival of deep seek disrupted the
Speaker 3: landscape for generative AI because it's a model that was
Speaker 3: produced with a much lower cost but also equal utility
Speaker 3: as some of the larger language models. Is this a
Speaker 3: major game changer?
Speaker 2: Do you think?
Speaker 1: Actually?
Speaker 4: You see we smile because I think it's a validation.
Speaker 4: We've been on this point for a long time that
Speaker 4: you do not have to spend so much money to
Speaker 4: get these models if you're willing to make fit for
Speaker 4: purpose models. We do believe that the cost should be
Speaker 4: in the millions and not in the hundreds of millions.
Speaker 4: And so how do you begin to distill models down
Speaker 4: to smaller sizes, get them unique for a purpose and
Speaker 4: then run them at two to three percent, so thirty
Speaker 4: times cheaper than the big models, but as accurate and
Speaker 4: as good for a domain specific task.
Speaker 3: Do you think that therefore there could be a day
Speaker 3: of reckoning for some of these big tech companies spending
Speaker 3: billions and tens of billions, even one hundred billion dollars
Speaker 3: on kafak spending funds these year.
Speaker 1: That's probably beyond my ability to computer. Is it a
Speaker 1: day erecting?
Speaker 4: But I can tell you that we're going to find
Speaker 4: that the usage is going to explode as the cost
Speaker 4: comes down, So maybe there's enough quantity increase that all
Speaker 4: of it maps out in the right way.
Speaker 3: Yeah, You've always been a big supporter of open source models,
Speaker 3: and I just wonder in the case of deep Seek,
Speaker 3: whether that actually served as a reason for the disruption
Speaker 3: to take place. Would we not have seen a deep
Speaker 3: seek come to the market had there not been open
Speaker 3: source models?
Speaker 4: No, I don't believe so, because there are enough large
Speaker 4: models that people are building, not in the hundreds, but
Speaker 4: definitely in the tens.
Speaker 1: And it's hard to.
Speaker 4: Imagine that there's an ecosystem which doesn't have a large
Speaker 4: model to start from. Look ideas tend to spread. This
Speaker 4: has been true for two thousand years. People have written
Speaker 4: about this. Once there's an idea, it gets penned down.
Speaker 4: The idea spreads. Once an idea spread, smart people, everywey
Speaker 4: can copy it.
Speaker 1: Yeah, let me ask.
Speaker 3: You a question about regulation. I started off the interview
Speaker 3: asking you whether innovation can keep up with demands. Do
Speaker 3: you think regulation is actually keeping up with the innovation
Speaker 3: that we're seeing in artificial intelligence.
Speaker 1: I'll actually go the other way around.
Speaker 4: Too much regulation early stifles innovation and then doesn't allow
Speaker 4: those companies and those nations where the regulation.
Speaker 1: Is heavy to succeed. We can always look at the example.
Speaker 4: I think that the EU is very good at lots
Speaker 4: of things, but sometimes the over regulation is an inhibitor
Speaker 4: on innovation, and I think we should balance that. I
Speaker 4: think that that balance is incredibly critical. And I talk
Speaker 4: about precision regulation as opposed to.
Speaker 1: Sort of blunt force regulation.
Speaker 4: So be precise and take a risk based approach where
Speaker 4: only the most risky activities are regulated. So ANYI that
Speaker 4: becomes the use cases. So yeah, be more careful around
Speaker 4: life or death activities, but allow innovation in customer service,
Speaker 4: in productivity for your programmers in terms of what we're
Speaker 4: going to do around improving the customer experience, but maybe
Speaker 4: be more careful in life or death activities.
Speaker 3: Yeah, let me just ask you another question which is
Speaker 3: also very important in the context of tech innovation, and
Speaker 3: that is the rise of countum computing. I thought it
Speaker 3: was really interesting that in your investor dage just a
Speaker 3: week ago, you said, well, you updated the quantum computing roadmap,
Speaker 3: and you said that you're aim at demonstrating the first
Speaker 3: contum computer by twenty twenty eight. That's only three years away.
Speaker 3: People are a bit skeptical that that can be achieved in.
Speaker 4: That timeline, tolerant with era correction part of computer. At
Speaker 4: twenty eight, we actually have third quantum computers on the
Speaker 4: cloud today, actual quantum computers over one hundred cubits, so
Speaker 4: not toys, really serious quantum computers. But we believe we're
Speaker 4: going to be on the roadmap to do that by
Speaker 4: twenty twenty eight, and that is a commitment that we
Speaker 4: did make. But I also believe that quantum computers are
Speaker 4: going to unlock a lot of value. We think about
Speaker 4: half a trillion dollars worth of value for our customers
Speaker 4: by the end of this decade. That's exciting materials, climate change,
Speaker 4: carbon sequestration, better fertilizers, better batteries, exciting areas.
Speaker 3: Yeah, do you feel that because the world is so
Speaker 3: focused on one thing at a time and this time,
Speaker 3: you know it's generative AI, we're perhaps not focusing enough
Speaker 3: on how quantum computing is actually going to disrupt our
Speaker 3: day to day lives.
Speaker 4: What do we actually look with that we can do
Speaker 4: our work and when we get there, it'll be a moment,
Speaker 4: and that that moment is going to be important.
Speaker 1: Our customers are pretty focused on it.
Speaker 4: We have two hundred and eighty people different companies and
Speaker 4: organizations who work with us on algorithms. The state of Chica,
Speaker 4: Illinois in the United States just announce the National Quantum
Speaker 4: Algorithmic Center, where multiple universities, startups, large companies, national labs,
Speaker 4: all player role.
Speaker 1: They'll be running on our quantum computer. They probably get others.
Speaker 4: As well if they exist and do that. I think
Speaker 4: that's the excitement that is there. But the fact that
Speaker 4: two hundred and eighty institutions all around the world are
Speaker 4: busy learning how to use them tells me they'll be ready.
Speaker 3: Yeah, Well, we're here in the UAE, and I know
Speaker 3: that you were in Saudi Arabia recently as well. What
Speaker 3: opportunities are you seeing in this part of the world
Speaker 3: for AI growth and growth in your business.
Speaker 4: We are very bullish about our business in both both
Speaker 4: these nations, both in Saudi Arabia and in the UE.
Speaker 4: I think the appetite for digital innovation, both for government
Speaker 4: services and for the private sector is incredible. I think
Speaker 4: both nations have woken up that tech can be a
Speaker 4: big part of their economy.
Speaker 1: If you look globally four to five percent.
Speaker 4: I think both these nations wanted to be ten percent,
Speaker 4: and they're investing appropriate And you can look at the
Speaker 4: services that are there in both countries that are enabled
Speaker 4: by technology. That appetite for AI is massive. You look
Speaker 4: at the investment that is done in the in the OE,
Speaker 4: around nbc UI, around some of the Falcon models. You
Speaker 4: look good too in the in Saudi Arabia and you
Speaker 4: have the universities and you have the Alarm model.
Speaker 1: I think that speaks for itself.
Speaker 3: Yeah, well, I'm sure we'll be seeing a lot more
Speaker 3: of you in the region. Then, Arvin Krishna, really good
Speaker 3: to chat to you.