>> Narrator: Live from Las Vegas, it's the Cube. Covering Informatica World 2018. Brought to you by Informatica. >> Hey, welcome back everyone. We're here live, it's the Cube. Exclusive coverage of Informatica World 2018. It's our fourth year, exclusive coverage. I'm John Furrier, your co-host of the Cube, with Peter Burris, my co-host and chief analyst at Wikibon, and SiliconANGLE, and the Cube. Our next guest is the CEO of Informatica, chief executive Anil Chakravarthy, who's back again for his fifth Cube appearance. We went back all the way to 2014 at AWS Reinvent when cloud was on the horizon. Now you running a really high growth company. Congratulations. It's great to see you. >> Thank you. It's great to see you. Great to be back on the Cube again. I appreciate it. >> One of the things I want to point out, you know, we're independent, we want to point all the things that you guys should be working on, but I got to say, you guys have done an amazing job. Executing on the product front in a market that's growing and changing erratically with data, and not a lot of people got that. Amazon was early on we saw them executing. They were misunderstood. You guys are not misunderstood anymore. >> Yep, I appreciate that. >> Data is at the center. Congratulations. >> Thank you. I think one of the things that we've learned over the last 25 years, 25 years old this year, and you got that in the sign behind you, is there is a few things we are really good at. Data management is what we are really good at. Now, it just so happens data is everywhere in all kinds of platforms, and we want to make sure that wherever our customers are we are there as well to help them in data management. >> So, let's talk about what's going on. So first of all, a lot of interesting things here going on. One last year, we talked about, data lakes, data swamps. This year it's about the enterprise catalog and all the goodness, MDM, and the things you guys have done, kind of check check. The catalog brings in the notion of the full visibility. And then you got the multi-cloud hybrid-cloud adoption and the announcement of Azure. This is bringing in a new era. You called it data 3.0 up on stage. What is data 3.0? Can you take a minute to describe the vision and what does it mean for your customers. >> Yeah, data 3.0 is the name we are using to talk about the generational market disruption that's going on right now. If you think of what's changing in the data world, there are multiple trends happening at the same time. Volume of data doubling every year. You have a lot of new types. >> Six months. >> Well, for us too, the cloud is six months, but across the industry it's about a year every year. Still faster than computing in fact. Faster than Moore's law. Then, you have the variety of data, all kinds of data. You have the velocity of data, all the speed at which data needs to get processed. All the new techniques of processing data, like AI and advanced analytics and so on. And if any single one of these was happening that would be a big trend in itself. Everything happening at the same time, that's the generational market disruption and that's what we call, I said look, it would be easier if we gave it a name, and that's what we call data 3.0. >> So, you know, you just made a really great point. And I want to highlight it and suggest, again, looking at the board, where are the next generation of innovations going to come from? It used to be that we relied Moore's Law, double performance every 18 months, and in so doing we could put more software into it. But what you just described is doubling the amount of data every year, faster than Moore's Law. Means that it's inevitable. We have to move more of the innovation up into software, especially software that manages data. >> Absolutely, right. I think there's, just like you had said, the rate of growth of data being so much faster than even the rate of processing power growth means a couple of things happen. First of all, you're going to move more data into the cloud because in the cloud you can expand horizontally must faster, so than you can ever do in your own on-premise. So that's going to happen. The second big thing that's going to happen is as data gets into the cloud and people are using all these different types of new data processing techniques to your point about the catalog, if you don't have a fundamental catalog that tells you where your data is, who's using it, what it is for etc., you just lose control. You just cannot keep in control of your data. And so what people are realizing is as they do new business initiatives they got to have the data catalog. They got to put in place the data catalog and then let the catalog expand. >> A horizontally scalable cloud. That's a really significant point. And this has been a customer challenge, right? So, we're now in the obvious mode of the cloud is there. Azure, you mentioned Microsoft is growing significant. The shift has been made, everyone kind of gets cloud. But the cloud scale is still the pressure. Now you got data coming in, into the cloud scale, and you got things like GDPR, which is a shot across the bow saying okay, now you got to start thinking about compliance and management, and growth. Kind of a lot of things being juggled there. How do you see that unfolding, because it's challenging for customers? I mean there's a lot of things going. A lot of moving parts. >> The way I think about it is, think of this way. Customers have been working with databases for a long time. Over 50 years right now. And the first generation of databases, customers used to say, "Look, I just need a database "that runs all the time. "I can't have a database that crashes "every two hours or so." It just needs reliability as the first thing in a database. The next thing people started thinking about, once reliability was a solved problem, was they said, "I need scale and performance. "The number of records are increasing, etc." Once these became design principles databases started to become more and more robust. The only way to solve the kinds of problems that you mentioned today is every new database that you think of, whether it's for structured data, unstructured data, any kind of data. And you think of a database, think not only of reliability, performance, scale, also think of connectivity, governance, security, privacy. All these need to become design principles for whoever is thinking about the database, and that's what we mean by the catalog. It's the catalog helps you put the discipline in place. When you start a new database, register it in the catalog. That way you know what you are doing with the database. When you set up a copy of a database, put in the catalog. That's what we mean by the discipline. That way you can track. Tomorrow if you say, look I want to know where my European customer data is, just go to the catalog and it will tell you. >> So, I want to build on that. Actually, many years ago when I was first screwing around with databases, one of the things that was explained to me was bring in a database the application developer no longer has to know as much about the underlying infrastructure. >> That's correct. >> Because the data base administrator will take responsibility for how the data got spread on disc and access paths and all that other stuff so the developer could focus on the development. Now when we think about the cloud and all these other technologies and raising things up the catalog allows developers to increasingly focus on how they're going to use data. As opposed to the process that they are going to build. So we were talking about his earlier with a couple of different guests. Microsoft and when Rohan was here. >> Right. >> And the idea that ultimately we're talking about a data-first approach to thinking about how we create application value. >> That's exactly right. And to your point, I think the principles have not changed. What has changed is the way that you apply those principles. Which is you take a data-first approach, but then that's what the APIs let you do. The APIs expose the data to different applications and users. They don't need to know how the processing is happening. So today the data might be processed through Spark. Tomorrow you might say I got a new engine that processes it. They don't need to know it at the application level. At the application level, it's exposed through APIs, and the get to use the APIs. >> So, if you think about, from our perspectives, sorry John, when you think about it from our perspectives, we've always believed that digital business means something, and the difference between business and digital business is digital businesses use data as an asset. And a digital business transformation is the degree to which you are transforming, re-institutionalizing your work, reorganizing around data as an asset. >> That's right. >> So very, very important concept. Challenging for a lot of CEOs. >> Yeah, exactly. >> So look. Informatica's a software business, which means in many respects it has a whole bunch of data assets associated with it, but you're engagement model hasn't always been data, your service model hasn't always been data-oriented. As a CEO, is Informatica more of a digital business today, >> Absolutely. >> And if it is, how would you advise other CEOs to think about this kind of a transformation? >> Yeah, let me just give you the kind of the intelligent disruption we've gone through, because we were a software business, we're a cloud business today. And that's the transformation of the digital business-- >> Peter: Product to a services-oriented approach. >> And even in the product, our business model used to be that we basically said look our goal is to try to sell software upfront, go work with customers, make the business case for software, and sell the software upfront. Today we're selling a service which means we not only want to self the software, we want to know how customers are using the software, are they successful with the software, is it doing what they expected, and that is the most notion of land, adapt, expand, and then renew. And that's a much better approach, because it works for the customer, it works for us. There's less shelf ware in this process. So a lot of people, everybody's happy with that. But in order to make that happen, we got to collect a lot of data on whether customers are being successful. >> The business model and the product model's got to be aligned completely and that's really what you guys have done. And is that where people are making mistakes, in your mind, when you see people going to the cloud? That they kind of do it with the cloud, then forget to change their... >> And that corporate, that's exactly right. When you think of this digital transformation or digital business you got to do three things all in sync. The new customer engagement models like ours change from upfront to ongoing. And then there's new products and services, which is all the stuff that we have done around the cloud portfolio. And then there's new operating models, new processes, customer success is a new process that we did not have four years ago. Which is we proactively reach out to customers to find out what they're doing with our software, are they successful with it, et cetera. We used to wait for them to call us. Now we do it proactively. >> But isn't that also one of the businesses of taking a product to services approach, is because you're now establish a relationship with a customer that says, it's not just proactively, you're exchanging data on a continuous basis. In the form of updates on the one hand, but also utilization information et cetera, build a better product, better engagement. >> Exactly. In fact, you'll see one of the packed events here has been what we call the the Ops Insight, or Operational Insight, that's the product we built to do exactly what you said. Get the telemetry data, help customers use our products better. And that's the transformation from a product to a service. >> And we had Toyota on earlier, and they were very complimentary. But the big ah-ha for them was we had this crisis, we weren't connected, but we actually had the data. They just didn't connect at all. So they kind of had it, the answer, couldn't get it. >> And then we're using data excellently in each of the different functions. >> Then we did the transformation, and then they realized, had they gone down a different route, they wouldn't have been prepared for the tsunami of telemetry data coming from the cars. >> That's exactly it. >> So now, again, this is not going away. This is going to to be the pattern. There's going to be a new set of inbound data coming in. How should customers prepare for that? Is there an ingestion mechanism? Is that where you guys do the cataloging? This is kind of the important, headroom question. Where's the... >> There's different points depending on the style of the organization. I often ask questions, what is the nature of the culture of your organization? Do you guys work top-down better, bottom-up better, how do you work? So somebody who says looking at it, we actually work bottom-up really well, right? Top-down dictates don't work really well. Then I say to them, why don't you start and profile the top hundred data elements that really matter for your business. So if they're an insurance company, a policy number. That's one of the top hundred data elements. A claim number, that's one of the top hundred data elements. Just identify the top hundred data elements, and then just tell yourself that you have a consistent business definition for that data element, you have a consistent technical definition, you know where the data resides, et cetera et cetera. Just start bottom-up. For some companies that works really well. Other companies are more like, no no no. We work more better top-down. Then you start with what is your strategy as a business? How are you going to transform yourself, who is your competitive threats, and so on. And then you go through what are you doing in terms of transformation, new operating models, new customer engagement, et cetera? And then translate that into a data strategy, and that becomes a data architecture. So I think it depends on the style of the organization. Some of them are trying both and meeting in the middle, but what I tell customers is based on your culture, based on your style, there's different models that work. >> Great relationship with Microsoft announced here. Scott Guthrie's on stage. How's that relationship going? I know it just didn't start yesterday, because there's deep production integration, shipping, it's not GA but it's previewed shipping soon. Couple weeks coming, or months. By September, I think that estimate is. Ballpark. Where'd this come from, how you guys doing, can you just give some color to the Informatica, Microsoft, Azure relationship? >> Absolutely. The relationship with Microsoft itself has been going on for a very long time. We have over 2,000 common customers with Microsoft, so it's something that especially on-premise, has been something that we have been working with SQL server and other Microsoft products for a very long time. The relationship specifically with Scott and with the Azure team started in 2014. So we went up there to Seattle just to learn about what they were doing with the cloud and so on. We were actually pretty impressed. We said, look, this is clearly the new Microsoft. This is the Microsoft that wants to work with partners, that wants to be a true enterprise player, and we said, you know what, this is the kind of partner that we want to bet on. So we made a few proactive investments initially. We, at that point, which was not clear that Azure would take off like it did. But just like you mentioned with Reinvent, we said these guys are really clearly betting on it. So 2014 was when we started making the bets on Azure, SQL data wheelhouse, et cetera. And that was when it started growing. And in the last, we have obviously seen the hockey stick now. We have 200 or so enterprises. >> Yeah, completely top-down, said we're doing that in cloud. Everyone's in line, it's beautiful. The growth has been there, the stock was the... I remember when it was trading at 26. I think it might have been about that time. >> Well you look at it now, exactly. >> So you're really confident that this is going to be a positive impact for customers? >> A very positive impact. Because with them, you see both the on-premise, we have clear synergy and partnerships with them, and in Azure as well, we have the clear partnership and value proposition with them. >> And let's be honest. There are not a lot of times when betting against Microsoft turned out to be the right thing to do. Maybe with phones, but that's about it. >> There's some things there, but anyway. I want to get to the company question. You're the chief executive officer, you're leading now a growing team, growing company. Talk about the culture, because you guys have always had a culture of innovation. Although private equity took you over, there was a story there, but I really want to get at the key points in the company, and talk about the R&D. Because you talked about bets. You bet on Amazon. We were there in 2014 with you. We say you there, and we saw Azure. You guys sniffing out the good tech. You guys are smart. But you got to put the rubber to the road for investment. Where's your priorities? Talk about the R&D. >> Yeah. Just to set the context, when we went private, we went private with the clear understanding that we would transform the company. We saw the potential for the company but we also knew that changing from a software company to the cloud company that we just talked about, that was not easy to do as a public company. Obviously there's a lot of investment required, plus there's some unpredictability. >> Earnings, and... >> We said look, we went private with the explicit aim of transforming the company. And the investors, our sponsors, had the same goal as well. You know, sometimes there's a misperception that all PE is about cost cutting. >> But most are. >> Exactly, and that's just not true. It's like you have to look at every PE form and every PE deal, and a number of PE deals that are growth-oriented. Because they know that, hey, with the investments we're making, ultimately if you can get a company to grow, the valuation is way better than you can ever get through just cost cutting. They saw that potential in Informatica. We worked closely with them to define the plan that we've been executing on since 2015. By the way, Microsoft and Salesforce.com came in as strategic investors, so when we went private that was a good endorsement for us. And so we've been executing on that front. And so we've never stopped investing in R&D. As a public company we invested about 15%, 16% on R&D. This year we're actually investing 17% on R&D, so we've really done what it takes to be continually best of breed and integrated, that's-- >> And I'll count cloud subscription models there, what are some other priorities can you share? Some of the priorities for you guys in terms of key areas you're getting out front on being proactive. >> Yeah, so biggest priorities for the company are continue to be a clear best of breed product line in everything we do That we believe that we should never ask any of our customers to sacrifice anything when they buy Informatica. It is best of breed. Second clear priority for the company, make sure that we have an integrated product suite. That's not easy to do, when you're both best of breed and integrated. But that's why we invest as much as we do in R&D. The third clear priority for the company is the transformation journey that we're on. All the key parts of the transformation, product portfolio, go to market, business model, customer success, brand. They all have to work in concert. That's where I mentioned the values and the culture of the company. We've really have always been a customer-focused company. But we said look, what really will take us for the next 25 years is what we call the values that are real data. >> I really appreciate your time, I know you're super busy. I have one final question, cause it's pretty obvious. We were kind of speculating on our intros, at our editorial overview is your ecosystem is, I won't say massive 'cause you're growing, but we predict it's going to be pretty big. Given if this continues, the trend continues, it's going to be a matter of time before you start rolling in developers and all kinds of new partners, just global system integrators, on and on and on. What's the strategy for the ecosystem, do you guys have clear visibility on how that's going to play out? Where is global partners or customers? How are people engaging with you guys in the ecosystem? >> We already have over 500 partners, and that's where this focus on being an API-driven, micro-services driven architecture really helps us. That way when you scale new partners, you don't have to do custom work for each partner. And that really helps us scale much faster. In the past we have a 100+ OEMs, and each OEM is to take a little more work because it was all custom interfaces. Now in this new API, micro-services driven world, we can scale to the kind of volume that you're talking about, and I'm pretty confident with-- >> In many respects that is the definition of horizontal scaling. >> Exactly. >> Horizontal scaling, it's the magic of the cloud. Certainly opening up and changing the game. Certainly changing the infrastructure with cloud-native. You're starting to see a shift to a new infrastructure on the internet is all happening with data, cloud, and who knows. Maybe blockchain and crypto will be in the conversation soon. How do you do the MDM on that? That's a hard one, we'll get to that later. Anil, thank you for coming on the Cube. Really appreciate it. Great to see you. >> Thank you for having me, I really appreciate it. >> Alright, John Furrier, Peter Burris here, the CEO of Informatica at Informatica World 2018. We'll be back. Stay with us for more coverage after this short break.

(technology music) >> Announcer: Live from Las Vegas, it's theCUBE. Covering VMworld 2017. Brought to you by VMware and it's ecosystem partners. (upbeat music) >> Welcome back to VMworld, we are live on theCUBE, day two of our continuing coverage here. We've had a great day and half so far. I'm Lisa Martin, with my cohost Keith Townsend. We're excited to be joined by two guests from HPE, who are new to theCUBE. We have Leslie Maher, the VP of North American Enterprise Servers and Converged Systems. Welcome to theCUBE. >> Thank you. >> And Satya Vardharajan, Senior Director of Strategic Alliances, from HPE. Welcome to you as well. >> Oh thank you, Lisa. Thanks for inviting us here. >> Absolutely. So guys, let's talk to each of you, Leslie we'll start with you. Tell us about your role, especially in the converged side for HPE, and what you're doing with VMware. >> Great. So, my role at HPE is I'm responsible for enterprise servers and converged systems. What that means is, really our value products. A couple of my key responsibility, one is our HPE Synergy Composable Infrastructure, I'm you've probably heard, people talk about here at the event. We also have converged products around offerings like SAP Hana, and some of the more mission critical servers. So here a lot of the focus has been on Synergy, and our relationship once with VMware, but also solutions around vSan and vCloud Foundation, where Synergy provides some really unique capabilities. >> Yes. And Satya tell us about your role in alliances, and your GTM strategy with VMware. >> Sure, so I manage the VMware Alliance globally, at Hewlett Packard Enterprise, and this is a very strategic relationship for each HPE. We have a long history with VMware, over 15 years. We've had a great run with VMware. And we continue to innovate everyday. My role at HPE is to make sure that we keep the customer trends in our radar as we copartner and innovate together, with VMware. At VMworld 2017, we've got lots of great and exciting announcements. And we're more than happy to share with them as we get to the discussion today. >> Fantastic >> A big question around converged systems, you guys will have the hyper-converged guys on shortly, but converged systems have kind of gotten a bad rap over the past couple of years. Like, "Oh, that's the legacy." But as you mentioned, SAP Hana systems, what's the relationship between converged systems and Vmware? >> To your point, about seven years ago the industry tried to simplify IT operations by doing converged systems. And that was putting together servers, storage, and networking fabric; and putting it all together for our customers. Where the industry has moved to now, is more software defined capabilities, where not just putting those hardware pieces together but enabling them through software. So hyper-converged as one flavor of that, and we're hearing a lot about that here in the conference, and then at HPE, what we did is we innovated around the best of converged and hyper-converged. Put them together into a new category of infrastructure, called composable. Fully software defined, it does compute, storage, and fabric. And the essential idea here is that you can have any combinations of these elements, through a software defined capability. So it really extends the ability of hyper-converge to multiple workloads. We use this term Composable Infrastructure, in addition to supporting through other products we have hyper-converged. That's where we're seeing the market trend. >> So Leslie, that's a unique concept. This composable concept. It sounds a lot like virtualization. How does the two relate? Can I run virtualization on top of these Synergy systems? >> Great questions. Absolutely. In fact one of the key things with hyper-converged or composable, is the ability to really have virtualized workloads. In addition to that, with our composable infrastructure, we let you also run bare metal, as well as containerized workload. So you have a real range of workloads you can run in one set of infrastructure. And so we can support lots of workloads, different kinds of storage in the environment in fabric. So you have a real range of opportunity. >> Let's talk a little bit about composable and your target market. What is the key message? A lot of, sounds like, flexibility and agility within the technology. What's the key message to your VMware customers that are using the VMware software? >> Sue, with customers who are using VMware software, it's the flexibility. For example, with vSan, we've talked a lot about here at the conference, our relationship with VMware. And vSan is the ability to have software defined storage. And what our HP offerings allow you to do, is to have the ability to scale, compute, and storage independently. So giving you this very flexible environment, to grow your capacity. And then you manage it with this virtualized vSan, software defined storage from VMware. Very simple for our customers to really have a simple operations, and really flexible scale; is what these new applications are requiring. >> As you guys have been talking from a VMware and HPE perspective to customers. How are they receiving this message? >> From a customer standpoint it's very clear. They need to move to the hybrid IT model. And that's kind of the mandate that's coming. They see it on the horizon. But they also want to do it in a very cost effective manner. They want to do it in a very scalable, efficient, and automated manner. And that's when customers look to HPE and VMware to solve the problem for them. And that's where our flagship composable platform Synergy comes in to play. Marrying the benefits of Synergy with VMware's Cloud Foundation Software, which is a very seamless and automated way of consuming a software-defined stack. You bring those two together, what you get is industry's first composable platform, that lets you set up your private cloud, in less than minutes. There also gives you the ability to allocate and reallocate. Again, compute, storage, and networking resources independent of each other, at will. Creating this very flexible platform for traditional workloads, cloud native workloads, private cloud workloads. That's what we're hearing from the customers, they want us to step in, solve this problem. But also give them the visibility on top. We were at a partner panel earlier today, and one of the partners got up and said, "Look. This is all fantastic. You're making the right moves, "You're building the right solutions for us, "But help us understand how you're going to build "That uber layer of visibility, "and more detailed predicative analytics. "To help us get the whole picture. "Because I don't want to use third party tools." And those are the frontiers that HPE and VMworld will continue to work on together, and create new solutions for our customers. >> One of the things this morning that Michael Dell mentioned when he was onstage with Pat Gelsinger, was that Dell EMC and VMware where like peanut butter and chocolate. (Satya laughs) Such a good combination. (Leslie laughs) So one year post combination, has that strengthened the HP VMware partnership with this now umbrella under Dell Technologies? In the last minute or so, talk to us about how that's helped you maybe differentiate. >> Yeah, absolutely. Look, right from the beginning, as soon as the acquisition was announced, there was a lot of skepticism. And that was industry wide. Everybody said, "Hey. How is this going to impact "The rest of the ecosystem?" VMware made it a point, and Michael as well, made it a point to come outright and say, "Look. We don't want to mess with the ecosystem. "The neutrality is very important to us." To make VMware not only thrive, survive, all of the above. So we've seen that in the market. We don't see any material change in the relationship with VMware. Just a few proof points I want to throw out there, we are still the largest OEM for VMware from a product perspective. We have over 500,000 customers together, who make demands on running workloads. Our channel overlap is over 80%. All of this continues to be recognized. We won a lot of awards in the past, the last two years, we won the OEM Innovation Award of the Year. Partner of the Year Award. >> I saw it. I think I may have a photo with you. >> Yeah >> To talk about synergy, pun intended. (group laughs) >> No it is. >> It sounds like it's only a strengthening. >> It is strengthening. 'Cause we took it upon ourselves at HPE, as a challenge to say, "Hey, look. "I know there's a new owner. "But this shouldn't materially change your business, "Because there's so much business at stake." And we cannot ignore the customers. The demand for our joint products is stronger than ever. >> Absolutely. Great, you guys. Thank you so much for coming on and sharing what's new, what's going on, and the commitment to customers. Outstanding Leslie and Satya. Thank you so much. You're now in the category of CUBE alumni. >> Alright, thank you so much. >> That's great. >> We look forward to having you back. >> Thank you. >> And for my cohost, Keith Townsend, I am Lisa Martin. You've been watching live continuing coverage by theCUBE of VMworld 2017, day two. Stick around, we'll be right back. (technology 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. >> Welcome back everyone. We are here live in Las Vegas for SiliconANGLE Cube's exclusive coverage of HPE Discover 2017. I'm John Furrier with my co-host Dave Vellante. Our next guest is Justin Hotard, Vice President and General Manager of the Service Provider and OEM Solutions for HPE, Hewlett Packard Enterprise and Curt Belusar, Senior Director of Service Provider Engineering. We got the trends, we got the market leader, the go-to market leader, as well as the engineering. Guys, welcome to the CUBE. >> Thanks, great to be here. >> Thank you. >> So, obviously the service providers is an interesting marketplace. We've been covering it for a long time and we know how hot NFV is and all the great stuff going on with the network moving up the stack, applications over the cloud. You name it, it's a crazy world. But you look at the trends around smart cities, autonomous vehicles, and movie and media entertainment, smart home, Apple announcing a home pod. Internet of things. This is a right market for service providers, so my first question is, with 5G over the top, these kinds of trends, to power these transformative use cases. Is it really putting even more pressure on the service providers? So, what's the deal? Where are they at? What are you guys doing with the business? Give us a quick taste of the landscape and some of the forcing functions that are helping your business. >> Yeah absolutely, and I think you hit on a lot of the trends driving the growth in service providers. What we see is a very dynamic market where everybody is trying to figure out their business model and build their services and respond to all these changes. What we see is a lot of customers, our customers as service providers, need a lot of flexibility. They need to be able to respond to these changes. They also need to be able to scale. Globalization is a huge trend because I launched something in the U.S. and Uber or Lyft is a good example. I launch in the U.S. Everybody expects to have that service everywhere else in the world. >> And guess what, they say "Whoa, hold on." >> Exactly, exactly. Then you've got issues with data sovereignty, and security, and privacy, and you have to factor all of those things in. These businesses, our service provider customers, don't have time to wait. So, they really see us as a core partner to them, to enable speed and delivery. Curt, you probably can add a few points cause you've seen this market evolve over the last, almost decade. >> I think what we're seeing is a transition to where there's more data out at the edge, and so you're growing both edge data centers and you're growing central data centers at the same time. The percentage of operating expense that these customers are spending on their IT gear is just a very large percent, and so they are all trying to optimize their spend in that space. That means that they're looking at ways to optimize the gear. They're looking at ways to optimize how they deliver the gear out to the data centers. They're looking at reducing servicibility costs and trying to attack it across the board. >> Let's talk consolidation for a bit because early on everybody said "It's just going "consolidate to a few providers," and the exact opposite has happened. >> Yep. >> It's logical. Services have always been decentralized and local and that's exactly what you're describing. How do you look at the market? How do you segment it, and what's you're thinking in terms of the explosion or contraction of this market, in terms of number of players? >> A lot of what we see in the press or what's discussed is, we talk a lot about the infrastructure of service providers, and the largest service providers. The reality is that the market is fragmenting because more and more businesses are moving to an as-a-service model. There's business as a service, software as a service, and each of these customers has a unique business model. How they make money, where they extract value, how they respond to their customers. We really see that trend, and I don't think it's going to change. That's not to say that the largest players in the market won't continue to grow in scale. As we've seen, they've been doing that pretty consistently, but we're still going to see those different services and different values because it is local, it's customized. You think about autonomous driving. There's going to be, you brought that up earlier, right? There's the people that are going to provide autonomous vehicles for consumers. There's going to be people that provide it as a service. There's going to be people that provide services into those vehicles. >> Data services? >> Data services. Content services. We think all of those models will continue, and the economics of one-size-fits-all just don't work. When you look at our product strategy, our solution strategy, including point next and how we go to market. It's recognizing that. We have customers in Europe, for example, that buy what we might consider more traditional data infrastructure gear. A lot of the core products we have in market today. We have customers that want customized, we talk about white-box a lot, but customized solutions, the latest technology. Integrated, optimized for their workload, for their scale, and we run the gamut. A lot of that is because one size just doesn't fit all in this environment. Let alone what Curt was talking about with where they're deploying their technology. >> Yeah, I see the same trends. I think that both the large, public cloud providers are going to continue to grow, and then you're going to see the next tier down is also going to continue to grow. It's everything as-a-service is starting to explode. >> How are the requirements, are they dramatically different? I mean the large guys, they've got massive scale and gimme the stuff and get out of my way sort of attitude. But the second and third tier, there's a lot of customization required. Where do you see HPE being able to add value in that space? >> We're going to see customization at both ends. It's just going to be more customization with the top-tier customers. It's interesting, what you've seen is a lot of the IT skill-sets and people have migrated from some of the top-tier providers down to the second tier and so you see them wanting to employ a lot of the same techniques to go save cost and optimize their environment. When we say customize, there's a very good reason why they customize. They will customize to the extent that it allows them to go lower their total cost of ownership. >> Well that's a great point. Dave mentioned in an earlier segment that all companies are becoming technology companies. Jim Jackson was talking about the digital technology issues, so you have a power law going on. You're going to have it at the head and the long tail of the service providers. Some enterprises, you say enterprise market. You can almost say, okay there's a line. You guys are now the service providers, and the rest are traditional enterprises. In a way, they're SMBs from that old classical definition. The point is, the definition's changing. >> Yeah. >> How does that impact your business and your product offering? >> It's really interesting. I think your point is every company is a service provider, and so we also see this even within our Enterprise customers. They have workloads that are running on Enterprise. They run mission critical workloads, and then they run service provider platforms, and they're looking for that flexibility. They don't want to be bucketized. In order to compete, in order to have a service that might deliver content into their products or provide conductivity into their products for intelligence or AI, they need to have the same cost advantages, the same technology advantages, the same forward planning. Because a big thing we see in the service provider's space, is they buy ahead on technology because they're trying to run the life cycle of what they might need and get that return on investment. We see those same behaviors across our Enterprise customers that are buying as service providers. So there is a bit of a blending of the business. >> Is there a pattern that you can talk to in the marketplace? This is interesting cause if you believe that, which I do, and I think you guys would agree, that everyone's becoming a service provider. But service providers have had a legacy business that had completely different dimensions than say, a classic enterprise. A lot of online. A lot of hyper-scaler's upfront. Now you have data tsunami coming, so are there patterns that this is a little service provider like, that now the enterprises have to deal with. Can you share insight into some of the things that you guys are doing to solve that, and I mean I know the flexibility thing is a key message. Composability, I get that. What are the core customer problems that now look like service provider problems? >> Well, there are a lot of Enterprise customers that are going and starting to stand up environments that look like service provider environments. There's different reasons why they do that. They could need an internal cloud for some reason. They could actually be standing up a service now that they're offering out to the public. The answer is they are all looking for some of the same things in their cloud-like environment. They want consistency in the way that they want to go and deploy and talk to the servers. They want to have lowest cost, total cost of ownership, and that's both on a capital expense side, in terms of what they pay to go buy the actual equipment, but also on the operating expense side. The more that they can make their cloud or their grid look uniform, it becomes easier to service, it becomes easier to maintain. You're starting to see them on a smaller scale perhaps, but employ a lot of the same techniques that are used in the large clouds. >> The business model question too comes up. In the old days, the ones who were online, highly big procurers of gear, servers and storage. Financial services, healthcare, I mean, these are highly online, transactional businesses, and service providers also fell in that bucket, but now as everyone sassifies. Hello! Your revenue model is tied to those services. >> Yep, and it's interesting too because we put a lot of emphasis, I mean by virtue of being a technology company, we've put a lot of emphasis on the tech and making sure we've got the right systems and configurations we're delivering to the customer. The other thing is, it turns out that there's some laws around physics. So power matters, real estate matters, footprint matters. >> Distance? >> Distance. All those things for latency and proximity, and we talked about some of the other elements. But those are actually huge operating costs, huge value points for our customers. So, helping them make sure that they're balancing all those choice points. Because if we get the operating expense right on the tech, but then they can't handle the power, they can't handle the footprint, they've got a different issue. >> Scale's a huge issue. >> They can't scale, exactly. That actually puts a limit on their growth, so there's all these different things that we balance and where we bring value, and it's not just the technology, but that total solution. >> The service provider space has always been a harbinger for what's going to happen in the Enterprise. If you looked 10 years back it was virtualization, and then DevOps and containers, and all that stuff that's hitting the Enterprise now was being done years ago. What are the tech trends that are driving the service provider space now? What are you seeing there that might show us a glimpse as to what's coming in the future? Where are they focused? >> I think that we're seeing continuation and furthering of some of the technologies that we've seen the public clouds rolling out starting to happen with the Enterprise, but when I think from a technology trend standpoint, things that folks are looking at today. We're seeing alternate processors become available this year. ARM 64, we're getting into the second generation of that. We're seeing trends coming like NVMe drives, the ability to pull data off of a drive much quicker. If you're a financial services industry company that wants to transact data real quick, that's helping out there. We're seeing NVDIMM technology that's coming into play, and that's shifting everything. Storage and memory is starting to come together, and so the way that they move around and cache data is something that's going to change. Applications are going to have to change. >> John: Architectures are changing, big time. >> Absolutely. >> What are the drivers behind that? Because you brought up data and memory, and then also, we just had talking to the server, options, lead, and this is a big deal. Memory used to be a constraint that you have to program around. Swapping out, back in the old days, but now it's almost limitless, with the persistent SSDs, speed, and that gives app developers huge flexibility, so this should change the game on the service providers. >> It's all about the data. There is just more and more and more data being stored for different reasons, and the data sets that people want to operate on are just getting larger and larger. And to the extent that we can pull those in and operate on them in a faster way in memory, it helps. >> You guys have a very dynamic market, so I've got to ask the question, what is the biggest way that you guys are riding on the go-to market? And from a technology standpoint because if you believe this conversation we're having, what is happening is, a service provider, of a service provider, of a service provider, is going on because someone may be a specialist in say big data analytics service provider for cars. Or I am a healthcare service provider that's out of scale, so scale becomes now the new differentiation. >> Yep. >> That's the locked-in aspect, but I mean it's not really locked in, it's just they have scale. You can almost envision this channel of service providers. How would that play out, I mean, that would be certainly game-changing. How do you guys rationalize that trend? What is the wave that you're riding? >> I think it all goes back to our customers, and we're doing a few different things. So one is deep-direct engagement with these customers, especially the ones on the cutting edge. To have a early dialogue with them, make sure we're delivering the right solutions. The other thing is actually bringing value, so we do some things through it. We have a program called Partner Ready Service Provider. We bring in, actually from our service provider customers, and this is a global program. We actually then deliver those services cause we have certain customers that might, again back to that mix in a CIO's environment, they might look like an enterprise, they might look like a hyper-scale service provider customer, they may also look like they're a consumer of service providers. >> All three? >> Exactly. Actually being able to do all of that is really important, and we think when we wrap all of that with our service delivery, our global footprint, our supply chain, the ability to deliver products anywhere in the world. Those are all things that give us a solution advantage for our customers. >> Curt, talk about open, the cloud line server portfolio, fast grow in the cloud age is here, open infrastructure. I was just talking to some of the guys in the labs. You've seen some of the stuff at the network layer becoming open-source projects. You almost take the network stack and say, "Oh wow, there's like six open-source projects "that make up HP, Arista, Juniper, and Cisco." Core technologies, yet you have to build your own proprietary stuff around that to differentiate. How does open fit into all of this because at the end of the day, it's going to be an open-source driven software world with the cloud? >> I think there's open-source software pieces, and I think we will get to the point where we have more open standards around hardware too. You've seen OCP, you've seen Open19 launch a couple weeks ago and you're starting to see standards around the hardware as well. I think the open's critical. I think that it is the way of the future. In this space, I think that we, again back to the comment about what the large grids or large service provider customers need. They need uniformity in their data center to a certain extent. It makes it easier to manage and easier to operate. If you just start with that principle, that implies that we're going to have open standards. They're going to want open standards around the rack, they're going to want open standards around the gear, open standards around some of the options that go in the gear. There's going to be open standards from a software standpoint, and it's going to be the companies that go and sell that gear responsibility to make those bullet proof, to make them to the point where they're secure, to make them on the hardware side to the point where you can distribute it worldwide and service it. Open is here to stay. >> We've been predicting on the theCube, I know Dave's got a question, but I want to get this point out. We've been predicting, it hasn't yet come true, and most of our predictions come true, so we're kind of waiting for the signals. Since open compute, we're seeing a maker culture going on, where we believe there's going to be a hardware renaissance, and when I say open hardware, there's really a driver on that. Thoughts on that? Because, this certainly would change the game. You see people trying to do their own servers, but yet they can't get a fab plan opened up, they can't do this. Interesting trend. If software's eating the world, then data's going to eat software, which we believe. Then you might see a really big shift to soft, I mean the hardware. We had Microsoft's Ballmer say at the conference last week, we should have got in the hardware business earlier. I mean, what is that all about? So again, this points to a renaissance. Do you agree? >> Totally. I think you hit it dead on. We see the same thing, and it's a business model shift. It's a different business model than where we're been, but the opportunity to deliver value in open, around platforms, around making sure there's inter-operability, quality, security, exposing performance. Those are all things that are enabled through hardware, and they make a difference, and Curt talked earlier about some of these technology trends. They're very hardware centric because that's actually what delivers the difference in software and data. >> And systems too, and having systems experience is now the new IP. Not necessarily having the fastest board. >> Yeah. >> Yeah, that's right. Having that ability to integrate it and deliver an experience and performance. Those are things that make the difference. >> Curt, your thoughts. >> Like I said, I think that we are going to see more and more open standards around it, and I think it's going to help people scale. It's about putting the systems together, in a open-scalable way. It's also about getting more work done out of the systems. It's kind of a, if you think about through Capex and Opex, there's going to be a work per watt per dollar done. How can I get that best done in the most standard way? And standards are going to have to be there, to enable all these pieces to go together and come together with a uniform look in the data center, which is what anybody who's deploying the cloud needs. >> So Justin, put a bow on this segment. Summarize from your perspective Hewlett Packard Enterprise's cloud service provider strategy. Where can you add the most value? Where's the sweet spot, and where you going to make the money? >> I think what we add the most value in is being able to be a comprehensive provider for all of our customer's solutions, and that's not just the product. It's being able to deliver the specific product or that specific workload or application. Being able to provide that global footprint and supply chain, the services on top of it. So that a customer, when a customer makes a decision that they need help, they've got one partner to go to, and I think ultimately that's where we'll make the value. >> Justin Hotard, who's the VP GM Service Provider, of OEM Solutions, and Curt Belusar, Senior Director of Service Provider Engineering. Guys, thanks for this insight. Great conversation. We love it, we love hardware. We all love software too. All that machine learning out there, there's going to be more and more power available. This is theCUBE, bringing you all the action here at HPE Discover, doing our job delivering a bunch of great services around data and video. Of course, bringing you live stream here. I'm John Furrier with Dave Vellante. We'll be right back after this short break. (techno music)