>> Narrator: Live from Las Vegas, it's theCUBE. Covering HPE Discover 2017. Brought to you by Hewlett-Packard Enterprise. >> Okay, welcome back everyone. We are here live in Las Vegas for SiliconANGLE Media's, theCUBE's exclusive coverage for three days for HPE Discover 2017. We're on day three, down to the wire here. I'm John Furrier with SiliconANGLE with my co-host Dave Vellante, my partner in crime with Wikibon. Our next guest, Ric Lewis. Software Defined Cloud Senior Vice President, President and GM of HPE, welcome back to theCUBE. >> Thank you. >> And Kate Swanborg, Senior Vice-President Tech Communications and Strategic Alliances, DreamWorks Animation. Welcome back as well. >> Thank you. >> John: Great to have you guys back. >> It's good to be here. >> So obviously DreamWorks, you guys are a big customer, Ric you are now leading up the team for Software Defined infrastructure, as we call it programmable infrastructure, a lot of great things. >> Ric: Yeah. >> Synergy we talked heavily about last year. >> Ric: Yeah. >> I kind of was geeking out with you on that in terms of all that programming ability and automation. Meg story this week was simplifying hybrid IT, which is the key part of where Software's coming in. >> That's exactly right. >> And so we got DreamWorks here, what's your vision in how that's going to happen? How do you take that simple message and put it into practice? >> Yeah so, we're completely about making hybrid IT simple, and we have three primary vectors that we're driving in order to make that happen. The first is our hyperconverged appliances that we deliver, and the second is HPE Synergy, our composable, and the third is our hybrid IT management stacked software that we have. And we've got momentum across all of those. In Hyper Converged, you guys know we acquired SimpliVity, it closed in February. Got a lot of customers on that. We had Red Bull on-stage here at Discover talking about their use case of that in their racing. It was a packed house, people completely interested in all the things we're doing in hybrid IT. That's SimpliVity. Synergy, we now have almost 400 customers that have adopted Synergy. We started shipping in volume in December, and DreamWorks Animation is one of those customers, and real excited for you to hear a little bit about how they're using it, but we had, I think we had around 10 customers from Synergy across all kinds of verticals and use cases, including service providers that were on-stage here. And the final thing is our hybrid IT management stack, a program that we introduced here at Discover called Project New Stack. So, that's what's going on in Software Defined & Cloud, it's a lot right now. >> And we had a SimpliVity customer on by the way, they were really glowing. >> Yeah. >> Great to see that happen. >> That was a great story. >> Great story, Kate, so DreamWorks, you guys have a business, you've got to put a product out there and so you got to look at technology, make it work for you, and sometimes you got to get in the weeds, there's pieces and pieces, at the end of the day you got a product to deliver. How are you guys taking some of the things that are coming out at HPE and putting them into action? What are some of the things you're doing? >> Well, I think one of the things that is often surprising to people is just how much technology we consume to make a CG feature animated film. These films take 80 million compute hours to render the images, petabytes of storage and we're typically working on five or six active films in production because they take us four or five years to make. And so we want to be able to have the capability of releasing two or three films a year, we must have simultaneous production. But of course, not all of the productions are exactly the same, and we've also got other media opportunities, whether it's television or theme park. And so, what's critical to us is that we're actually able to provision the right amount of digital resource to the right project quickly and easily so that as those creative inspirations are growing and burgeoning at the studio, we've got the resource behind it in an effortless fashion. >> And how are you making that happen with the Synergy for example, because last year we were looking at thinking well this has got a lot of potential. I mean you can do it through the orchestration, making the management work kind of takes that, abstracts away a lot of the complexity. How are you guys dealing with that, I mean how have you put that into action? >> Well, we've been working within a hybrid environment for years now, so the idea of a hybrid environment isn't new to us. The key however, is that it's labor intensive. It's time-consuming. In order to get all of the right configurations of the networking and the storage, the compute to actually work in a realtime environment for our artists, that has taken us an enormous amount of effort over the years. What we're looking for in the Synergy deployment is to reduce those weeks down to days and those days down to hours. Once we're able to do that, our engineers can go off and focus on the niche technology solutions that actually matter to the artists. And that's where we want to get the business benefit. >> And with Synergy, compute, storage and fabric all managed under the same management domain. >> That's right. >> Single API that you can get access to all those resources, so it makes it super easy. It's the world's easiest way to do infrastructure as a service, it's built into the platform natively. >> That's right, and one of the things that's been so impressive to us is that we've been working with the Pointnext team to come in and actually configure this for our environment. Everybody uses a high-performance compute environment, but nobody's is exactly the same. The configure ability of this and the customability of this to our environment has been critical, and we've seen incredible benefits from that. >> So Ric, we kind of pushed you in theCUBE last year, cause you were saying "there's nothing like this in the marketplace". We said, okay define what's different. (John laughs) One of the things you touched on was the fluid pools of infrastructure. >> Yes. >> And Kate, what you just described is bringing technology to different digital teams. >> The dynamicism if you will. >> Absolutely. >> Being able to dynamically configure the thing, yes. >> So, let's test it. I mean, it sounds like that's exactly what you're doing, and how is this different than the infrastructure that you used to have? >> So, the reason that it's different is that we've got, we've got a simply said, a single infrastructure. We've got a compute farm, we've got storage, and historically what we had to do was actually partition off certain pieces of that for certain productions in order to protect their resources. The problem with that is that any given day, particularly in a creative environment, maybe they're using all of it, maybe they need more, maybe they need less. The challenge is is that historically if they needed less we can't reprovision that to another production in order to take advantage of their inspiration and their business motivations. Now we can. Now we have the opportunity to actually have the infrastructure be as dynamic as our creative environment, and that's saying a lot. >> And you can reconfigure those resources three clicks, five minutes, you literally can deprovision -- >> Kate: That's it. >> So the old way they're like bitchin and moanin, where's the servers? >> Absolutely. >> Right. >> And running around scrambling. >> They're on order. (all laugh) >> Six weeks. No this what we're talking about. >> Yeah. >> This is about speed, right? I mean this is -- >> It absolutely is. >> Alright, so I want to ask you a question about the HPE event. You mentioned you're here. So, a lot of people go to these events and they try and extract all the action. You've heard a lot of firsts, last year was Synergy first, big claim there. We're hearing some security stuff with servers here. >> Ric: Yeah. >> As a practitioner that comes to these shows, what's your strategy when you come to an event like HPE Discover, and obviously the schmooze is going on and getting wined and dined by HP, a big customer, but like when you go in there, what are you looking for, how do you connect the dots, what tea leaves do you read, what's your strategy? >> Well, I'll tell you, one of the things that really interests me about Discover is we've got a deep partnership with Hewlett-Packard Enterprise. We're talking to Hewlett-Packard Enterprise all the time. So we might actually think that we know what's going on. It's not true, there's so much innovation happening that when we bring our team to this show, we learn things that could really help our business. I'll give you a great example, so we learned this week about SimpliVity. Now, we had sort of heard about it, but we had not taken our time out of our schedules to really understand how that could help our VM environment. Our team's sitting in one of the panels this week, and he's texting other engineers on our team going "We have got to look at this next week at DreamWorks Animation". That's the kind of environment this is. I'll tell you something else, New Stack, we're going to lean heavy into New Stack because we believe that the innovation that we're seeing in that space is really, finally going to deliver on this promise of cloud that's been out there. >> What specifically about New Stack do you like? I want to just double down on that. Is it the rule of your own, is it the flexibility, what's the big thing there? >> Well, again this is one of those things where our team today is actually writing code and creating architectures that are sort of New Stack-like, but we're having to do it, we're having to invest our own time. It's trial and error, some of the things work some of the things don't, and that time is not being spent focused on our animation productions. The fact of the matter is, here's Hewlett-Packard actually doubling down and making sure that there is going to be a robust solution that works, that we can bring into our environment. >> We're in enterprises across the world every day. We're having these conversations, and most enterprises are doing kind of a roll-your-own cloud kind've thing. >> That's right. >> They're playing with OpenStack, they're playing with Kubernetes, they're playing with all these tools, they got a bunch of custom code, but we're really what we're trying to do with New Stack is take the best of what they're all trying to do, constrain that down, take our standard Software Defined infrastructure as the base, put a stack on top of that that they can count on to do a private cloud with bridge-to-hybrid capabilities, that's standard, that ships, that delivers and has updates, so that they're not messing around with it. Their developers don't want to spend time doing that, they just want to have a private cloud installation that has hybrid capabilites and have it installed. >> This is super relevant, this is super relevant, and we call you a tech athlete because you want to go out there and deliver value to your group and actually build products, right? >> That's right. >> The film. But Dave's team just put out the True Private Cloud Report which shows on PRAM, cloud-like environment, $260 billion dollar TAM, but the notable thing is that the labor costs were non-differentiated spend is going up by a $150 billion shifting in 10 years. >> Yeah. >> That's exactly the point here that you're talking about, is my guy's aren't working on the product that they need to be building. They're doing the R&D, so the OpenStack and all these things you're talking about, they're doing the R&D. Here, you're doing the R&D, delivering the product to the customer. >> Well and when we deliver that, we're still going to leverage all of those technologies. OpenStack is a key part of New Stack. Kubernetes is a key part of New Stack, but what we're doing is pulling that together so that they don't have to curate their own private cloud. >> Kate: That's right. >> We create that, deliver it in a way that's an appliance-like way, just like we deliver Hyper Converged today, in a controlled plane that manages that hybrid IT estate and gives them visibility into public cloud uses and private cloud, and it's really going to help them a lot, and it's going to help a whole lot of other customers cause we're making it standard and easily deployable. >> Well, we've seen this story unfold over this decade, where the corner office has said I don't want to spend money on that caching and provisioning. Okay, so go to the cloud. And then IT said, well, eh, we can't do that. (laughs) Okay, and so they get in with Hewlett-Packard Enterprise and others say what's the answer? Okay, but what you've described is this horizontal infrastructure capability that you can throw any workload at. >> That's right. >> And so my question is, what does it mean for the business? Does it mean you can do things faster, you have happier animators, you can do more movies, what does it mean? >> I think it means a couple of things. First of all, opportunity cost. In our business, a new opportunity for a creative endeavor, that comes up all the time, and the key is is that you want to be able to explore that as quickly as possible. Creative ideas work out sometimes, sometimes they don't, but they key is is that if takes you time and effort and money to just explore it, you've got an opportunity cost you don't want. >> Yeah, yep. >> Something like Synergy will allow us to provision resources to new ideas and new potentials quickly enough, easily enough, and at a cost-effective measure, so that we can actually determine which creative endeavors are going to work more quickly in our environment. That's a huge deal. >> So you were missing opportunities because of the infrastructure limitations, is that right? >> That's -- >> The mockups and everything have to get done. >> That's right! >> All the CG work. >> Again, when our filmmakers have a new idea for a new sequence, a new character, those types of characters, they take tremendous amounts of resources. I often talk about the dragon in Shrek. Back in 2001 we released Shrek, and it had this beautiful, huge pink dragon in it. And she was fantastic, but frankly she was so complex and so computationally heavy, we actually had to cut her out of parts of the film because we couldn't produce the shots she was in. Fast forward a few years, and we decide to make a movie called How to Train Your Dragon that's nothing but dragons. The key is is that we never want to be in a position again where we're tabling a great creative idea because we can't resource for it. And solutions like SimpliVity and Synergy and particularly where we're going with New Stack and the ability to actually harness the cloud without having to do all the work ourselves, that's going to bring that potential to reality. >> John: And then you know, your application in this opportunity cost is for your business. Other companies have apps, right? So their opportunity costs are very similar. >> That's right. >> John: This is the classic how shadow IT was born. >> Oh, yes! >> And people want to experiment, show proof of concept. Not a PowerPoint, an actual demo of real working product. It may not have the scale there, but you get to that point of where it's workable. >> Look, every business is facing some element of this right now, and I will tell you the other reason of the two reasons that I think that this is going to make a difference. It's future-proofing our environment. >> Ric: Yeah. >> The world is so dynamic right now, things are changing so quickly. Even in our environment with media and entertainment, the world of what people want to consume and how they want to consume it and the nature of how we're looking at innovation in both filmmaking techniques, as well as new media opportunities, the key in all of that is is that we have to be dynamic in order to be future-proofed. These types of solutions give us the confidence that we're actually putting the money in the right place. It's an investment in our future. >> Earlier you mentioned Pointnext services, and the narrative from Hewlett-Packard Enterprise is my inference is it's more cloud-like. Do different types of business models. Are you seeing that? I mean, is it more than just a new name, a new brand, are you starting to see an evolution of the way in which you engage with Hewlett-Packard services? >> We absolutely are, and it's one thing to talk about strategy, but at the end of the day, you don't call up your technology and have a conversation with it, you call up people. And what we're seeing is that Hewlett-Packard Enterprise is investing in a level of expertise within the Pointnext services organization that is unparalleled. That is a massive change over the course of the last five, six, 10 years. These folks are coming into our environment now and we're finding that we are inspired by their strategies. We're not having to teach them about our business, they're actually coming in with all of these other learnings that they've gotten from all of these corporations and they're looking at our ambitions and going hey, we think we've got some ideas here. I'll tell you, our engineers are hard to impress. >> That's the truth. >> They are used to, what was your phrase, rolling it on their own. >> Yeah. >> They are used to being responsible, and they have very little tolerance for actually giving other people time within our organization. Pointnext has blown them away. We could not be doing the work that we're doing on Synergy as quickly and as effectively, installation and strategy around that without the Pointnext team. >> Well, that's the proof, that is the proof in the pudding in my opinion when your people who are, I won't say cocky, but they're kind of, sounds like they're pretty cocky. (laughs) >> Ric: Confident. >> But that you're in a, you're in media entertainment. It is one of the most disruptive, being disrupted markets right now. Smart Cities, IoT, media entertainment it's, you're the leading trend in IT right now, media entertainment. >> And in our team, there's simply no tolerance at DreamWorks Animation for technology getting in the way of the business. The fact of the matter is technology always has to be enabling the storytellers, enabling the filmmakers, enabling the business and ambition. And the key is is that our engineering team, they feel responsible to that. One of the things that we're finding with the new Hewlett-Packard Enterprise, the Pointnext team, Ric's team with the Synergy deployments, is that we actually feel like we've got a partner that can up our own game. >> John: Good. >> And we do deep beta programs with them on everything that we're doing to make sure that we're meeting that next generation of what they need. It's a fantastic partnership. >> Well Ric, congratulations on the success, and Kate thanks for sharing all the great stories and your experience DreamWorks Animation. Great to see that trend, again media entertainment, you guys are doing great stuff. We're doing our share with digital TV here, we're not a, we live on the edge of the network with theCUBE here at HP Discover. With DreamWorks Animation, I'm John Furrier, Dave Vellante, stay with us for more day three coverage here in Las Vegas at HP Discover. We'll be right back. (tech music)

>> Announcer: Live from Las Vegas, it's The Cube, covering HPE Discover 2017. Brought to you by Hewlett Packard Enterprise. >> Welcome back everyone. Live here in Las Vegas is SiliconANGLE's CUBE, our flight ship program. We go out to the event ... I'm John Furrier, My co-host David Vellante. Been watching 3 days of wall to wall exclusive coverage of Hewlett Packard Enterprise Discover 2017. Our seventh year covering HP Discover, now called HPE Discover. Dave, we've covered them all. Now we're doing some European versions. I missed the last one in London, but you were there. But you and I have covered HP Discover, Now HPE Discover, for now our 7th year. Interesting times as they say. >> Dave: I'll say. >> We live in interesting times. HP's been getting hammered. Certainly the competitions been slamming them, The press has not been kind to them, People think they're irrelevant. Wall Street just slammed them, so Jim Cramer on CNBC, really taking Meg to task, But we always come back and we feel differently when we're actually at the event. When you actually talk to the people in the company. They got a lot of cash on the books. They've got a lot of customers. They got technology. They're doing the vendor R&D that you guys have pointed out in your recent, ground-breaking, true private cloud research market sizing you put out there. Astonishing change. And I think, my gut is, yeah, certainly HP's had some changes in corporate development, but the reality is that they now have set that up and the market is exploding. It's got the cloud market that's coming on premise. The private cloud business is taking off. >> Yeah, you know, John, we have documented this over the last seven years, and it's like the Band-Aid is coming off slowly, and it finally feels like this Discover (ripping noise) is finally almost there, right? Because you remember the split, and then the spin merge, and then the software business, okay. This has been the cleanest Hewlett-Packard Enterprise Discover that we've been to. There wasn't a lot of noise about software, they had a little separate event going on. Not a lot of talk about the spin merge, a lot of talk about Pointnext, I think that's good, I like their branding. >> It's like they cleaned up all the rooms in the house, and the outside's got a new fresh coat of paint. I got to say, last year- noticeably, the branding, which we were kind of originally critical on two and a half, three years ago; the show was beautiful, the branding's amazing this year, again, they're going to that next level, you're starting to see the clean messaging, it's as if the ship has been kind of re-readied. And we said that last year, but to be fair, we did say last year that they got to prove it to you, They got to show the results. And we were talking with Alain, who runs their data center infrastructure group, he agrees; the metrics that all the other analyst firms are using out there are irrelevant, and he believes that new metrics have to be redefined. This to me is the biggest story of this show, is that HP is eyeing a new sea change and I don't think people understand it. That's my personal opinion. >> I think you're right, I mean, the narrative on HP is, oh, they're just a hardware company, hardware's dying, what are they doing, et cetera. Well the reality is, people have been telling me the hardware business is dying since I've been in the business. The good trend for them is, the hardware business is consolidating. Of course, the tough news is, a lot of it's going to the public cloud. But as you've been pointing out all week, there's plenty of growth, on prem, in what we call the true private cloud. >> That's the biggest discussion of the show here, is the impact of the Wikibon research, the true private cloud report that you guys put out, I want to spend some time with you on that and ask you some really pointed questions. What is the true private cloud report that Wikibon put out, and what does it mean, why are people talking about this research so much here? >> So three years ago, the team at Wikibon started to quantify this notion of private cloud, and we looked at it and said, ah, this is cloud-washing. Really this is just virtualization. What we really want to see is, on prem, mimicking,to a substantial degree, the public cloud. Orchestration, certainly, >> Agility, >> Management, agility, pay-as-you-go, those types of things. Okay, so, the genesis of the market move is something that we heard from Alan Nance, our friend, several years ago at the Vertica user conference. He said- he was, at the time, CIO of Philips- he said, "my CEO said 75% of our spend in infrastructure "is non-differentiated, so we're going to eliminate it, "and everything we're going to do is going to be as a service." That was three years ago. So, massive change, and Philips went out to all of its suppliers and said, this is what were doing, if you can't do business with us this way, you're out. And remember, we wrote a bunch of stuff about it, and Alain came back, okay. So they were one of the early folks making that move. Everybody is now doing that. So what's happening is, there's going to be $150 billion that is going to vaporize out of non-differentiated heavy lifting. And it's going to go in two places: it's going to go into the public cloud, and it's going to go to what we call true private cloud, and that true private cloud business is going to grow to be about $250 billion within the next 10 years, okay? So that's a long term market forecast. >> So the addressable market for true private cloud is what, 260, or 250 plus- >> 250, just under $250 billion. Which is growing faster than infrastructure as a service, public cloud, and it will ultimately, we believe, be larger than that IAAS business. Not as large as SASS, that's going to be the biggest public cloud market, but it's a huge opportunity for companies, and it's a land grab, and it's a dogfight. >> So, I want you to explain this, 'cause I think this is important, and it took me a couple minutes to click on this. You had mentioned that- there's a point in your slide on that deck, the size of the market is huge, it's $250 billion, that's a lot of cash. But the TAM component of labor costs, now, this is the big fear, everyone thinks, "oh, my job is going away, AIs and auto ate my job away", but yet you're saying $150 billion of cash costs are going to shift. >> To where? >> Absolutely. Okay, so a couple of things. What is going to shift? Today, there's so much IT labor spent on provisioning servers, provisioning storage, tuning systems, tuning databases, all this stuff that can be now hyper-automated, as the CEO of Wipro said, so that's happening today, as we speak. So, vendor R&D, i.e., R&D money that goes into appliances, boxes, new systems, new software, is going to replace and automate out those non-differentiated tasks. So if your job is provisioning LUNs, you really want to re-skill. >> So what's that mean for the customer in HP, and why is that important to this show, why are people talking about this report, what's the relevance? >> Because everybody's talking about their digital transformation. And how do you fund a digital transformation, right? You've got to spend all this money to become a digital, data driven company. Well, where do I get that money? >> John: Real cash involved, basically. >> Yeah, there's cash involved, so how do I do that? Well, I have to shift away from things that aren't driving value for my business, and eliminate that, and put the resources in things that are driving value. Application development, new development paradigms, digital transformations, new partnerships, and that's where the money's going. And so again, if you're an IT infrastructure patch management pro, you either have to re-skill, or you're going to be out of a job. >> Did you see Kate Swanborg light up when we talked about the private cloud, 'cause that's exactly what was her point. >> Yeah, well they're seeing it at DreamWorks, because essentially what they're doing, they're changing the game in animation. My prediction is, they're going to be able to pump out many more movies within a year now, and that's going to make them more competitive. I think that's part of the reason why she didn't want to dig too deep into what they're doing, 'cause I think they see it as a competitive advantage. >> Yeah, and she did tease a little bit out by saying that the creative people are so much more productive, she mentioned the dragon. Alright, other impact: Wall Street. We see a lot of analysts kind of taking HP to town. We know the competition, we talked to Michael Dell, he came on The Cube; Meg stopped by but she did not come in, that's notable for the folks out there, Michael certainly sits down with us; Michael says, "hey, I got plenty of cash", when I bring up the debt thing, he thinks bigger is better, HP thinks smaller and nimbler is better- >> This is going to be really interesting- >> Your thoughts on that as we move forward? >> Look, there's two, sort of, bromides, right, with Wall Street. First disappointment is never the last; uh oh, that would be bad news for HP, but Meg said, "we have bottomed in terms of margins, margins will improve." And a big thing's going to happen next month, HP's gets the cash from the spin merges, right, that's going to happen, and that's a big deal because their balance sheet- they're going to have $12 billion in cash on the balance sheet, which will match their debt, and they're going to start to be acquisitive. Dell EMC can't be acquisitive right now. They got to retire that debt and delever. >> We saw SimpliVity and Nimble, front and center, a lot of good success with the software there. >> Yep, so this will be really interesting to see, is this the last disappointment, is this a buying opportunity? >> Yeah, we're going to watch it, and- >> So if I had to bet, if I had to bet I'd say it is a buying opportunity, based on what I'm seeing here. It's much cleaner, leaner, and they've also restructured the sales organization to a great extent, so hopefully the execution's going to be better. >> Well, I'm not that generous, I think I want to see more results, I think- >> I know, but if you see more results, you're going to miss the upturn. (laughs) >> Well the question, to me, is- I do believe that they have an advantage with the true private cloud report you guys put out, I think that validates the shift of spend in IT, which validates the fact that it's growing, not shrinking, and yes, people might not be buying boxes but they're going to be buying IT. >> And the big thing is, well you know, John, the street right now wants growth. That's why Amazon can make no money and still crank, right? But if HPE can eke out any growth and start throwing off cash again, I think the stock is going to do just fine. >> Other notable things; obviously, the outsource business is gone, Pointnext is the solution, we had Ana on from Pointnext, she was the leader; other notable thing is the absence of Chris Hsu with Micro Focus, we had a chance to ... saw him at the Foundation Room at the Mandalay Bay the other night, had a great conversation. Apparently, they're not included in HPE Discover because they're a separate company. They're apparently doing really well. >> Well Micro Focus is killing it, right? I mean, their stock price increased faster than Facebook last year (laughs) so, that's an interesting play. I think it's a new private equity play, John. You know, the private equity play used to be, suck as much cash out and then leave the carcass. I think the new private equity play is, invest, and then take it to market again, and try to get that value from the market, so increase the value. >> I think you're onto something, and this is why I've always been complimentary of HP's corporate governance game, because I think that private equity is all about taking things private, and being nimble, and then going public again, so- >> And Micro Focus, in my opinion, picked up those assets for short money. >> Yeah; well, HP owns a big part of the company, so- >> Yeah, of course, but that's why they did the deal, it's short money, and they wanted the cash, and that's why they had to put the security piece in there. >> Alright- Dave Vellante, I'm John Furrier here breaking it down, ending our three days of exclusive coverage, at HPE 2017. Look for us at Madrid, the show there; I won't be there, Dave will be there; and again, HPE Discover, enjoy the rest of the conference, thanks for watching; this is The Cube out, thanks to the team and everyone here for a great job, see you next time.