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