>> 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.

>> Announcer: Live from Las Vegas, it's theCUBE, covering HPE Discover 2017. Brought you by Hewlett Packard Enterprise. >> Welcome back, everyone. Live here in Las Vegas, this is theCUBE's exclusive coverage for three days at Hewlett Packard Enterprise Discover 2017. I'm John Furrier with my co-host Dave Vellante. Day two winding down, a lot of action happening, a lot of news, a lot of technology announced with a lot of ground-breaking stuff, and our next guest is Navin Mittal, Director, Products and Solutions Marketing at the Data Center Infrastructure Group. Welcome to theCUBE. Good to see you again. >> Good to see you, John. >> Thanks for coming on, I mean a lot of stuff going on under the hood. We heard from Susan about the servers with the security chip and the silicon. You guys got FlexFabric, you got all this capacity. It's really kind of like the new sports cars coming out with Gen 10, under the hood a lot of action happening. What's going on with the relationships? We're hearing a partner-centric message here at Discover this year. Give us the update. >> Yeah, so first of all, absolutely spot on on the whole Gen 10 servers. We are data crunchers. We will get the market right. But let's talk about networking, because that's something that actually combines everything, when you talk about server storage and networking and our customers as you very well know, can't just give it service alone. So, if you may or may not remember, six months back we announced the strategic relationship with Arista Networks where we basically said that they are our preferred network provider going forward. >> John: Yeah, we had them on in London. >> Okay great, yeah, so it's been going great so far. The giant go-to market has not been just go-to market but it's also been reference architecture designs. It's been creation of reference architectures with our server teams especially mission critical servers, SAP HANA talk about it so. >> John: Give us the update. What's new with the partnership? What's the progress in six months? >> Yeah, so in six months, our sales teams are completely trained and stoked to go out and sell there. Our customers are really excited with the partnership. The are asking for not only HPs servers and storage solutions but of course the Arista products also. 'Cause now they have a choice of products. If they are existing FlexFabric customers, they already worked very well with HPE, but now with the bringing in of the Arista switches, you can get the software to fine layer end-to-end. >> And you get the high end covered. A lot of service provider opportunities. What's the big take away in the marketplace from your standpoint? As you look at what's going on here at Discover 2017, and looking at what you're doing with Arista at the networking layer, a lot of interesting things are going on at the network layer, a lot of open source projects, a lot of new software, what's your take on what's going on at the network layer in the Cloud and whatnot? >> Open source has always been an integral part of HP's DNA, as you very well know, right? We have been a great contributor if you talk about Helion or you talk about OpenSwitch which was happening last year. Customers are looking for business outcomes. They don't really care whether it's open source or closed source at one point. We are all about outcomes and business solutions. So, we bring in the best of breed networking along with best of breed servers and storage, combine them to give a solution that we can offer to our customers whether they are in the Cloud-centric journey, they've already made the transition to Cloud or they trying to tackle with legacy (mumbles) >> So what are some examples of some of the solutions? >> Yeah, the SAP HANA solution architecture that we did recently, not many people know about this, but the HANA Cloud actually runs on the Arista switches already. Now think about power that our customers can get if we can bring that flexibility and agility that SAP uses internally in their Cloud into the Enterprise data centers today. So that's the reference architecture which we already have. >> Okay, and then in that example, so the core switch is Arista, and what do you guys bring to the table, everything else around it? >> Storage, yes. And don't forget the Pointnext consulting, right? So that is the switch, ties everything together so that customers can actually utilize not only our products and solutions, but the entire journey. >> And in that solution, for example, the HANA, when you mentioned Pointnext to consulting. What specifically is the service's organization doing? Is it tuned for SAP HANA? Is there some magic sauce that's sprinkled in? How does that all work? >> Yeah, so great point. And so the Pointnext to consulting of course makes a point to understand where you are currently in your journey, right? Depending on where you are, the SAP HANA Cloud solution may not be a perfect fit. In this example that I mentioned about SAP HANA itself we just wanted to highlight the fact that if you are ready to move to the Cloud like agility into your private data center, we have the solution ready with you, and you can apply it in your private data center. So your journey might begin with Pointnext, it might begin with coming to HPE. >> Alright, so here's the hard billion dollar question, not million, billion dollar question. >> It is a billion dollar question. >> Trillion dollar question. Well true private Cloud TAM is 260 billion. So that's not including hybrid. But Meg's up there too. >> Navin: Well it's 250 billion based on one of the reports that Wikibon put in. >> The true private Cloud. Ground-breaking again, another great Wikibon research that no one else is doing. Again, that number is legit, that's basically saying that On-prem isn't going away any time soon. I think this plays beautifully to what you guys are doing. But the question is this, how are you going to simplify as customers are transforming their operating model to Cloud-like, how are you going to simplify it with these relationships? >> Yeah, so for that, to talk about simplicity I need to take a step up, right? Because you saw Meg talk about the hybrid ID strategy, and then we also talked about the Gen 10 Silver announcement where we talk about control and agility and security. That's where the Arista portfolio fits in squarely across the hybrid ID and the Pointnext to consulting because now you're talking about the security solutions being end-to-end from service, storage, and networking, while giving you the agility that you're already accustomed to in some cases from (mumbles) solutions and having the capacity control from our financial services offering. >> So, from a customer standpoint, no real change, it's kind of like, it's enabling them extracted away, I'm just trying to get on the network side, what's your policy? A lot of policies going, a lot of automation opportunities. >> Yes. >> What's going on there? >> Yeah, so I don't know if you know about the product called the Spirit Cloud networking that we offer, where it is really allowing the policies that are defined at the application level and translating that into the underlying infrastructure level. So think about this, in a typical data center you tend to have silos, where you have a server silo, networking silo, and a storage silo, and from the time the application defines the policies and the requirement from an application standpoint to reach the end customer, you would have to go through these silos in order to provision those. With bringing in distributor Cloud networking, and it's integration with other networks, those policies get automatically deployed. And guess what, it's a heterogeneous environment, so you can actually mix and match existing workloads along with existing infrastructure as well. >> And what happens to the IT pros that used to be associated with those different silos? I mean, what are they all doing today? >> Yeah, they get to do much better things, right? Because IT is now transitioning from a cost center to a revenue generator. And it's not about firing people, right? Let me make sure I clarify this, it's about realizing your resources so that they can now become more productive with the time that they have. I don't know about you, if I'm done at 5 pm, you could either go back to your home, and I'm sure you have families, or you could spend time figuring out the next network problem that you're having in the data center. That's where the true agility comes out, that's where the true economic savings come out. >> That's where software programmable infrastructure works. People can get their weekends back. That's really kind of like, I mean, a lot of time is spend on mundane tasks. Either chasing down some sort of automated provisioning, or I mean, manual provisioning, or configuring stuff. What's the big game-changer? Is it machine-learning that we're seeing there, how do you guys see that technology? What's the enabler? >> Yeah, so I think at the end of the day, customers are looking for a stack, end-to-end stack, that one company can bring to them with the flexibility of choosing every layer within the stack. So we at HP of course are very focused on openness, right? So the HPE stack actually has all the way from applications to computers, to servers, to storage, to networking, whether you're talking about Nimble or the SimpliVity acquisition, or the (mumbles) that we have, to the underlying networking layer. And in this case, we are contending that Arista switching is the fabric which brings in best of breed. But you're free to choose the other layers of the stack as well. >> And how do you differentiate in the marketplace? The competition or the customer says, well I should have you guys HP and Arista instead of whatever, vendor X,Y, or Z. What do you tell them? >> Yeah, so the famous thing that I tell is you are either in the legacy mode and stuck with a typical vendor, you know we all know what the name means but I won't mention it here, where they try to keep selling you newer and newer gear with newer operating systems, or you go with a vendor that is open, has a DNA of being open, will hold your hand until you actually deployed in the data center and give you the choice that you need in the data center to be successful. >> Surely making things easier has been key. Nimble, and SimpliVity really kind of put the design at the center, and then brought software in, that changes the game. That's more Cloud-like. That's certainly very DevOps friendly. >> Absolutely, and it doesn't even stop there, right? If you take the conversation up higher up to the virtualization or the container layer, discussion. When you start talking about digitally the containers bring into the world, then it's a completely game-changer. How do you ensure that the network traffic that and application sitting on a container somewhere in one of the Vms or in Silver, can be translated and traced all the way back to the switchboard. And ensuring that nothing goes down. >> And that's the whole ethos of infrastructure as code, is actually make it programmable. So the app guys don't have to get under the hood. >> Yes, that programmable is taking care of the agility side of the house. What I am talking about is visibility and security so that if something does go wrong, we all are human, something can go wrong, even in programming, you need to pinpoint and detect and create and automate and fix issues as fast as possible. And there are some fundamental underlying tenants of the Arista operating system which allows us to do that, and of course the secret sauce that we add on top of that is the combination with the server and storage. >> Navin, thank you for coming into theCUBE and sharing insights. Final question for you. What's your takeaway from this year at Discover? What's the vibe, what's your personal (mumbles) simplifying, IT, hybrid IT, and intelligent edge, outside of the core things, what's your big takeaway? >> Yeah, I think I am super excited after meeting our customers and partners here. We are back in the game. We are here to take the market by storm and we will be doing it. >> Alright, here breaking it down in the networking Arista relationship and all the great stuff in the networking life. Navin, thank you so much. It's theCUBE live coverage from Las Vegas, in HPE 2017. We'll be back with more live coverage after this short break. (futuristic music)

>> Announcer: Live from Las Vegas, it's the Cube, covering HPE Discover 2017. Brought to you by Hewlett Packard Enterprise. (techno music) >> Okay, welcome back everyone. We are here live in Las Vegas for the Cube's exclusive three-day coverage, we're on day two of HPE, Hewlett Packard Enterprise Discover 2017. I'm John Furrier, my cohost Dave Vellante. Our next guest is Susan Blocher, Vice President of Marketing, Data Center Infrastructure Group, part of Hewlett Packard Enterprise. Welcome back to the Cube, great to see you. >> Great to see you both again. >> So a lot of great stuff, so I want to just going to, a lot of buzz, Gen-10, a lot of new capabilities. Let's get right into it. Hard news, what's the update? What's going down at the show? >> We made the magic happen for this discoverer. It's just really exciting. So, hard news, we really focused on three areas for our customers: new levels of agility across their hybrid IT infrastructure, which means automation, better performance enhancements, taking things that used to be very manual and making them run sort of seamlessly, number one. Number two, security, and we're talking breakthrough security. So this is where we've been able to leverage some unique opportunities like the fact that we build our own silicane to put a silicane root of trust, or an immutable fingerprint, right into our silicane that can never be changed. That fingerprint will not let infected firmware startup. No matter, you know, as long as the firmware is the right firmware, it'll boot up seamlessly. If it's in any way been compromised you will, it will not let that server boot up. Super secure infrastructure. Last but not least, our customers were telling us economic control. We need economic control. We need cloud-like economics. We need pay-as-you-go. We need the ability to get capacity on demand. Those are the things that we really innovated on for this year. >> One of the things that's coming out, we had Bob Moran on the security thing. >> Yeah. >> And James Morrison >> Yes. >> I want to call him Jim Morrison >> Oh, exciting. >> I used to be >> I know. >> a big Doors fan. >> Yeah. >> I respect his name, I'm sure he gets that all the time. >> Yeah. The security on the silicane >> Yeah. >> is interesting to me because now you're seeing things like block changes, immutable environments wherevpeople have this trust relationship. That really hits the ransomeware side of things really in a big way. >> Susan: Yes. >> What else is that hitting? That is, to me, the big news, is that, is the security at the server-level because there's no perimeter anymore in this cloud-like environment, so this is kind of a cool way, explain more, just take minute to talk about the security piece because I think to me that's game-changer. >> It's super fascinating, and you know, I'm quoting somebody else, so I'm blatantly stealing somebody's line, but I was reading an article where somebody said firmware is a cesspool of Trojan horse opportunity for cyber attackers, and that took me aback because I was like, Boy, those are some strong words there, but really with all of the investment that companies have made over the years in data security, application security, network security, no one was focusing on the servers, and frankly, there's a million lines of code, and I'm sure Bob said that, there's a million lines of code booting up to get your servers up and running that no one has protected up until now. And so, we recognize about two years ago, that this was a huge threat, and increasing everyday, and boy, two years later, we're in the nick of time, to give customers really the peaace of mind of that security. >> One of the things that Wikibon just put out in terms of reports on research that I find fascinating that ties into this trend that I want to get your reaction on is, I think they're the only research firm that put this out actually, is they actually size the true private cloud market at about 260 billion, and that's not including the hybrid piece. That means, on-prem, cloud-like capabilities for on-premise data centers, which means, hey, that's not really going away, so it points to that narrative that, oh, data centers are moving to the cloud, so that's kind of probably not going to happen any time soon, but the cloud-like capabilities are there. But one of the interesting stats is that, is billions of dollars in cost-shift from labor, to hire differentiated, higher yield, or differentiated stuff inside the organization. So IT's not getting smaller, it's getting changing. >> Susan: That's right. >> So, how are you guys taking the Gen-10 and other things, and helping customers abstract away those tasks? >> Yeah, exactly. So look, all of our customers are really doing hybrid IT now, and so they're doing some things on-premise, they're doing some things off-premise, and frankly, it makes sense. But there's a tremendous amount of compromises that they have to make on both sides of the coin, and so what we've been talking about, a new compute experience, and that's really what we mean. It's not saying that you should have everything on-premise, or that you should move everything to the cloud. It's really saying, how do we give you the best end to end experience across agility, security, and economic control, so that the trade-offs that you're making, are not trade-offs on the pros or cons of those side loads of IT, but really looking at it from a what kind of business outcomes do I need to drive, and that's how I make my decisions. >> So, if you go back to around 2010, John, we were talking the Cube about a couple of observations. And it sort of coincided with the ascendancy of the public cloud. We said that the hyper-scale guys will spend time, engineering time, to save money, and then automate stuff, but the Enterprise guys, they'll spend money to save time. They don't have all of those engineering resources and we talked about that for a while, and it kind of got old and sort of boring. Fast-forward to 2017, and that's exactly what happened is vendors have put in a lot of effort to create cloud-like capabilities, and to John's point, is you're seeing a shift in staffing away from undifferentiated stuff, so talk about what that means for the data center infrastructure group, sort of how you position and how you talk to customers and message them about your role and how you add value. >> Yeah, absolutely. So look, first of all, we don't talk about just data center infrastructure. I think that's really where it starts because frankly, customers are talking about their data, they're talking about their applications, they're talking about how to bring intelligence to their hybrid IT experience, and so what we're talking to them about, is really how do we bring that together for them? We're talking about software-defined intelligence, how we're leveraging HPE One View to automate the deployment of applications across what could be a complex apology, but doing it absolutely in an automated seamless way. We're talking about how we're taking iLo and building the security in, but we're also doing things like intelligence system tuning where we're partnering with Intel and really figuring out how to take what is the Intel turbo-boost mode, from their processors, and make it even better. And so a lot of applications can't take advantage of the turbo-boost mode because there's a bit of when you hit that high frequency, you get a little bit of jitter, and that jitter creates latency, and so a lot of applications like core banking, video streaming, high frequency trading, they can't use turbo-mode because of that jitter that creates latency. We've been able to figure out, partnering with Intel, how to dampen a little bit of that speed, but still get turbo-mood and eliminate that jitter, so no latency. For the first time, these applications have been able to take advantage of turbo-mode. And what we figured out is even though we dampened it a little bit, they actually perform better with that little bit of dampening than they would've if we had shot them up with full turbo mode, right? So super exciting innovations with that. >> Sounds like Pied Piper. (laughter) >> But this is the kind of innovation that's going on in the systems world, and another observation we've seen on the Cube is, we go to a lot of events, is that systems is back. There's kind of an under current going on in the industry where hardware and operating systems folks are now part of big transformations, whether it's hyper-scale or in-service providor and Enterprise, so how are you guys looking at the compute differently if the notion of a server is shifting, and they're maybe consuming IT differently, where the channel partner might become a provider, and all these things are going on, how do you guys look at this new style of computer, our Meg says the changing landscape of compute. >> The changing landscape. It's all about really understanding our customers, and who they are, and how we can look at their unique needs and then segment our value and our portfolio toward them, so you talked about hyper-scale users, like service providers, cloud service providers, small and medium sized businesses, Enterprise customers, Telco environments, high-performance computing, super computing. What we realize is that one size does not fit all, and that's really what it comes down to, and that's one of the trade-offs of the public cloud environment, there's lots of good things about public cloud, but one of the trade-offs is it's kind of commodity hardware and one size fits all, but if you're trying to do any kind of mission critical applications, like I said, high frequency trading, you need super computing capabilities, you need deep analytics, machine-learning, whatever the case might be, it's not... You really need to specialize the infrastructure, and HPE is right there working with our customers regardless of their needs and their segments, we've got the solutions that will help them do that. >> So one of the things I'm inferring from some of your comments, I want to ask you about marketing. I always struggle with marketing. (laughter) You're shifting the message from product, product, product to business impact. >> Susan: Yes! >> Okay, that's clear. What else is working in marketing these days? It's never one silver bullet, but there's belly to belly, there's events like this, there's obviously old-school email marketing, there's social media. What are you finding as a marketing problem? >> We talk a lot about digital transformation for our customers, but digital transformation has come to marketing, so that's the biggest thing. We have made a huge shift at Hewlett Packard Enterprise in digital marketing. So everything that we're doing, even an event like this, which is physical, but it used to be kind of a one-off. We do all this prep, and then the week would go by, and it would disappear, and that would be the end of it. We're learning to build snackable content assets that have life after life after life, we're really embracing the social media, we've built a whole new digital marketing platform, we've shifted from what I would call traditional demand generation into really reaching our customers through digital marketing in every country globally. Huge, amazing metamorphosis, and frankly, with the announcement of the new HPE compute experience, and the Gen-10 platform, and the world's most secure industry-standard servers, it is the perfect timing of bringing all of this incredible innovation of technology to market at the same time that we're innovating around marketing, so the next 12 months, it's going to be super exciting. >> Eating your own innovations, if it were. >> That's right, that's right. >> Congratulations on the Gen-10 launch, and all the great goodness you guys got going on the security thing, a big deal. >> A big deal. >> Looking forward to following up on that further after the show, to keep it going. Certainly, there's digital aspects here in the Cube will be available on Youtube.com, slash and the name of course, the Cube Gems and highlights, all available. Thanks so much for joining us on the Cube, really appreciate it, more live coverage from HP Discover 2017. After this short break, stay with us. I'm John Furrier with my co-host Dave Vellante. We'll be right back. (techno music)

>> Announcer: Live from Las Vegas, it's theCUBE, covering HPE Discover 2017 brought to you by Hewlett Packard Enterprise. >> Welcome back everyone, we are here live in Las Vegas for HPE, Hewlett Packard Enterprise Discover 2017. This is theCUBE, Silicon Angle's flagship program, we go out to the events and extract the signal from the noise, I'm John Furrier with my co-host Dave Vellante. Our next guest is Phillip Cutrone, who is the VP and General Manager of Worldwide OEM Datacenter Infrastructure Group, you're taking all of the stuff and offering it out to customers for HP. The portfolio's massive, welcome to theCUBE. >> That's right, hey, thank you so much, it's great to be here and what a great business. I got to tell you we have thousands of customers. Multiple billions of dollars of revenue, double digit growth for the past five years. It's an awesome business and I'd love to talk to you about all the vertical markets that we're taking care of. >> Let's start in with the strategy, so we see HP, okay, you now have a cloud play which is fine, I mean, what does a cloud play really mean, the cloud is everywhere so it's not like a cloud play kind of reminds me of the internet play. What's your internet play? It's the internet. So you guys are seeing the cloud all around you with other folks, that's an OEM opportunity, in and of itself as people become service providers. >> You know, >> The solutions are all over the place as well. >> There are services providers, but we find with OEM customers, let's think about OEM customers like this. Let's talk about edge for a moment. We've move compute to the edge as far as possible, right. That's an en vogue, that's a current contemporary topic of saying at the edge. In OEM we work with customers, say in healthcare. Whether you want records at the hospital, having it in a private cloud accessible to all doctors, but it goes a step further. You need to acquire the data first. Now let's talk about a CT scanner. A CT scanner needs a lot of processing to produce the image. So, we'll put a compute, specialized compute server inside the CT scanner to receive probably at a terabyte of data per minute that has to be recorded flawlessly into the server. Now we accumulate that information now it's not just one record, it's thousands of records. Now we can take, doctors can take a look at all that information to try to make, create better outcomes for patients. So think about pushing all of that data to a private cloud inside of a hospital in a healthcare example. Now, you can look at video surveillance, another great example, manufacturing, control of assets on your manufacturing floor and possibly telecommunications. So think about not just cloud, but pushing it down to the edge and doing the compute, processing, storage there and possibly using the cloud later on for big data analytics. >> I got to ask you the question, why are people interested in the OEM solution from you. You mentioned business is good, doing over billions of dollars, but why are they wanting to OEM, why HP? Why not just buy off the shelf stuff and cobble together? >> Yeah, so that's a long answer and hopefully I have enough energy to keep you and your audience entertained here. But let me say this, if you're going to bet your business on a product, on the infrastructure, who're you going to do it with? 'Cause it's a lot of responsibility. I can't book revenue until my OEM customers book revenue. That means they depend on Hewlett Packard Enterprise. So think about that level of responsibility. Okay, now let's think about the four components of what makes our OEM business. First off I'm going to say, I'm going to break this down into four Ss. The first S is going to be solution. Everything around here you see at HP Discover, is all about the portfolio. Resilient portfolio. What does OEMs care about? They care about great products, quality products, feature-its, great value, but, they also care about long life. So why do I care about long life? Some of these customers will spend six months to eight months, qualifying, certifying a solution on a server. They don't want to agree to do that for possibly another year, two, five years down the road. Pardon me. So they actually want to take their time and live that life out as long as it squeezes. >> It's integral to their solution. And they really spec it out. They're not just like bloating it, stacking and racking. >> That's right, now, but now they need someone to execute it. They need a supply chain, the second S. They may, if a customer, a small customer inside of Iowa, wants to ship product in Singapore, Japan, or South America, they need a company that can take them global, we can do that. One SKU, a custom SKU for that customer, the exact configuration, their image loaded in the factory deployed globally. The third S, services. Once it's deployed, they're going to need someone to maintain it. They'll do first level call on their application or something like along those lines, but they need someone to get on site and actually fix it if something were to happen. We give that assurance in our services. And then finally, you know, the OE in business is a dedicated business. It's not a, you may have not heard about us before, they were just a covert business, but it has dedicated resources, dedicated sales staff, dedicated engineering to manage and maintain. We have like a control tower. So think about our IT customers who are receiving products into their data center. It's a one time transaction generally speaking or infrequent For OEMs, it's every week we get a PO, we've got to be executing flawlessly all the time. So we need a control tower to maintain that entire ecosystem to make sure it's a flawless execution. >> So what's the fourth S? I got solution, supply chain, services. >> Staff, I call it dedicated resources, staff. >> Now I got to ask you Phil. >> Yeah. >> So you would before the split with HPE, HP had a big instrumentation business and it's sold presumably to a lot of, for instance, medical you know, device applications and use cases. Was there synergy between your business and that business? How did the split affect you? Certainly it affected the supply chain in a way, you know supply chain shrunk. Did it affect your buying power? How did you navigate that split? >> So generally speaking, the two businesses were operating separately anyway, even from a supply chain perspective, and yes it's true that there are common customers between say HPI today and HPE today as well, but in a case of calling on common customers, there's a workstation application where HPI specializes in, and then there's a storage or a compute from a server perspective, and we specialize in that, and there actually has been minimal overlap, so actually, if anything, there's still a very collaborative relationship with HPI today. >> And, and you said it's multiple billions, growing in double digits. >> That's right. >> Per year. And what exactly, I mean can you give us a sense of some of the solutions that your selling. >> Absolutely. >> What's hot? >> Yeah, I'll tell you, I want to go back to, I'm going to say two items. First off, telecommunications. Telecommunications was a huge opportunity doing the build out of 4G. Now 4G is out and that was billions of dollars of opportunity working with all our OEM customers. Now we're looking ahead of 5G. Now there's a tremendous opportunity. And we're starting to work on the servers of tomorrow. Now do we have the portfolio today to do 5G? Of course, but when 5G finally lands, it's probably going to be a vol, it's going to evolve, and it'll probably end up even being a different server than what we actually have on the truck today, because we're going to optimize and tune. But what's super super hot, I want to go back to healthcare for a minute. And it's important for all of us. When my children sometimes ask me, hey dad, what do you do for a living? Well if I tell them, I say, well you know, I OEM out, the don't know what the hell that means, right? Okay so, no no, we build servers. I don't understand that, what's a server? Storage, they don't get it. But if I say it this way, I help you connect that phone. Probably 90% of the phones in the United States connect through an HPE server, that's a fact. Okay that means it's enabling. So we provide communications, we provide entertainment, we're the infrastructure behind. And we save lives. How can you possibly proclaim that we save lives? I'll tell you how. When I'm, I go back to that CT scanner example. When a terabyte comes off that scanner and goes onto that server, there cannot be a hiccup. It's not buffered, it's not, it's got to land directly on it. If not, it's a misget. That means the patient gets reradiated, and it's an FDA offense. We have family members that have to go through CT scans, that's not a good thing. So we help save lives, that's the perspective. Now what's happening, what's so popular is collecting that data and let's go to digital pathology. That's the latest thing, now are you familiar with digital pathology? >> Not really. >> But the key point though is that the, the having the reliability is critical on the OEM, and they go to HP for the reliability, the custom engineering, staff. >> That's right. >> Because of the services you guys provide. >> And big data analytics. And that's where digital pathology, I want to close on this topic. When you go in, if someone has cancer, and they take a tissue sample, and they look for, they run the genome sequencing, and they're looking for the mutations in the cell, now, as you start to accumulate that, and we work with companies that are accumulating a petabyte a week of data on this very topic. Okay that's a lot of data. So now I want to figure out what's the most effective cure. So I can go back and look at millions of patients and look at what the therapies were for that specific mutation. That's very compelling. Now instead of throwing a barrage of every possible treatment to treat every patient, which in and of itself is detrimental to the body, now maybe it can be very small. I talked to some doctors and they say, you know, sometimes an aspirin can be a therapy for a specific mutation. Well why would I give it radiation? And this is the reason why, >> This is the power of data. >> Power of big data. It's going to help us make better decisions. >> Phil, thanks so much for coming in, really appreciate your insight, OEM opportunities are out there, and congratulations on your success. >> Thank you so much, appreciate it. >> This is The Cube coverage here at HPE Discover 2017, stay with us for more. We're on day two of three days of exclusive coverage with theCUBE, I'm John Furrier with Dave Vellante, be right back, stay with us. (electronic music)

>> Narrator: Live from Las Vegas it's theCUBE covering HPE Discover 2017 brought to you by Hewlett-Packard Enterprise. >> Hello and welcome back to Las Vegas for theCUBE's exclusive coverage of Hewlett-Packard Enterprise Discover 2017 or HPE Discover 2017. This is theCUBE, our flagship program from SiliconeANGLE media. We go out to the events, and extract the signal from the noise. I'm John Furrier, the co-founder of SiliconeANGLE. with my co-founder, Dave Vellante, my co-host. Our next guest, Jason Newton, Vice President of HP Marketing Pan-HPE Market cross HP, and Jim Jackson, Senior Vice President of Enterprise Group Marketing. The big dogs here at HP laying out the show here for 2017. Guys, great show again, our seventh year, appreciate it. But this year, more than ever, is a seminal moment, obviously everyone knows what's going on in the news, is a huge shift in the market place, what's happening at the show, set the scene for us, what's the backdrop? You guys lined up all the messaging, you have the whole set up to the show, tell us: what is this show about this year? >> First, welcome to Discover, guys! We're really excited to have you guys here. And you know, we got a lot going on at this show, so for example, yesterday, we had our Global Partners Summit so we brought out top 1300 partners, and we had an amazing session with them. This week starts Discover, so it's going to run for the next three days. We've exceeded our tenants targets, so we're feeling really good about it. I think what that shows is there's a lot of interest, a lot of energy, a lot of passion, for what Hewlett-Packard Enterprise can bring. You know, I'm not going to go through all the mechanics of the separation and the spin merger, but I would say that that was all designed to make us a faster, more nimbler company, and one that is really aligned to where we want to take our partners on their digital transformation journey. You know, what we're seeing today, is digital transformation is impacting every single customer and every single industry, and digital business is technology, and really, that's where we play and that's why we're so excited to get our story out. And when you look at over the last year, there's a lot that's happened at this company around really innovation, acquisitions, and ecosystem. Just look at some of the innovation that we've brought to the market, Synergy. Amazing innovation, it created a new category, it really enables our customers to now get a public cloud experience, but on PRIM. And we're hearing from a lot of customers, I want to leave my applications on PRIM, but I need that capability. So we're delivering that with that kind of innovation. Another one is HPC. High growing market, we're leading in that space. What we're doing in the storage flash space, we rebooted, and rebranded our services organization, it's not called Pointnext. We want to help our customers point next to whats' next for their business. When you look at the Edge, just amazing innovation happening there, whether it's Aruba technology, whether it's what we're doing with all of our Edge compute solutions, so just a tons of things happening and then when you layer on top of that all the acquisitions. SGI, we're already the leader in HPC, we have 140 of the top 500 systems, SGI makes our position that much stronger. That's a hot market, it's growing at six to eight percent. SimpliVity, when we brought our capabilities, our UI from our technology, combined it with the data services from SimpliVity, we now have the leading HC solution in the industry. When you look at Niara, that gives up additional capabilities at the Edge to help secure that. When we look at Cloud Cruiser, we can help customers understand and balance what's happening across their workloads. And then Nimble gives us just an amazing portfolio across storage. We're really the leader now in the storage space when you look at the ability to dress almost any use case, from MSA to SimpliVity, for customers looking for more of that hyperconverge play, to Nimble, to 3PAR. Our strategy, super simple. Make hybrid IT simple, power the Intelligent Edge, and it's not just the compute, it's to bring the analytics so that we can translate insight into action, and really to bring the services to help our customers on their journey. And those services are our Pointnext services complimented by our partner services. So, you know what, we're fired up, we're excited, there's a lot happening. >> You guys got so much going on and we've documented the whole spin merge thing 'till the cows come home, we've already done that. You guys got a lot going on, a lot of customers are talking a lot of people are talking about you in the industry, at an industry level, certainly at a partnership level, you guys have always been customer focused. We heard that, you mentioned that, they kind of want to know: what is HP going to do now? You're going to put the stake in the ground, they want to know what's happening, where is the phoenix coming from out from all this decoupling, and more agile messaging, it's a lot of corporate governance, corporate development, I get that, what's next? When are you guys going to put the stake in the ground, you going to be aggressive, when are we expecting to hear from Meg Whitman? >> This week, right, you're going to see it this week. I think that's why we're so excited, this is our opportunity to bring our story together and talk about the innovation and the outcomes that we're delivering for our customers. We are playing offense, and you're going to see that this week. You know, I think one of the themes about this whole week is really about outcomes. I just hosted a panel, with four amazing customers, we had Dreamworks on there, we had CenterPoint Energy, we had CallidusCloud, and I had one more, can't think of it, Merck. And just amazing stories in terms of their digital transformation journey and how HPE is helping to enable that. You're going to hear that on main stage, we're going to have additional customers, Symmetry, others, talking about their digital transformation journey. So, we're really fired up about the main stage, and the story that we're going to get out today. Backstage talking with the executives, they're ready to rock and roll. You know, we know we have a great story and we need to package it, we need to send it out there to the marketplace, and that's what's going to happen later today. In addition to the outcomes, and I think that's what's different about us maybe from some of our other competitors who come to these similar events and just have a bunch of products, we're really talking about how our technology is enabling outcomes but you're going to see a lot of innovation today as well really themed along our strategy. We're going to highlight and roll out the next generation of our compute experience. We're going to talk about how we're delivering the industry's most secure industry standard servers. That's complimented by a whole set of announcements we did last week on our storage portfolio, and the software defined space updates to our synergy solution to HP OneView, and then we're going to be previewing our multi cloud hybrid stack, which will be available later in the year. When you look at the edge, new campus solution, core solution, so what we're really doing is if you think of a data center course which we're bringing that to the campus, so we can essentially now manage from the ceiling, to the side, to the floor. So we're bringing all the capabilities. Asset tracking capabilities coming in as well. Pointnext, we're bringing in new innovations to the marketplace around Consume. Jason, maybe you can talk a little bit about some of the IOT Edge stuff that's coming out as well. >> Yeah, I mean we think, a core part of our strategy is to power the Intelligent Edge. We think that's where all the innovation is going and increasingly, you know, we think about data and getting insights from data, right? Going forward, we're going to start thinking about how do I take data and put it into action, right? The Edge is a place, and there's lot of different places that we can bring technology to bear to put into action and create value and so, tons of examples of what we'll be talking about with customers and really interwoven within that are the need for analytics, you know, big data, high performance computing, having a renaissance because of that, and the need for hybrid computing right because the stuff needs to be secure and it needs to be driven by applications, and so it really is a great way to try to exemplify why our strategy is the right strategy and why it's a winning one, because those are the unique elements that are going to power this world going forward, and we've got 'em. >> 43% of data will be analyzed at the Edge by 2020, so think about that, right. >> Yeah and we actually think that it'll be much higher over time, that moving around all this data is going to be challenging, I know you're working on the speed of light problem in the labs, and that number I think will increase. So, I wanted to ask you about messaging because messaging in very important. It clarifies your vision and it underscores your relevance to customers and previously a lot of the HP and now it's HPE, messaging was very product centric, and one tended to get lost in that. How have you sort of transformed your messaging architecture to address things like outcomes and business impacts. >> Yeah, you know customers today, it's really about outcomes, right, so technology matters but if you just look at making hybrid IT simple, as an example, that's a easy statement to say, hybrid IT is not simple. So when you, think of the messaging though, of how we're talking to our customers about that it's really at multiple different levels and let me give you a couple of examples. It's, first of all, the services from Pointnext, how do we come and engage them, and help them characterize their applications, understand their environment, and ultimately give them a roadmap with the right mix of technology, not only for today, but for the future. So, that's an example of leading much more with services in terms of our Pointnext services, in terms of how we're engaging our customers. Getting very disciplined in terms of when you think about okay how do I want to run my hybrid IT environment? We believe it runs best on a software defined infrastructure solution, Synergy gives us that. So, customers are telling us, hey I want to have more on PRIM, or I want to be able to run my applications on PRIM but I need the same experience that I can get from a public cloud, we can now do that with Synergy. Fully programmable, we're seeing amazing interaction with it we have almost 400 customers engaging, and that pipeline is continuing to grow. And then I think the third part of it, when you talk about solutions, again it's not just about technology, it's how do I want to consume this, right? So, we're hearing from our customers, you know, I need, not all of them want to just buy it from us and install it. So, we do amazing things here that we probably haven't gotten out to the market, and you're going to see us get a lot louder this week about that. For example, through our flexible financial services organization, we have amazing capabilities to really engage with other parts of the line of business, the CFO, and talk to them about how do you really want to finance this, what kind of business relationship are you looking for? With Flexible Capacity services, we bring amazing capabilities to help our customers get a public cloud experience on PRIM, so it's sitting on their environment, we're managing it, they only pay for what they use. The other part of it is, it is customers are telling us increasingly, hey you know what I want to actually have a network of service providers that I can get services from. We have done that through our Cloud28+ and our service provider partner ready program, we have a whole set of service providers optimized for infrastructure, for applications, many of them are located close to our customers, so just a few examples, I think of how we're trying to bring this all together, and a solution message is really elevating it and saying: what is the outcome you're trying to drive, starting there, and then looking at engaging them holistically across all of that. So you're seeing more and more of that. Our demos highlight that, that's the stuff we're trying to highlight at the show. >> Dave, can I pile on to the message piece, too, as well? His messaging guy here, for Jim. You know, there's a lot of noise also out on the marketplace, and I think one of the keys is the advantage of being a more focused company now, we can be much more simple, and forthright and direct in our messaging, right, in terms of who we are, what we're about, what's our strategy, what are the elements that we're putting in place to execute that strategy and it's I think it's really important because you don't get but 60 seconds, right, in front of a customer, or to grab their attention off a Twitter feed, or whatever and so, simplicity is really really important, and I think the advantage of an event like this is it brings our strategy and that message to life, I mean it's three dimensional out there right. It's living and breathing, we bring the customers forward first, that's the lead of every message because that's what other customers want to hear about, what are you going to do for me, right? >> Well, lets talk about the messaging and how it translate, from as I always say, if you got the sizzle you better have the steak, to use that old expression. Just as a random example, the user experience is changing significantly in IT, I mean yesterday I was delayed coming in Southwest coming from Silicone Valley and, you know they sold my seat, they didn't have to drag me off the plane, but you know I'm getting some help in the analog face to face but I got on Twitter, had to DM Southwest, instant channel to Southwest. That proves that the interface to technology in a digital business is changing. Now IT is transforming in a similar way, how are you guys taking the messaging of simplicity at the same time as the product evolution is shifting and architectures are changing. The people who have to consume and manage this stuff, their work is changing, so how do you guys talk about that because that's really where the meat on the bone is sitting that's where the rubber is hitting the road, your thoughts? >> I'll start, and maybe Jason you can pile on, you know I think Jason poked at it, we are a much simpler company today, so our strategy is very clean. It's to make hybrid IT simple, it's to power the Intelligent Edge, and it's to bring the services to help our customer go along that journey. So just starting with that simple message means that we can get out whole organization, our partner organization, on message in terms of what we bring and how we can help them to do that. I think the other part this that's really important is we view innovation today as really a team sport, and as we become more focused, we're actually leaning in a lot harder to our partner ecosystem. Whether it's our traditional partners, like Microsoft and SAP, whether it's new partners like Docker, Mesosphere, you know bringing the containerized environments, or actually curating a new set of partners for the future with Partner Next. Because it is about getting it down the simple thing of what's the outcome you're trying to drive, what's the technology, and the ecosystem and how can we be the company to help bring that forward? And I think that's a lot of the simplicity that you're going to see. You know on stage later today, I think why we're so excited about this is, you know you're going to hear Meg talk a little bit about the journey we've been on but more importantly the outcomes that we're delivering for customers and then what we're going to do is we're going to feature three customer scenarios, talking about what they have done, what their journey has been, their outcomes, their experiences and what they can do today, and then of course, how HP technology is enabling that. >> We had in our opening, Dave and I always talk about this, because we love the shiny new toy. Certainly I'm from Silicone Valley, he's from the east coast but the reality is that all this stuff about declining markets here and there is always a shift to another growth market, even on PRIM, you know, people might buy and consume and interface differently with technology but it doesn't mean that the data is slowing down, it doesn't mean that the value creation is changing, it's shifting. So I think that has really been something that I think you guys have had online, maybe lost in some of the tactical things but, you know, from new style of IT, to this, it's been kind of a cadence that you've been on it's not like you guys are groping for messaging. >> What goes down, yeah, and you can't just snap your fingers and be the transformed company that you want, right, but we're moving at break-neck speed on that and it does all go back to the advantage of that strategy, and the world you just described, right, you want to be nimble. You know, there may be something next month we've never heard of that disrupts the entire container market, right, containers become oh that's so yesterday, we want to be the company that's ready to pounce on the next thing, right, and we're geared to do that. You know, competitors - >> John: (mumbles) containers in microseconds is kind of a big deal, and it's coming out of the labs. >> Well you know, the other thing, I want to just add, so you talk about customers, you start with the customer the technology business is always moved faster pretty much than any business, but now, every customer is technology company, and so they're accelerating the pace, so you've got to accelerate that pace with them and be that provider. Digital transformation is all about data, it's all about becoming a technology company. So what's the message to your customers in terms of your role in helping them accelerate their transformation? >> Well, I think you pretty much hit it, right, in the statement that I use is digital business is technology. You are not going to seed with your digital transformation unless you have the right technology foundation and that's what we heard from those customers on the panel. It's about speed, it's about flexibility, it's about having the right technology that enables me to deliver services back to my internal clients at the speed I need to do it. And you know, that's where our innovation is really focused today, and that's why we're seeing a lot of customers coming to us and saying I want to understand how you did it for CenterPoint, or for Dreamworks and how we can take advantage of that. The other part of it is, technology is a big part of it but it's also the learning and the expertise that we can bring to actually make that technology work in that customer environment - we know how to do that. We're proven in doing that, and I think that's something because we're close to the technology, we not only have the right innovation, we have the right expertise to make it work for our customers, and that's important. >> I don't even think it's early innings either, Dave, I think it's not the game hasn't even started and I think you know one of the things that we believe and we're doing some research on is, we think asset evaluations is going to be completely data driven. Data will be an asset and that will impact the evaluation mechanism to >> Dave: Data is the new currency! >> John: To companies' value, so I think the shift is so early. So, riding the wave, guys thanks so much for coming on theCUBE we really appreciate it. Looking forward to the keynote from Meg Whitman to hear the messaging. Congratulations as you guys continue to - >> Dave: We're fired up! >> Jason: He's fired up. >> Dave: There's a lot of energy, Meg's fired up >> Jason: She's going to bring it today - >> Dave: Antonio is fired up, there's a lot of energy at the company, and you know, we're just excited to get our story out and engage customers. Thanks guys for the opportunity. >> Live here from HPE Discover, this is theCUBE's exclusive coverage, we'll be back with more live action. Three days of wall to wall coverage after this short break. (electronic music)

>> Announcer: Live from Las Vegas, it's the CUBE covering HPE Discover 2017. Brought to you by Hewlett Packard Enterprise. >> Hello, everyone, and welcome to the CUBE's special presentation of HPE Hewlett Packard Enterprise Discover 2017. I'm John Furrier and my cohost Dave Vellante. For three days of wall to wall coverage. This is our intro section of our three days of Hewlett Packard Enterprises transformation and coverage. This is our seventh year covering HPE Discover, formerly HP Discover after the split. Lot of commentary today. We have seen HP over the years transform. We've been watching this, sort of a front row seat to HP, now HPE, really getting hammered in stock market their last earnings again didn't meet expectations, but this is not a quick turn around. I mean, this is a market place that's shifting. HP's had their plan now for multiple years. We're going to cover it for three days. But interesting. The world is turning. You had tweeted this morning on a Twitter storm you put together @dvellante, twitter.com. So it's Dvellante. Everyone should check it out. But it really highlights it. True private cloud, or private cloud, cloud has impacted everything. HP's kind of shifted their cloud strategy. It's becoming clear what they're doing, but private cloud, true private cloud, is legit. It's a 250 plus billion dollar market opportunity, as you guys have put it out on wikibond. Hybrid cloud is very relevant, and on the horizon is multi-cloud, the ability for customers to use multiple clouds. And on top of that we have machine learning, AI, and a myriad of things. Marketplace is shifting significantly, HP has been transforming significantly over the past five plus years. Your thoughts this year at HPE Discover and marketplace conditions and are they poised for success? >> Well, John, we're in the fifth year now of the turnaround that Meg Whitman initiated, and I think it's the light at the end of the tunnel year. HPE-- We've said many times at theCUBE that HP has the strength to grow. Well, it's certainly shrunk. They're about a 50 billion dollar company with a 26 billion dollar market cap, and there's a way to eek out some growth. If you separate all-- Call it Remain Co. Like the remaining company. Take out the software, take out EDS, take out actually tier one, tier one customer who's-- who's not buying as many servers as possible, or as they had previously, and the company grew about one percent. So what you're seeing, John, is some quarters HP grows a little bit, some companies it shrinks a little bit, but essentially it's facing what most legacy hardware companies are facing. Legacy hardware's down, everybody's scrambling to what we call true private cloud, which is essentially hybrid IT, trying to mimic the public cloud. And then HP adds in a dose of IOT at the edge, and then, really importantly, services. Services have never been more important for this company, and that is what I called earlier Remain Co. The remaining HP. Once it jettisons the software business this fall, that's what will be left, basically a 50 billion dollar company with about 55,000 employees. >> I was looking at a-- some IOT stories just last night, and a Business Insider article came up. It was an image, and it had listed the companies that-- by average age. And you had, obviously, Facebook, average age like 28. HP was at the highest end, like 39. And I want to bring up this notion of changing market because HP has always been customer focused, so the question is, if they are truly customer focused, as is Amazon, for instance, we talked to Andy Chasey, he talks about that all the time. And the context of where you've been and where you're going, historical legacy, declining markets, say servers for instance. And where you're going. It brings up an interesting point. And notable is recently Amazon web services hired Gosling, the founder of Java, which had a big conversation on the internet around age. A lot of the winners are older systems guys. So what's interesting is I actually look at that Business Insider article and saying actually age is a wisdom point now, because right now HP's got to solve customer problems. In addition to transforming themselves, they're looking at a customer base that's changing their requirements, so having experience is actually a good thing, as pointed out by some of the big leaders right now in hyperscale are old m systems guys. This is an opportunity for HP, and I think that's where I want to get your thoughts on. Are they customer focused in your mind, and if they are going to be, continue to be, what should their customer focus be? >> Let's talk about what customers are doing. So, first and foremost, customers are deinvesting in non-differentiated, you know, hardware maintenance and provisioning, okay. So they're shifting IT labor from provisioning luns and servers into digital transformation initiatives, so that's sort of one piece. The other pieces there as they're shifting those resources in places up the value stack. So it's applications; it's, as you say, digital transformation services; it's new IOT activity. So they're only investing-- from the HP standpoint, HP's an infrastructure company. They're only investing in infrastructure that looks like public cloud and can focus on hybrid. So are they customer focused? Yes. And what are they doing there? So they're investing in MMA, they're doing some MMA tuck ins. They're focused on develop-- delivering platforms with an API that are essentially programmable infrastructure. And very importantly, they're in a low margin business now. It's sort of low 30 percent gross margin business. So they have to get volume. How do they get volume? How do they reach those customers? Partners. So you are seeing a new partner emphasis. You know, are they customer focused? Yes, but they're really right now partner focused to reach those customers and increase their scale and coverage. That is a critical difference between the new HP, not that they always didn't have partners, now partners are critical to their success. >> One of the things that's the theme here is simplifying hybrid IT and I think from a customer standpoint, simplifying that is going to be critical. At the same time, creating new services opportunities. So I want to get your thoughts on the top story, at least from my perspective, here at the show at HPE Discover, and that is, is it better to be big or small? And HP has a strategy of a collection of small, nimble, agile business units. Dell EMC, for instance, has a strategy of being big and using leverage and supply chain and what not. Two different strategies. We pointed that out on the web. Certainly we've heard a lot of different approaches. Your thoughts on HP's strategy vis a vis bigger and better, or smaller and nimbler is better. >> Well, HP's not small. Hewlett Packard Enterprises is still big. I mean, it's a, it's a company that's twice the size, or more, than EMC was at its peak. So it's still a very, very large company. The difference is, John, I think they're focused. So they really are focused on hardware and infrastructure, the support, you know, the digital transformation, whatever you want to call it. The big question I have, John, is now that HP is getting rid of its software business, its outsourcing and EDS business, what is HP going to do with regard to software and services. So, they reinvented the whole services organization. The big question mark for me is software. Will they get into this, what you call inter-clouding business? Software to manage multiple clouds. It's a wide open space, everybody's going after it, and I haven't heard much from HP there. So what is their software strategy? Now, the other thing I'll add, is the good thing about being smaller is that it's going to generate cash for them. So they're going to get, going to get cash out of the spin merge with CSC. They're going to get cash out of the spin merge with MicroFocus. And you've already seen HP become more aquisitive with the Simplivity acquisition, certainly with Nimble recently, previously the Aruba acquisition, and some other tuck ins. That's critical in order for HP to reposition and continue to grow. >> Yeah, and my take on HP right now is they got to be more assertive. Their voice in the marketplace, at an industry level, has to be very assertive and relevant. I think that's something you've got to put the stake in the ground and hammer that home. I think we got the piece parts, and I think the spin merge is not a "they're getting out of that business." They're just decoupling from the monolithic entity that was HPE and creating kind of cohesive entities. And I think there's a strategy, in my opinion, that looks really strong there in the sense that, hey, at the end of the day, it's going to be a services game. And if you look at the IOT Edge, to me that's the tell sign of the marketplace. As the value shifts from IT-- So, simplifying IT, having true private cloud, having some hybrid pathways for IT, maybe a declining market from a service perspective, but simplifying that and operationalizing that and shifting the value to the Edge with services is a huge opportunity for HP. This is something that not a lot of people on Wall Street are kind of rocking at this point. But the value shift from IT, centralized IT, to a distributed kind of network effect is a really interesting play. And I think this a bet I think HP's making from my standpoint, and that's where the intelligent Edge piece comes in. If they could nail that, and layer on the services, and bring real value paths for customers with outcomes that are, not pie in the sky-- Sure, they throw some AI in there, machine learning, it's all relevant. Getting into open source. Taking that labs machine and memster technology and bringing that out at an appropriate timing. With the services in place. I think that's a good strategy for HP. >> Well, you mentioned Wall Street. Look, Wall Street is very tactically focused on the quarter and the margin decline, and, you know, D-Ram prices doubled in January, okay? So a company like HPE is going to get hurt by that. So that's head winds for these guys, these currency head winds. The stock, the price will go up and down. But the point I want to make, John, is there's a new competitive reality. CIOs have woken up to open source and cloud. And as a result, we've emerged into a new competitive dynamic where HPE is competing with Dell. It's competing with China, and it's competing with AWS. And it's one different-- Two differentiable advantages or services, you know, clearly HP's doubling down on services. I'll actually add a third. The second is partnerships, and the third big one, which is green field, is an ecosystem around IOT and what they call the intelligent edge. >> Well, Dave, great commentary. My, again, my feeling is customer focus at an industry level, having the right product mix that's relevant in the, for the solutions customers want. And also their partners. Leveraging that partner network. Really going to be a two pivot points for me. I see that as great leverage for HP. At the end of the day, everyone talking about declining market of servers and storage. I actually don't see that. There's more computers available now, more storage available. The key is can that shift to true private cloud, which again is a 250 billion dollar market, partly declining. And hybrid cloud is certainly growing. So, declining and growing, I mean they're all different perspectives, and I think HP's messaging here-- Come the end of the show, we're going to look at that and understand and impact and unpack that, that analysis. So, I'm Jeff Furrier, Dave Vellante. Day one of coverage, of three days of wall to wall coverage at HPE Discover 2017. More live coverage after this short break. (upbeat music)