Chapter 1: What is the main topic discussed in this episode?
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IBM and Grok are announcing a strategic partnership to give clients ultra high speed, low latency AI capabilities via Grok's inference technology. For more on how this partnership is going to provide greater access to the full potential of enterprise AI, we're joined by Rob Thomas, senior vice president of software and chief commercial officer at IBM, and Jonathan Ross, CEO and founder of Grok.
And Jonathan, I want to start with you. You know, the way that I look at this, is it's a very interesting go-to-market channel for you, a sales channel. Think about all of the clients that IBM has and how you've tried to grow the company. Explain how people will access LPUs through this or through the Cloud Matrix.
Absolutely. It's an extraordinary opportunity for both of us. IBM is going to have their sellers sell Grok SKU. And so now you'll be able to directly access our speed. The advantages that we offer, you could think of it a little bit like offering broadband in the era where dial-up wasn't fully rolled out and people were still trying to connect to the Internet.
Our LPUs are just significantly faster. But we also keep the cost down. Just imagine if you were to offer broadband and you charged more per bit of data that was sent over the line, it would be uneconomical. Broadband increases the demand. With agentic use cases, it's particularly important to reduce the speed. You don't want to ask a question, wait 10 minutes later and come back.
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Chapter 2: What is the strategic partnership between Groq and IBM about?
Let's talk about that, Rob, a little bit more because you're the man who's in charge of the software business. You're also really responsible for the world revenue and profitability of your company. So help us understand why Grop was the obvious choice. How is it helping your clients get answers faster on the inference side of things?
We looked at every possibility in the market and the clients are looking for significant performance. So something that changes how your call center operates or how your supply chain runs. And then you combine that with a fraction of the cost suddenly the economics make sense. AI does have a cost problem, and we think this breaks through that.
In IBM, we've said we're going to drive $4.5 billion of productivity by the end of this year. That's another example of AI truly having an impact. And the number one question I get from clients now is, how are you doing that at IBM, and can you help us do that? And we think the combination of IBM and Grok can make this a reality for any company.
Let's dig into that a little bit now with you, Jonathan, because the integration with Watson X Orchestrate, what does that look like on your side? How does that happen and happen seamlessly?
So the WatsonX API is available for anyone to use today. It'll be invisible to most users. It'll simply work. We have a compatible API, and this is something we've been working on. We will also work on some lower-level integrations with VLLM, which is a technology that IBM is very deeply involved in. But it should just be transparent. You should just get more speed.
Just imagine one day you come home, you had dial-up, and now you have broadband, and it costs less.
Rob, where's the demand coming from on your side, like IBM Granite or some other agentic workload that they want to run using the Grok LPUs? Are these public sector names? Are they private sector SMEs? I'm trying to understand who you're serving with it.
As often happens, I would say financial services have been early adopters. But the thing that has changed in the market in the last six months is everything is moving to multi-model. We have IBM models that we open sourced, which are the Granite models. We announced a partnership with Anthropic. We have a partnership with Mistral and Llama, just to name a few.
What is incredible about what Jonathan and team have built is any model can run. and get instant improvement running on the LPUs from Grok. So I think this is a combination of a multi-model world, accelerating inference with Grok.
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Chapter 3: How will clients access Groq's technology through IBM?
I think this is a great combination.
Jonathan, does this capacity already exist? Or are you supply constrained still? You've got to go out and build it, either in Saudi, Finland, here in the States?
Yes.
So the entire world is supply constrained, and I would actually expect that to continue for at least the next five to ten years when it comes to AI. Our advantage is that we have a supply chain that actually ramps much faster. So customers will be able to come to IBM, put in an order, and we will be able to fulfill that faster than you would be able to with other technologies.
But the supply constraints are real, and this is another reason to start working with IBM sooner. The sooner you get access to that capacity, the sooner you're going to have it.
I can't tell you how many startups come to us and other companies come to us and they are looking for capacity because some of them are actually growing 10, 20 or even 30 percent per week or per month, which is an astronomical growth rate. But by approaching us early, we can build to your needs.
You were just mentioning, Rob, about all the partnerships you have when it comes to LLMs and the offerings that you're intertwining within yours. Will you go to others to ensure that inference is as fast as possible or is it this exclusive with Grog?
We are open to working with anybody in the ecosystem of AI. Around what we're doing specifically on the acceleration with Grok, we want to lean into this partnership. That's why this is the one that we've announced today, because we have confidence working together with Grok. As Jonathan mentioned, we're also enabling some of the lower level technologies in open source, like VLLM.
So this is the right place to be when it comes to inference. But when you think broadly about what's happening in AI, we have many companies working with us on agents. Last week we announced S&P Global is now running on Watson X orchestrate as an example. So we're always open to new partnerships.
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Chapter 4: What are the financial implications of the Groq and IBM partnership?
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