Person and show it as their own, they always give credit. Its the spirit. When you see people like that and if you think back over all your life charlie of who youve met and have done well and were consistently doing well they had that spirit. And you think about the skin flint who is holding back, taking ideas they dont go that far. Ginni rometty, jack welch, suzy welch, when we continue. Rose funding for charlie rose has been provided by rose additional funding provided by and by bloomberg, a provider of multimedia news and Information Services worldwide. Captioning sponsored by Rose Communications from our studios in new york city, this is charlie rose. Rose Ginni Rometty is here. She is chairman and ceo of ibm. Fortunefortune magazine named her as the most powerful woman in business for the last three years. For over a century, ibm has been among the globes most powerful countries, its in 90 of the banks and 70 of all corporate enterprises. 2014 was altransformationle year for the company. They continued to share businesses such assemy conductors. Its on the cloud, mobile commute computing and Artificial Intelligence. It announced Watson Health for analyzing healthcare data. I am pleased to have the ceo of ibm at the table for the first time. Welcome. Thank you, charlie. Rose tell me where ibm is today and where you want to take it. I had a Great Company and you would expect me to say nothing else. Its 104 years old now. When you said were transforming, i said to everyone, you dont get to be 104 years old by doing the same thing every day. This is especially in the tech industry. You talk about technology a lot but this is an industry that is violently reinvents itself over and over and you have to keep changing with it. So im reinventing ibm like my predecessors as well. You say what are we now . We are a solutions company. When you mention technologies its not just about the technologies. They are at the heart of the solution bus it is really what we do for clients that makes the most important difference here. We do some of the most Mission Critical important work in the world and really things that, you know, i say trains dont run, plains dont fly, they dont do it without us, but you have to do it in new ways, so we are an Innovation Company on solutions that are underpinned by these Current Technology trends. Rose youve had declining revenue for a number of quarters. Yes. Rose your goal, i assume is to find new revenues as you face the reality of declining revenues. From an outside view youd say gee, revenues are declining, but a lot of it has been by design by us. Rose things youve shedded. Absolutely. One of the things i learned with this Great Company is dont ever protect your past and thats how you succeed in the future. That doesnt mean at the minute. Last year we divested 7 billion of businesses. I have to had they were also negative profit. If you move to higher value, thats not just in a Share Holders mind. You have to move out into some businesses and move into new businesses. Rose because you have to transform on multiple layers and multiple platforms. I you adjust and you move on to the next era. When ibm was doing main systems, the pc came along and people said thats going to be the end. We went through a that and moved on to the next erravment now the internet. We again took the internet, made it real for the enterprise and now on the next set of trends. Sheer one thing different. There are three of the Technology Trends at once. So for why the world feels a little different in the area, there is a reason. Its intense. You have the advent of the data which well talk about. You have the adventive cloud which i put as buying things as a service and then you have mobility which i will come back to underscoring of security and the importance of it, which have the three things going on at once. Theyll reorder our industry. But as i said all my colleagues, they will reorder yours, too, and well reorder every business whether a manufacturer, produce cars, retailer, it will make a change in how you operate. That makes a difference at this moment in time. Add in currency, macroeconomics and other geopolitical things. Rose mobile systems, you made a deal with apple, you made a deal with twitter. How are you combining with these two huge names . Yeah, this is a really interesting point that i think history will reflect on and show how important it was for us. I am a big believer in these partnerships. Those names like apple and tim and i have talked they are wonderful at what they do for consumability, ease of use. And thats a great thing. Now, the market of the enterprise which we know so well, if you say what does that mean in the enterprise and were really the Gold Standard for the enterprise, theyre a Gold Standard for a consumer, so when you come together, as weve talked, its good to know what you can do and what you shouldnt do as a business. So the idea is we could reimagine work in the enterprise if we worked together. So take their kind of simple consumability and then our ability to know industrys work flow, integration, and to me a perfect example to kind of bring it alive, my favorite one of the first apps weve done is flight attendants. I know youre going to run off to a flight. If youve ever been on a flight, in the air, you think i have a connection, youre on the ground, you get your phone, someone is helping you, typing away end leslie what about someone in the air walks up to you one screen no training as a flight attendant, shows you pushes a button and you get the information on your flight. Thats complex and we made it simple. So that is a perfect example of reimagining work because in the workplace with mobile devices, 70 of the time its email and calendaring. Theyre likely not imagining how work is done. We put in industrial strength security add to that. Rose an idea steve jobs once expressed is you have to look at things with fresh eyes you cant see them as an extension of what you do. Has that been one of the challenges for you at ibm . Yes and no. I would say this is not the first set of trends. To reinvent yourself dont protect the past i was saying weve invented some of the trends but some we dont. You swim into them as hard as you can and thats what the industry is like, you go as fast as you can into them. Adjacencies are good, some are better. Technology is taking us to places some better, what we are doing for healthcare well talk about. But back to your question on apple twitter, that is really about taking those ideas, consumability or massive data in the case of twitter, and we said you know what . We could improve every business decision if you could really understand the data. So were taking the consumer technologies into the enterprise and i believe you will look back and well be the goto platform for the enterprise that brought things into the business environment. Rose and you can access them through apple devices and all that. Good for them. Every partnership has a good winwin to it. Thats right. Rose when you talk about those kinds of partnerships, is that part of the way you see apples headlong rush into the future, finding both in a Venture Capital standpoint, because you took all your seen your Vice President s out to Silicon Valley as soon as you took control, as i understand it, and introduced them to Silicon Valley saying we want to know whats going on out here. Slightly different i would say. We have one to have the First Research labs in Silicon Valley was ibm. Just about anything regarding data sitting in Silicon Valley was begun by ibm. I think to provide whatever their clients need, it will be through partnerships and the like. So went out there for that reason to really form that foundation and obviously the team goes out there many times. But a lot of startups, who, by the way, part of what we do is help them. And this watson well speak a little bit about, one of the main things for watson is we built a platform and said this form of Artificial Intelligence, natural language, this thing that learns Companies Come build your own business. You dont have all innovation locked up yourself. So 4,000 companies in line to build on watson. Rose you say one of our challenges is to prove that a Large Institution can be entrepreneurial. That a Large Institution can show the facileness of small startups. I agree speed is a really important thing. I believe now as we just have done our last results and shared with everyone we said, look these new businesses around data cloud, mobility they now represent 27 of ibm. And people go really . 27 of ibm and have grown it 16 . That is a big number and 27 which equals 28 billion is a big number. Thats our job. Continue that. I should Say Something interesting, its not to say of the whole company the other businesses are not good businesses, theyre very good. We do the things that are kind of the heart beat of the world, but you innovate inside of them. You mentioned we do banks. One of our most recent announcements because we have all the systems in most the banks was how to do mobility and how to encrypt everything you do for security. So you reinvent that part as well. Rose an increasing issue. It is. I dont think theres a topic more important than security. Every one of my clients i talk to i say whatever youre doing, youre not doing enough. You go through the things they should be doing around this topic. It is important for individuals businesses, obviously countries and the like. Rose let me talk about the cloud. Were you late coming to the cloud . I look at cloud from a couple of dimensions. One dimension absolutely not late to the cloud. We were in private cloud years ago and for those watching, ive had many of my friends go what is the cloud . Would you please quietly tell us what the cloud is . Just think of the cloud as i say, anything is a service. But you dont have your own electrical generation plant. You know a way to plug into something and you get electricity. You dont get to say what kind of electricity you want you know how to plug into it, thats what you get in a simple way. Rose spoken will by an electrical engineer. Thats true. So in the cloud. What we did first, i always look through the eyes of a company in an enterprise business. We said the first thing people will do is do it on their own premises. They will say all my divisions i want you share and do things the same way. I give you a private cloud. In my four walls and own business, youre the only users, its standard and you will all be that way. Because its less standard, its usually less expensive. The next thing is the public cloud which that started in the consumer world. You say i have all my music on the cloud you probably dont know where the cloud is, right . Well so we then started out and said, you know what . People will do things like likely fast applications, the front end of a mobile banking app, theyre going to put them out on the public clouds where its not on your premise shared by many people. We started to build that and honestly it was moving too fast. We then acquired a Company Built by the bottom up for an enterprise which simple words what that means is it recognizes the importance of security, you must know where your data is i mean, we deal with healthcare banking, regulation. You cant not know where its add. Audittability. And most importantly people do things there just like the old days of the internet, you browsed, and somebody said i dont want to just browse, i want to buy something. Then they had to connect into systems they already had that built things and priced them, logistics warehousing. So thats the world called hybrid, we connect the two together, but many other parts are software and services. Rose whats the division between software and services. Services 60 software rose and thats been the big push at ibm prior to coming into services. We have acquired over the years in software weve acquired over 130 companies and put them together. People dont realize that. 130 companies. But in areas of solutions again, back to its not just analytics, its analytics that help banks do customer retention, that do fraud. It is healthcare where weve actually you know, i think of our history. We had if you go back in time we have participated in some of the most glorious moments of history whether it might have been the first systems that ever did census or landing a man on the moon, im telling you our moon chat will be the impact we have on healthcare. Its already started. We will do our part to change the face of healthcare. I am absolutely positive about it. That, to me, while we do many other things, that will be one of the most important. Rose is this called Watson Health . We just announce something called Watson Health. Can i back up one second . Rose sure. I want to tell everyone what watson is. The first generation of computers they counted things. The Second Generation you have to program them. Everything you know today is programmed. What watson represents, we use cognitive, its a system that learns. Rose you call it cognitive computing. It learns you dont program cognitive its asystem that learns. Rose you call it cognitive programming. It learns Artificial Intelligence is a part of that. Not all Artificial Intelligence does llike this. We started natural language, learning, including Artificial Intelligence, and we started with one of the toughest problems which was health care. We started withonicology. And i think this is some of the work you may have read about and seen where we have done work with memormal Sloan Kettering foronicology to do diagnoseis and treatment mayo clennic, Clinical Trial matching. Cleveland clinic, how to teach doctors. Watson has been really through the rigor. And just picture as a party i always say take one cancer take Breast Cancer. Two million new cases a year. You would guess, i think given all the progress of time in the world, mortality sup14 . Incidents are up 20 . And the number of therapies for Breast Cancer approach 800 and hear. What would you tell uson can do, look at all your medical records. He has been fed and taught by the best doctors in the world, and comes up with what are the probable diagnosis, percent confidence, why rationale, diagnosis, why, odds, conflicts. I mean, that has just started to roll out in Southeast Asia to a million patients. Rose you have said in an interesting way in talking about big data, you said it will be the Natural Resource of the 21st century. Tell me what you mean. This is because every company will say its got so much information no knowledge. Youll hear all sorts of things. This idea now though the amount of information created around us, whether its pictures images, every day to to until you do something with the data, refine it like a natural resowrks its no good. And you watch what happened with electricity, and then you saw steam, and then you saw fossil fuel. So for the 21st century it will be data. But just like other resources you know, the benefits go to people who refine it and do something with it. You know many countries that have Natural Resources that are poor countries, that dont do something with it. The same kind of analogy and i think it will end up being the phenomena of our time. And it wont be just your ability to look backwards. Charlie, this will be about looking forward and that will make all the difference in the world about predictions. And thats watson sitting out here on a spectrum on far end of that and its ability to do that. Itsip iconic to represent that future. This is about helping kids predict which kids are going to struggle in school and what they need to do. Rose heres whats interesting to me as well. It is not only the collection of the data and the assessment of the data. We now have better means to collect the data through sensors and everything else. Thats right. Rose so that its impacting on medicine in ways we never believe we would know. They have ways to measure your human body and its function more invasively and more precisely, than weve ever been before. Therefore, with the collection of data that you have, you can take these numbers and these information packs and look at these compilation of a thousand other cases. Thats right and compare and have evidencebased medicine. What you just described is a perfect example of the announcement we made this week which include ablle, johnson johnson, med tronnic. What was behind this was a partnership. Partnership, and its an open platform. Back to the idea of partnerships ecosystems an open platform. But for every human, kind of a simple way to think of it, 10 of the information in your lifetime collected about you will be the formal medical records that you know of today. Another 20 will be the genomics thats starting to happen. But what you just there is another 70 which people call it exogenous data your fitbit apple watch, what youre eating what youre filling in is there your heart rate. It will be 300 million books of data per person. Thats kind of the amount. And with that you have a whole other world that can be health and wellness for the ability. Rose and the capacity to not be overwhelmed by it. And privacy, security all that all around it but not be overwhelmed. Rose either you said this or one of your colleagues well, that is one of my colleagues, but i actually agree. My head of Research John kelly said that. And right now, we are already working on giving watson eyes, and one of the first things hes working