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From theCUBE Studios in Palo Alto in Boston, bringing you data-driven insights from theCUBE and ETR, this is Breaking Analysis with Dave Vellante.
Dave VellanteIt's estimated that more than $200 billion is spent annually on security hardware, software, and services by organizations globally. That is a big number, but consider that the economic impact of cyber-crime ranges from half a trillion to $2 trillion annually. And there's even an estimate from cybersecurity ventures that says the figure is as high as $9.5 trillion. Each year, it seems the more we spend, the more vulnerable we become, which is especially concerning given the exposure to critical infrastructures. Governments around the world have stepped up their involvement with executive orders, privacy regulations, and lots of finger-wagging at the technology industry and its customers. And frankly, some of that is justified. The tech business, it does a lot of good, but it really has a subpar record at solving this problem of cybersecurity. And one premise that we've put forth on this program is that the industry has to find better ways to collaborate and share resources to combat cyber threats.
And two firms, IBM and Palo Alto Networks have joined forces to combine deep expertise, AI, and a platform approach to better protect organizations from attackers. Hello and welcome to this week's theCUBE Research Insights powered by ETR. In this Breaking Analysis, we look at the security landscape and unpack the multi-dimensional relationship between IBM and Palo Alto Networks, which is often misunderstood, to better understand how industry collaboration can improve cyber defenses and modernize security operations. And with us are two senior execs from each firm. Mohamad Ali is senior vice president and head of IBM Consulting, and BJ Jenkins is the president of Palo Alto Networks, two CUBE alums. Welcome back to the program. Thank you so much for making some time with me.
BJ JenkinsThanks for having us, Dave. It's great to be here.
Dave VellanteYeah, you bet.
Mohamad AliYeah, thank you.
Dave VellanteAll right, just to set the context, both stocks of these firms are performing exceedingly well, both at or near their all-time highs. Under Arvind Krishna's leadership, IBM has improved its focus and is executing on a hybrid cloud strategy with a much more cogent AI approach, deep consulting expertise, a couple of sharp M&A moves, and a more open ecosystem mindset. And the company's valuation is back up over $200 billion. Meanwhile, Palo Alto is the first pure place security company to crack the $100 billion valuation mark, attacking the market with what's called a platformization approach. Now, in December of 2023, these two firms expanded their partnership with the announcement that they were expanding their relationship and May of this year they further advanced the partnership with a sharpened focus on AI security and announced that Palo Alto would acquire IBM's QRadar, SaaS assets for I believe around $500 million. I think that deal closed in September.
Mohammed, let's start with you. We just came off the IBM Analyst Relations Forum in New York City this week. It was really great to see you and we heard how you're transforming the IBM Consulting organization. You're enabling consultants with AI tools and embedding more software into your business. So two part question. What was the motivation from IBM's perspective for this partnership with Palo Alto that you announced in May or in December? And some might look at the QRadar announcement in May and the sale of that and say, "Wait a minute, if Mohammed wants more software, why is he selling software assets?" So explain the motivation and the idea behind QRadar.
Mohamad AliYeah, thanks, Dave, and thanks for having us on. And it was great to see you over the last couple of days at the IBM Analyst event. So let me just say that there's very sound business logic for all of this and I'll get to it, but these kinds of relationships actually start with people and there's actually a friendship that was the genesis of this. BJ and I have known each other for a long time. And as a matter of fact, we used to be competitors. We both ran businesses, we were CEO of businesses that did essentially the same thing, provided cybersecurity and data protection to small and medium-sized businesses. And so we've known each other for a long time. At one point, we looked at merging the companies even and then we were both bought by other people, but that's how we know each other.
And so that was the foundation for us working together. That aside, what's the logic for this? So if you think about cybersecurity, and BJ and I both come from a cybersecurity background, it's about products, it's about services, and it's about data. And data is really the thing that you were talking about earlier where it's fragmented everywhere. And the more data, the more signals you can see, the better cyber protection you can provide. And IBM sees a lot of data, a lot of signals. Palo Alto sees a lot of data, a lot of signals. As we bring those together, we can now create better solutions for the market.
So then we can bring those products together. And IBM continues to have a large set of products that provides security, that provides observability. Palo, of course, has a ever-growing set of products. Together, we're actually building new capabilities on top. We're building some of these digital workers on top that utilize these signals, and then, of course, we wrap it with a service that we deliver to the client. So coming together was really all about delivering better security, security that nobody can do today and only together we could bring to market.
Dave VellanteSo BJ, the relationship piece really resonates with me. At Dell Tech World this year, Michael and Bill McDermott got together and Bill even said, "I've known Michael for like 25 years. He's the most trusted individual I've met in this industry." So that goes a long way, but there's got to be business justification as well. So from Palo's perspective, what was your motivation behind this deal?
BJ JenkinsYeah, first of all, having a long-term relationship is the best way to build a successful partnership. And it helps both Mohamad and I navigate through anything that comes up in a partnership. But I would say for us, as we look at our customers and we look at what they're trying to do to protect themselves, there's a challenge. It's a very fragmented industry. Point solutions have been the answer, are adept in defense for many, many years, and it just hasn't worked. We see more breaches in the news. We see more customers suffering. As customers digitize their business and go through transformation, there's more ways for breaches, cyber criminals to hurt them.
And we have viewed the ability to platformize or help customers consolidate their solutions, reduce their operating costs, and build a better security defense as the way to go. It's a better way for customers. Now to help them transform, that's always the hard part. And we feel we build the best of breed products and the best of breed platforms, but you need a trusted partner who talks to CIOs, CISOs, CEOs, and can help them understand how to navigate that transformation. And this is where I think the beauty of Palo Alto plus IBM comes together. When we look at the vast array of resources that Mohammed has, the way he's been leading them with leveraging AI, bringing that technology to the forefront, and then you marry it with our platforms, we can really go into a customer with a comprehensive approach to modernize their security posture, consolidate and save money on their operations, get more leverage out of their investment, and ultimately have a better security outcome.
And finally, where that came together was in the SOC and around QRadar. We are investing over a billion dollars in R&D. Our XIM platform we believe is leading the industry and driving true transformation for SOC and SIEM. I think IBM and Palo Alto Networks recognized that opportunity and the way to help customers transform in the most rapid fashion was for us to do that together. So we're super excited. We're really firing out of the gate, and I think this is really going to lead the industry down a different path.
Dave VellanteAnd am I correct that Palo Alto is acquiring the SaaS assets of QRadar, but Mohamed, IBM's maintaining the on-prem component of that-?
Mohamad AliThat's right.
Dave VellanteAnd so that's your high touch sort of business, but BJ, you now have an opportunity to modernize those customers and platformize. I'm going to use that term a lot today. Am I getting that right?
BJ JenkinsYeah. Go ahead.
Mohamad AliOkay. So absolutely. So look, our joint customers are going to need a set of technologies and BJ and Palo Alto, they have one of the best cloud SIEM products. And it makes sense for us to put together our cloud capabilities around SIEM. We have a very strong on-prem version of that. There are clients who are going to need both, and we'll be able to provide that. There are clients who are going to want to modernize to the leading cloud version of that, and we're going to help them do that. And then there's a whole set of other products that we bring together that Palo Alto has in their portfolio that are critical to security, everything from endpoint to firewall and IBM also brings to the table like observability in the Instana and so forth. That whole family of capabilities are necessary in order to provide extraordinarily good security. And so this is one piece, QRadar is one piece of this bigger solution.
Dave VellanteAnd if you think about the SIEM, a lot of CISOs tell me that they'd love to get rid of their SIEM, but they can't because of the compliance reasons. And I often say, "Well, can you turn that into a valuable asset instead of an anchor around your neck?" And so our premise today is the industry needs more collaboration like this to create better security outcomes. So my question is do you have enough data and have you had enough time that you can say you're positively affecting outcomes through modernization or consolidation? What have you learned so far?
BJ JenkinsWell, I'll jump in first, Mohammed, but I'm sure customers would like to get rid of their SIEM too, but you can't. And if you look at where the world's going towards, for large public companies, there's regulation coming in that you're going to have to disclose events within certain timeframes. If you look at attackers now and how fast they can attack, they used to linger and take days, weeks, months to exfiltrate data, they now do that in hours. And as we look forward, that's going to become minutes. And so your SEM really needs to drive a security outcome for you. You need to be able to detect attacks, not in days, not in hours, but it needs to be minutes. And your ability to identify, isolate, and start remitting that needs to be in a similar amount of time, not only for regulation, but really to protect your business and protect your assets.
This is where there was not innovation and enough innovation in this space to meet the moment, to meet where technology was going. This is something we saw coming. We've invested heavily and we feel we've delivered the product to meet that moment in time for customers now and in the future. And again, I think you pair that with where IBM has invested and leading investing if you think about Watson over a decade or more, when you bring those two things together for a customer, that's really the moment of transformation for them. It's really the moment where they are going to be able to meet and exceed regulatory frameworks. They're going to be able to be very proactive in what they do and protect their business. We haven't been able to do that in security before. I think really now's the time we're going to be able to help customers do that.
Dave VellanteAnd it looks like you guys are doing a little dog footing too, I call it. IBM calls it Client Zero, Palo Alto probably calls it drinking their own champagne. But you've got IBM basically platformizing its internal security with Palo Alto and Palo Alto going to incorporate WatsonX into Cortex. That makes these deals real, what I say, actually use each other's products. And I think that's an important testament for your customers. Mohamad, I'd like you to speak to sort of driving AI through the life cycle. We're showing a graphic here that involves... You've got digital workers on here that you talked about before, threat intelligence detection, you're doing some scoring, you've got your observability assets, you're bringing that all to the table. But explain your philosophy here in that life cycle approach, please.
Mohamad AliYeah, yeah. So BJ touched on it when he said WatsonX. So WatsonX is an AI platform. It's a great AI platform, but what we do with it is what matters. And no AI platform works without data. And so this collaboration between us in Palo Alto gives us access to a tremendous amount of data, signals coming from the Palo Alto platform, signals coming from elsewhere. And we're able to use those signals to actually build a set of digital workers that you just saw on top that we can deploy in the SOC next to the human SOC engineers who then rely on the SIEM that BJ was just talking about to aggregate all this data and compare it to patterns that we've seen elsewhere.
And so the way we instantiate that is in these digital workers, and I'm not going to go through the entire life cycle of the threat, but I think people know lots of signals come in, they have to be triaged, some of them are... A bunch of them are automatically eliminated. A bunch of them go to somebody to look at. They look at it, then they say, "Hey, listen, this really needs to be investigated." And just to give you a sense, with these digital workers now, we're able to reduce the investigation time by 81%. That's really, really essential because more and more signals are coming in because the bad guys are doing more and more every day. So we have to be faster and faster. So what we're doing is we're combining these great products, these great technologies from Palo, from IBM with AI to be able to respond faster because we have to.
Dave VellanteThat 81% reduction, Mohamed, is because you're reducing false positives or you're identifying through your scoring just higher priority activities? Is that right?
Mohamad AliYeah. So we're using AI throughout the threat life cycle. What I described to you in the 81% is almost at the very end where you're doing an investigation and somebody has to look at a whole bunch of data, a whole bunch of logs and be able to figure out what really is happening here. And that's very time-consuming. And if you think about it, all the data they're looking at, all the logs, that's perfect for GenAI. You could use GenAI digital workers to extract insights very quickly. And so if somebody is going to take 10 minutes to review something, now they can do that in less than two minutes or two minutes because they have these digital workers helping them do that. It's actually the perfect use of GenAI.
Dave VellanteAll right, BJ, let me set up the platformization discussion. I want to share some data from ETR, our survey partner. It's a survey of nearly 1800 IT decision makers, 1775 from this month. This is a very recent data and we cut the data on information security, that's sector, and this is X-Y graphic. It shows net score on the vertical axis. That's a measure of spending velocity and then market penetration or what we call overlap in those 1775 accounts. Remember, again, this is account penetration, not dollar amounts. That's why Microsoft's off the chart because they have over a thousand accounts in this survey. Over a thousand accounts are using some sort of Microsoft tool. Microsoft's ubiquitous. But the point of this chart is it's a really crowded market.
Number two, it's got some shiny new toys. You can see that on the vertical axis like Wiz. ZScaler's not new, but they're elevated. Rubrik is now a security company with a $7 billion market cap. BJ, you used to run the backup division at EMC. Who knew you should have just called it security? And we've highlighted in the red line there Palo Alto, which is both elevated on the vertical axis and is very prominent on the horizontal as well. So the market's really challenging in that with the exception of maybe Microsoft, no company has more than single digit revenue market share. And we're talking about a very large market opportunity here. I mean if you throw in services and internal staffing, it's a couple hundred billion. The software market's probably close to $80 billion. So BJ, you use the term platformization.
Nikesh, your CEO loves that term. I love it. Here's a graphic that you guys shared with us that helps visualize the concept. And I think the point is that you have a lot of products in various sectors. They're best of breed as you show here, but please address a couple of things. First, what do you mean by platformization? And second, can you be both a suite, a platform, and best of breed? That's very challenging to pull off in such a dynamic industry.
BJ JenkinsYeah, both charts obviously give insight. I think the other thing we talk about, Dave, is the industry has over 3000 funded companies. The industry has been dependent upon point solutions. Customers have bought point solutions to solve specific problems, and we've forced it upon the customer to try and integrate those solutions and drive an outcome. And as I said previously, it's not working. We see breaches, we see more and more of them, we see bigger customer impact of those breaches. And it just tells you that approach isn't working. Now there have been companies in the past that have tried to build platforms and I think the problem there is they lost the focus on innovation.
They lost the focus on bringing customer value to that platform. How does it help the customer as you consolidate or bring those things together? And I think the difference that we start to show you in our approach is the slide you put up there where we have the good fortune of investing over a billion dollars in R&D. I think we have some of the greatest security minds and product builders in the industry and Nikesh and Lee Klarich and Nir Zuk, they drive them every day to build the best security product for our customer. So we're not asking a customer to forgo the quality or the innovation to be on the platform. And you have to have that to be successful.
I think the second part of that is our approach has been to focus in three areas, network, security, which includes SASE, cloud, or CNAP, and then SOC transformation. In each of those areas, those teams are focused on not only building the most robust platform, but also the best individual solutions. And what that brings to the customer and the ability to consolidate is a single user interface across each of those platforms. Leveraging the use of data, as Mohammed talked about, we have more data than anybody out there. And then ultimately in doing that, instead of having to buy 10, 15, or 30 point solutions, in buying one platform from Palo Alto, you get best of breed, but you're able to save operating costs.
You're able to improve your business processes and at the end of the day, operate more efficiently, help your business transform, and execute on what it's trying to do and have a better security posture. And it's only possible if you make that R&D investment. It's only possible if you stay ahead of that innovation curve. And if you do that... We see it every day. We reported in Q4, we have over a thousand customers now who have driven platformization with Palo Alto, and we can see the benefits that those customers get as they go on that journey. So I think this is a trend you're going to see more and more customers adopt. You'll hear more and more customers talk about the benefits they get in driving platformization in their environments, and you'll see the savings, but you'll see better security outcomes also for them.
Dave VellanteSo I want to push on that and just follow up a little bit because you worked a company, EMC, that made some acquisitions, didn't do a great job frankly of integrating. It got worse after you left, but integration has been... Even IBM, I could say has not... I mean a lot of the software assets that were purchased over the years, kind of made some attempts, took Oracle 10, 11 years to integrate with Fusion. It's a very difficult thing to do. Now, maybe it's easier today in the API economy, and I know and I've met Nir Zuk a number of times, he's a pretty intense dude. And as you said, he's focused on the R&D. The situation today where is it actually easier to do more facile integration? I'm often critical of Amazon because there's not a lot of integration there and it makes it harder for customers.
But what does it take to do that integration? That's question for BJ and Mohammed. I want to understand the role that IBM Consulting plays in platformization, but BJ follow up on that integration question. How were you able to do that?
BJ JenkinsWell, look, I think first off, as compared to my EMC days, we have a much tighter focus. Everything is around security. I think when you look at the infrastructure category that EMC ultimately was trying to play, it was much broader and required a much different set of requirements to try and platformize something. I think in security, we have three very highly focused areas. It's just about security for us, and I think that makes it achievable. Second is you have to have the ability to invest dollars, which we do. And what I think Nikesh, Lee, and Nir have done brilliantly is they've married organic with inorganic.
We tend to look at emerging categories or very tight adjacencies and we make decisions whether to build or buy. If we're going to buy, we know upfront we're going to integrate that technology into the platform. And Talon and Dig, which are two of our more recent acquisitions are perfect examples of this. We bought Talon in December and they didn't release as part of our product until the August timeframe, integrated into Prisma Access. And the way we did that is we added engineers to their team. We built a roadmap that it would be integrated. And I think you have to make that commitment upfront rather than, you see, sometimes they get bolted on or you let them operate independently. And I think that's just been a fundamental way of how Nikesh and Lee have built the portfolio and we can see customers understand that and appreciate that approach to building a platform.
Dave VellanteGot it. Thank you. So Mohammed, you don't go from not a platform to a platform overnight. It's a journey. So what role does IBM Consulting play in that journey?
Mohamad AliYeah, I think a pretty big role, and this is another one of the key reasons for the partnership, not just bringing the best products and capabilities to the market, but also being able to execute on this platformization strategy. So a couple of weeks ago I was with the head of IT and security at a very large bank and he said to me, "Hey, Mohammed, I think I'm actually paying more than I need to for all these products that I have." He probably has at least 50 security products. "And I think that my risk is increasing and I'm not able to evolve fast enough." So we actually put a proposal on the table, we had already done so with BJ and his team, that actually showed him how by moving from these 50 plus products to more of a platform strategy he could actually save money.
But that was only one part of what he was worried about because he knows that over the next few years that threat actors are going to be attacking him a thousand times more because they're using GenAI to attack him. And if he's got all these tools, there's going to be a vulnerability someplace. And so what he wants to be able to do is to have fewer tools so he can manage them better, the best tools. And then on top of that, he wants to have these digital workers and so forth that we talked about earlier to help utilize those tools to fight back. It's really hard to do that when you have 50 products, but if you have a platform strategy, we can do that for you. So we actually laid out a plan of lowering his costs and improving his security, and that's what you can do with platformization.
Dave VellanteSo that is a perfect setup for my next segment here, which is the Bad News, Good News segment, which is the bad news is so far the industry is not consolidated. The good news is it means nothing but upside to those who can do it. So let me share some more data. If you haven't noticed, we love data. This is a survey ETR did ahead of RSA this year. They asked over 300 security pros... By the way, it was a nice even mix of C-level, VPs, and practitioners. And the results were consistent for a change. Oftentimes you see a big dissonance there. Not the case here. The personas were sort of in sync and aligned. We asked, "Over the next 12 months, will you increase or decrease the number of cybersecurity vendors in your stack?" And only 9% said decrease, with 51% saying increase, and the remainder said, "Stay the same." And we went back and we asked, "Well, why are you having difficulty consolidating?
" The customer said they're constantly facing new threats so they deploy new tools and techniques to stay ahead. And some said, "We need to have best of breed." So BJ, square the circle for me. You've got this massive upside for the consolidators like Palo Alto or is there some other dynamic that we need to understand is blocking the ability to consolidate?
BJ JenkinsWell, first of all, the slide tells me I have to do a better job getting to these customers. So we'll take that as a challenge.
Dave VellanteBig TAM. Yeah, big TAM for you.
BJ JenkinsThere's obviously new technologies coming at these customers that they want to adapt, but the other sometimes challenge customers have in terms of consolidation is every one of these tools they've bought in different timeframes, they've got different sunk costs out there. And sometimes it's the commercial viability of how you bring those together. The second is there's transition costs. To move off of one point solution, you have to maybe pay twice for that period of transition. And you're probably working with IBM or someone like that who needs to help you in that transition. And there's a commercial cost there. I think one of the beauties of this partnership, especially on that SOC transformation, is both IBM and Palo Alto have joined together to find ways to eliminate a lot of those, what I would call, double bubble or transition costs and consolidate.
And so we've anticipated that. On the Palo Alto side, Nikesh talked about this in platformization, how we go to customers now and in the effort to help them modernize and take advantage of platforms, we'll buy those technologies out there. And in contrast to that slide, Dave, we certainly announce our platformizations in our quarterly earnings and we obviously see a great acceleration in that. So I think it's really helping customers understand the innovation that's going on, how they can take advantage of that in a platform format, and do that in a way that meets their budget requirements and drives operational savings. And when we can sit down with customers and have that conversation, it really is enabling for them to make that move.
Dave VellanteIt's clearly the right direction long term. I know a lot of the people on Wall Street didn't like it initially when they heard it because they were like, "Oh wait, you're going to be aggressive about...? Giving modules away and letting people try before they buy! No charge for everything." So that's okay because you guys, like you said, are communicating how you're approaching this, maybe doing some longer-term deals, multi-year deals, which again is very smart to give people an opportunity to absorb it. So it comes back to, Mohamad, this is a journey. And so how do you think about this? What's your perspective on the long-term opportunity? It seems like it's a massive upside for the consolidators.
Mohamad AliOh yeah. I mean I think it really is. And the deals that we do isn't just, "Here we're selling you a Palo product or we're selling you an IBM product." These deals that we enter in are five-year transformation deals. Some of them are shorter, some of them two years, three years. But there's a process that we're going through. Having said that, I mean the threats are coming faster and faster. And I come back to if you just keep buying more products, like 51% of the folks said here, eventually you're going to run into a problem because some of these products are not going to be great products and the bad guys are going to get through and they're learning faster and faster how to get through. And AI is not the only threat. In a few years out, we're going to have a Quantum-safe type of problem.
So all these products out there that use PKI encryption, if they don't replace that, it's going to be a problem. And if you've bought something and it's in your environment and it hasn't been operated, then you have a big exposure. So there are all kinds of threats that are on the horizon within the next few years. And I think some of our clients are starting to realize that. So at IBM, we do a lot of work with governments, with banks, and they are recognizing that it's not just the AI threat that's here, that there are more and more looming threats. And having 50, 60, 70 products is not really the way to go long term.
Dave VellanteYeah, the exfiltrate now, decrypt later with Quantum-
Mohamad AliThat's right.
Dave VellanteIt's a real thing. I would argue to the board, look... The question we didn't ask in that survey... Anytime you do these surveys, you say, "Oh, I wish we'd asked that." Do you want to consolidate? And I bet you there, the C-suite would say, "Absolutely," the practitioners, "Maybe not." And so that's a sort of interesting angle there. But I want to come back to-
Mohamad AliIndeed, I want to comment. So this partnership is so important and so deep. So I talked about how we're doing co-development, joint development around new capabilities that are AI powered capabilities with WatsonX and these digital workers and so forth. But if you think about it, we talked about Quantum just a minute ago. There are now four Quantum-safe algorithms out there, three of those algorithms IBM scientists developed. So there's another opportunity for Palo Alto and us to work together to ensure that the Palo products are Quantum-safe going forward, the IBM products are Quantum-safe going forward. How many of those 50, 60, 70 products that are in an independent environment are going to be able to be on the forefront of this? This is why it's so important for companies like IBM and Palo Alto come together because the threat is real and increasing.
Dave VellanteGreat, thank you. Let's come back to how you guys are working together. We're going to share one more data slide, and it's the same two-dimensional view. Remember, this is the spend momentum on the vertical axis and account penetration on the horizontal. And so what we've done here is we've filtered the data on 856 IBM accounts in the survey, and we're measuring the overlap in those accounts by each cybersecurity vendor, which we show here. And by the way, this is just a subset. BJ said this, there's thousands and thousands of companies out there, and we have other surveys, they're even more crowded than this. But at any rate, I don't know what the real numbers are, but in this survey, 328 or 38% of those 856 IBM accounts also have Palo Alto Networks security products. So that's pretty significant penetration already. And there's also some real upside. And by the way, in the Fortune 1000, it's six points higher.
So I'd like to ask each of you what you expect going forward. You're only eight months into this recent phase of your journey. What should we be looking for in the future? Is it a higher penetration, which we do measure? Is it deeper penetration? We don't happen to measure that on a quarterly basis. More consolidation? Are we going to see better security outcomes? What's that going to look like? Mohamad, maybe you could start and BJ, then chime in.
Mohamad AliYeah, sure. So the 38% is fascinating because that's a number of companies, but I bet if you did this by revenue, that number would be significantly higher because if you think about it, our clients tend to be the largest clients on the planet. And so I would say that's probably already pretty high overlap on a revenue basis. And I think a lot of what we are going to be looking for is penetration, because you put up the chart, companies continue to have 50, 60, 70 products and it's growing. This is an opportunity to bring a more consolidated solution. And BJ and I already seen that. We do these quarterly QBRs where we look at the accounts that we're pursuing and the penetration is looking quite strong.
Dave VellanteBJ, any thoughts on that?
BJ JenkinsYeah, I've been doing this for a long time and partnerships always have different arcs. This one out of the gate has been the most incredible I've seen, and there's a couple reasons. One, I just think fundamentally the value proposition we've created together is compelling for customers and meets them open. Second, culturally, both of our two companies really are customer-centric and want to create customers for life. IBM has been a trusted partner to these companies for decades. As a security provider, that's what we want to be to these companies. And so there's been a great, I think, cultural alignment there. I think the third part, which Mohamad was just talking about, is given our presence in some of these large accounts and given where IBM is at, I think not only in the SOC transformation with the QRoC business, but as Mohamad said, in the move to cloud or hybrid cloud, zero trust, we have a compelling value proposition together and that's going to allow deeper penetration, especially if you think of the largest customers in the world.
And we've already seen it in just the early days. We've not only seen that deeper penetration for both of us, but again, to give IBM a lot of credit, we broke into a major food processor who we had never done business with before. And in this QRoC to XIM transition, IBM had the seat at the table and they walked the customer through it, they brought us in, and the customer is now deploying XIM. So I believe that chart hopefully is going to show even more penetration in those larger accounts going forward.
Dave VellanteAnd I'm going to wrap here shortly. Really appreciate your guys' time. We did an Ask Me Anything with Arvind Krishna yesterday, and something he said was quite interesting. He said, "You could look at your competitors..." We were asking him about his philosophy on partnerships. He said, "You can look at your competitors that are growing faster than you are and say, 'Hey, we want a piece of that action.' But rather today the mindset is we look at... What we used to look at as a competitor, we look at it as an opportunity. Where can we add value, maybe help that competitor grow, and we can grow as well?" And I think he said, "We've got seven partnerships now, four of which are over a billion a year, three others that are tracking that way." So that's a new mindset I think for IBM. And the example that you just gave, it is a win-win for both companies and also the customer. I just want to end by looking at some things, some key issues that we're focused on in the future and that have each of you summarize your final thoughts.
Look, well-funded nation-states, you got China, Russia, North Korea, and Iran, the big four. You got organized criminals, you got disreputable insiders. Any fool can be a ransomware today. So risk is on the rise. The probability of an attack is higher than ever, and the impact of breaches is escalating because you've got ongoing digital transformations. So in a lot of organizations, unless you have a strong security posture, your expected loss profile gets worse. Now, historically, we've seen tech companies somewhat reluctant to share data and collaborate because they're so competitive. It's such a competitive industry. Are we going to see more industry collaborations like the IBM and Palo Alto went to merge to effectively combat the threat and help organizations keep pace with these agile attackers? And is AI going to make the problem even worse?
Are we going to be more vulnerable because we're so increasingly reliant on technology? Or is AI going to improve the security posture for defenders? And will platformization actually show up in the macro numbers? It doesn't today. It certainly is isolated in some of the earnings prints that we see and this life cycle approach to security that IBM is espousing, is that going to enable simpler and better security, posture, detection, and response? And what's the role of governments and public policy in the battle for better security and defense and response? Is the private and public sector partnership where it should be? I think it could be better in our view. What more can be done in that regard. Guys, I'll give you each the last word. BJ, why don't you go first and then, Mohammed, bring us home?
BJ JenkinsWell, each of those questions could be a show in its own right in my day. But look, I would say that the threat factor is going to continue to grow and AI is going to accelerate that. I do think our use of AI can help meet that moment, but I think this partnership will be a trailblazer and a trendsetter in terms of others looking to replicate and get the same benefits. I think it'll be hard to do, given the base we started with, given the IP of both companies and how we're coming together, but I would suppose you'll see more of this down the road. I say that because I believe Nikesh was the first to use the term platformization, and I believe I've heard five to 10 security companies now say they're a platform.
I believe this one's going to be the most successful. I think it is a trendsetter in terms of how it's structured. And I would say that Mohammed and I both want to come back because we are going to be that billion dollar one that Arvind said to you the other day. He's given us the goal. Mohammed and I talk about it all the time. Our goal is to get there as fast as possible.
Dave VellanteThank you. Yeah, Mohammed, please give us your final thoughts.
Mohamad AliYeah, sure. Dave, I mean that list that you just went through I think just confirms that this is a complicated, difficult, and expanding threat landscape for all of us. And these partnerships are actually essential if we're going to fight back and fight back effectively. Having said that, the fact that we get to solve these hard problems and we get paid for it is actually pretty amazing. And the fact that we get to do it with friends like BJ and Nikesh is wonderful because we're going to be out there fighting for our clients every day and you want to do it with friends. So I'll end where I started. It's all anchored on these great relationships.
Dave VellanteWell, guys, thank you both. I'd love to have you back. I mean, we love these long form discussions so we can go deeper and help our audience better understand the details of certain partnerships like this and hopefully educate and inspire them to action. So really appreciate the collaboration. Great work. Congratulations and excited to have you back and talk more about how you're making progress there. Thank you.
Mohamad AliThank you.
BJ JenkinsReally appreciate it.
Dave VellanteAll right, that's it for now. What do you think? Are you able to consolidate your security tooling? Do you think platforms could give you best of breed or do you feel the need to still deploy the newest innovation, the shiny new tool to try to keep pace? Is there a schism in your organization between how the C-suite thinks about this and the practitioners? Let us know. I want to thank Alex Meyerson and Ken Schiffman on production and in our podcast. Kristen Martin and Sheryl Knight help get the word out on social media and in our newsletters. And Rob Hoff is our EIC over at SiliconANGLE.com. All these episodes are available as podcasts wherever you listen. Just search, "Breaking Analysis podcast." Last year we cracked the million download number, so thank you for that. I publish each week on thecuberesearch.com and SiliconANGLE.com. If want to get in touch, email me, david.vellante@ SiliconANGLE.com, DM me at dvellante, or comment on our LinkedIn posts. Check out ETR.AI, they get the best survey data in the business. This is Dave Vellante with BJ Jenkins and Mohamad Ali for theCUBE Research Insights powered by ETR. Thanks for watching, everybody, and we'll see you next time on Breaking Analysis.