 from London, England. Extracting the signal from the noise. It's theCUBE. Covered, Discover 2015. Brought to you by Hewlett Packard Enterprise. Now your hosts, John Furrier and Dave Vellante. Okay, welcome back everyone. We're live here in London, England for HP Enterprise, now called HPE. HPE discovers the hashtag. This is theCUBE, our flagship program from SiliconANGLE. 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 CUBE alumni Sargillai, Senior Vice President and General Manager of HPE Communications Solutions, which is NFV, CMS, SDN, essentially Telco, all the stuff going on. Really the high growth here is welcome back to theCUBE. Good to see you. Good to be here. Looking good and quietly building out a pretty big organization you have. Certainly you're a big part of the cloud group which has now got a lot of momentum under Bill Hilf making the decision. Finally, taking the right path, in my opinion, at least staying on no public cloud and building a lot of private. You then moved over after you built that out to now, NFV, and so just describe your organization real quick. Sir, so I think from a market perspective, we at HP see the convergence of telecom and IT as a big opportunity for HP because we have both the obviously strong strength in IT and private cloud and the future of IT, dynamic infrastructure and so on. But also we actually have a big telecom pedigree in our CMS portfolio, which is sort of communications media and solutions. We have the HLRs, the registries, most, you probably can't make a phone call in the U.S. a cell phone call without going through one of our systems. We have a lot of assess capabilities and so on and we run it in a lot of places. We also have the telecom pedigree. So we see this sort of thing between IT and telecom as an opportunity for us and as part of that, we sort of reorganize all our assets under sort of one roof so we can go after this opportunity and we created what's called the CSB, which is the communications solutions business. And under that business, we have the NFV effort. We have the CMS group and we also have carrier SDN, which is part of the acquisition that we did of Context Stream earlier this year. So Meg Whitman tapped you remember we had a conversation a couple years ago when you were looking at this opportunity. It's really an emerging big opportunity revenue-wise for HB, certainly with their install-based and incumbent relationships. But now with the market dynamics, the industry forces, plus the technology forces, we're really pushing at this new area. What is the opportunity for the folks who aren't really following along or that aren't inside the ropes? What are you attacking? What market are you going after? What are the industry forces and what are the technology forces? Sure, we can spend a few hours discussing this course, but in general, if you look at what's happening in the telecom or in the carrier space, right? So telecom and carrier is about providing services, cellular service, landline service, cable to some extent, pretty much any sort of access is through that. They've been building these networks over the last 20 years, very reliable, high capacity, very successful, made a lot of money. But in the last few years, what's been happening is that a lot of the revenue, a lot of the profit of the networks is moving to someone else, i.e. the OTTs over top players. So for example, a lot of the revenue used to make is billions and billions of dollars in text messaging, right? When's the last time you paid for text message, right? Everybody uses WhatsApp or so forth, right? They've made a lot of money on data, but data now is becoming cheaper and cheaper because they got to compete. They're losing their grip on there. What's happening is they're losing the services revenue, the profit of these networks is being taken by someone else. They're still providing, they have to provide more and more capacity, so they actually have to do more and they're getting less for it. Not a good place to be. The good news is... Well, they got to innovate too, they got to, it's like it's an enterprise, they got to get top line revenue up. So the good news is that while, in the last decade, as we all know, right, from talking about the cloud, right, there's a whole new model of how to do things, right, in terms of virtualization, and clodification of infrastructure that allows you to move to a much more automated and much more dynamic environment. But their networks aren't built that way because they were designed before this technology existed. And so now they have to transform to this. And this is what's, you know, NFV network function of organization really is that thing, but it's really about how do I, in the telecom space, pick and choose all the innovations that have happened in IT and cloud in the last decade and leverage them for transforming to a much more automated, much more dynamic capability so then I can provide better services. So, you know, if you want to do a circuit, let's say, these days in a business, right, sometimes you have to wait two weeks, three weeks, I want it in a minute, like why would I want to wait two weeks, right? In the cloud, I can get something with pressing a button, right? There's no reason for that. Things have to be automated. Today in the OSS system, right, lots of people involved, lots of people, very expensive, right? If you have expensive people, you want them utilizing new services, building new services, not operating stuff. It's a huge opportunity. They basically have to rewrite their business from scratch while operating at scale. So, how much of that transformation enables new markets for these guys and expands their time to maybe traditional IT space? I think the first play here is a defensive play because in fact, when you talk about this industry, the industry is somewhat contracting because the CapEx is going down, they're trying to be more efficient, but for HP, this is a huge opportunity because we're not a big player here and it's coming our way because it's coming towards IT and telecom. However, as you're right, right, if they do, if they're playing their cards correctly, this can also provide them new revenue streams because when you started doing things with the phone, when the phone started having apps, all kinds of new things happened. When you can start doing services on the fly, on demand, new things pop up, new things you didn't think about before. But the first step is to get their CapEx under control and to get their OpEx under control and then move to a much more agile environment so they can roll out services much faster. This whole thing means they're moving from where you're today, which is today they have these vertical stacks. So they buy a vertical stack, let's say for mobile, they buy a vertical stack from one vendor all the way down, locked in, doesn't really change much. And they want to move to a horizontal platform. And the way I sort of explain this to people, and again, this is not exactly the same, but it's like, look, remember in the old days, you bought like your chocolate bar phone from Nokia or whatever and it came with a bunch of apps. They weren't that great, but you came with some games, like Snake or something and if you wanted new apps, you had to get a new phone. That's where telecoms are today. You want new apps, you got a new hardware, okay? This is, we're moving to a horizontal platform, which is the platform that HP will provide, will be more like an iPhone. And then on top of it, there's a bunch of apps. You can put any app you want. And that also opens it up that anybody can develop apps. So in the old days, you couldn't just develop games for phones, but now anybody can develop an app. It's very easy. So the same way, one of the ways that the telecoms are going to control their costs is by opening the whole app marketplace to new entrants. And we actually at HP have a whole thing called an Open NFE program that's driving that and creating whole ecosystems so we can enable that to happen. Talk about some of your successes. What have you got? You've been doing a lot of good stuff. Rumor has it around the water cooler. You've got the massing of large organizations, actually three divisions. Can you share any color around some things you've knocked down the market or successes you feel proud of? Well, first of all, I think in general, in the NFV space, I can't really get into numbers, but the revenue growth has been more than we, we had very high targets and we exceeded all the targets. And that's because the market's moving and we're going where it's going. And when you are in something that's going this fast, if you just get on it, right, it's like a rocket ship. So that's been going very well. And that's every different pieces. It's not only software, it's servers, it's storage, it's networking, but that whole market is like on a ramp like this and we're riding that market. So that's done really well. In terms of rolling out NFV solutions, we've launched a bunch of different capabilities, but we are also, the telcos, fortunately and unfortunately, work through POCs, right? They don't just deploy stuff. And so they want to do a POC, they want to try it out, they want to prove it. But we've done over 50 POCs, proving technology with them. Many of them have turned into some deployments. And so we feel we are sort of at the right place as this market is sort of moving. Once you get the POCs, you're in the clear, you're deployed. That's kind of like... In some cases, I mean, a lot of cases. If they work. No, I mean, in a lot of cases they run the POCs to prove a business case and then they'll go back and do a few things. But generally speaking, if you're involved in the POCs, when they roll out the services, which could be two years later, you're in the driver's seat. And so that's what important. I think the key is in a telecom space, you have to have a long breath, which is also an advantage for HP because we're in for the long haul here. And we can invest heavily, build the ecosystem, work with customers, invest in open source. Part of the big piece here is that they want to move to open solutions. They don't want to be locked in. And so we're investing as part of our open stock investment. Obviously, we have a long history there. So we're pushing very hard in this area. Other areas that we've done really well, we have a product called NFV Director, which is used for bridging between the old and the new. Because a lot of their stuff, they have existing OSS VSS systems. You're going to connect it to virtual systems. They don't operate the same way. You got to connect it somehow. They, you know, you're not going green field here. So that product has done really well. Really has a lot of excitement by customers. So I think we feel that we're in a really good position relative to where the market is going. So business is good. You can't give us numbers, but when HP reports numbers in networking, you're in that number somewhere or not. You're somewhere else. I don't want to break your numbers out. We don't break them out. We are in the networking piece. Oh, you are, okay. No, not only. So we break them into different components. I build solutions, right? Some of it will fall in networking. Some of it will fall in servers. Some of it will fall in storage. Some of it will fall in software and so forth. They don't break it out. They break it out at later stage. But this is, you know, this is seven figure. I mean, this is big. But it's pieced. It's going through different parts of the organization. Yeah, it's going through different parts. And the reason we structured it this way is because we're building solutions and you want alignment between the BUs who are providing some of the components. I mean, some of it I'm developing, but some of the BUs are component and the team that's selling it, right? You want everybody aligned. Otherwise, like if they don't get revenue from what I'm selling, why would they support me? So that way you get full alignment across the organization and everybody is very supportive and very interested in growing this market because it benefits them. Absolutely. So if you're a storage guy and I'm selling more and more storage into NFV, you're going to go and do whatever I ask you to do to build the solution for me so you can sell more. So it's got a hybrid P&L or? It is a hybrid P&L. There are some in the CMS piece. It's the full P&L, but it's a hybrid P&L because it's about creating solutions, leveraging technology that we have, some of it we develop, some of it even comes from partners and providing those solutions to customers. So something big opportunity here with legs. Last time we talked, you had sort of described, I had said some people sort of say, well, the 1.0 of NFV really only affects my hardware piece. It allows me to use different pieces of hardware almost like virtualization did for different servers. And you said, yeah, that's true. We got to take care of that. And then it's on to the sort of application piece. Can you give us a sense, Saras, how long this journey is going to take? So you know when a journey starts, no one really knows how a journey ends. I mean, we characterize a journey into sort of four piece parts and they're not perfect of course and so on, but it sort of gives you a framework for looking at it, which we feel, the first part is what we call decoupling. So this is where you just say, okay, I'm going to separate the hardware from the software. And that's largely been done, but the benefits are somewhat limited besides the fact that you can now have, you can use more standardized software hardware. The second piece is virtualization. So this is where you say, okay, I want to run more than just one thing on hardware. I want to run two. Now you can say, well, how hard is that? Well, it's not that simple because there's performance issues. One of the things about NFV is that performance is really important. So it's not like a typical workload in the enterprise where here, milliseconds matter. So running multiple is not that typical, this is where we have technologies like DPDK and other things that we work with Intel and others on to ensure that you can get really fast bandwidth. That's the second stage. That's really where the market is today, but a lot of it is lift and shift. So you take an existing app and you don't really redesign it, you just virtualize it and you optimize the platform, which is fine. Get more efficient. Yeah, it's better, but that's not, that's like when you do, you know, VM vending versus real cloud, right? So then the next phase, which is where we're sort of pushing into right now, it's cloudification. And that's when you really move to resource pools, starting to have apps that are more horizontally designed and so on. But that obviously requires you to rewrite the apps. So I would say, you know, today we're in the virtualization area and people are starting to think about cloudification. The benefit of cloudification is you really start to get operational efficiencies because you're moving to full automation. And then the final stage, and again, these are not, you know, perfect. They could be in different parts, could move faster than others, is what we call decomposition, where you say you move into full microservices. So if you look at, you know, your 50 apps that are running and you say, well, 80% of the functionality shared lets us create a bunch of microservices and leverage that. And you know, again, going back using the same iPhone metaphor again, even though it's not a really good example, you say, look, I give an app on the iPhone, it doesn't do the presentation layer, it doesn't do the communications layer, it's just a bunch of algorithm. You can do the same thing here at some point once you get decomposition. And the steep part of the O-Give curve is between two and three, is that right? Yeah, two and three is where it starts to get interesting because the apps have to be redesigned. And look, there's no right or wrong. It's a question of depending what app you do and what you're trying to achieve. But if you say, okay, well, you know, five or 10 years from now, what's it going to look like? It's going to look like decomposition. How we get there needs to be a business case focus, not a technology focus, right? So how can I get advantages? Where can I get better results? There's no reason to redesign something if you can get what you want in its current design. Why waste your time? But what I always tell people is, okay, but if you started from zero, how would you design it? Sorry, talk about the HP transition. Obviously, it's now official on November 1st. Been operating as a split company prior to that. A lot of big shift, IT stuff went happen, all that stuff went down. They were showcasing on the keynote the first day. The key, the floor here is not built by division. You mentioned solutions. What's your take on the new HP enterprise? What's the vibe, what's your observation? Certainly, people seem relieved that the shackles are off from the noise. I mean, the strategies have been right on track with the, on the converge side. Composals out there. What's your take? Well, first of all, I think, you know, what IT, what HP IT did during this, and all the folks who were working on the separation did, was quite amazing. If you think about, you know, separating these huge company, 70-year-old company, we didn't really notice it. Like one morning, you know, you press the button and within 10 minutes, your computer was now HP, your email changed, everything changed. I mean, again, you can talk about it, but it's like, it was amazing, because we didn't know, look, this whole thing hasn't really affected me. Non-disruptive operations. No disruption. Like I really had no disruption. I mean, some systems were off for a few days, but in general, no disruption. One morning you came in, your email changed, everything changed, automatic. So this is the fact that our IT knows how to do that. That's a skill that is pretty rare. In fact, we're just going to market it now to companies that are doing similar things. So that was amazing. I mean, we didn't, we, you know, we were like, hmm, we'll see what happens, right? We thought, but now we'll have it happen. I'm going to hit the beach. I won't be doing any work. We'll be down for, you know, and John Hinshaw and those guys did an unbelievable job. It really is a big deal. Unbelievable. I wouldn't have believed it if I hadn't experienced it. Yeah, I mean, I think in terms of separation, I think there is a good vibe. I think it's more a question of, there's a good focus now. You know, as Meg says, you know, she's got the people, she wants on the bus and the bus is moving. And I think you saw- Now that got to be great. Now it's all in the open. And you saw, and you saw the, you know, and the shows and stuff, it's very solution oriented. It's, you know, we're getting away from this sort of be use centric element and customers, you know, want to deal with one entity. They want to deal with eight speed, not with business units. That's part of also what my organization does for telcos. They deal with us and we hide the complexities of the business unit. So I think that's moving more and more. So I think, you know, you guys are here, you tell me, but I think the vibe is very positive. Yeah, well, and then there's the balance sheet, you know, which is just the beautiful thing. So I wondered, you have a big shopping list in your pocket there? Are you going to do M&A? I already did M&A, right? I bought Context Stream. So, you know, look, look, we are going to, I am not here to discuss- You spent your allowance already? I'm not here to discuss anything we do. I would just say that- You're talking about philosophy. We're going to invest very heavily in this market. We're going to obviously do things as much as possible organically and we are investing heavily organically. But, you know, if there's opportunities that we feel will help us with our customers, we will partner first. And that's part of our open entity. We have a huge partnership. But if we feel that we can help, you know, in some cases, for example, a customer will tell us, well, this company is really small and I can't really buy a solution for them. I want them under the HP banner because then you can stand behind them. Then, you know, we would obviously consider that. I don't see any massive things, but obviously opportunistic tokens, specifically to solve customer problems are always an option. But that really wasn't an option a couple of years ago. I mean, it was sort of on ice for a while. And then now- Well, we were in the penalty box, right? Right, at least it's an option, right? You're back skating. We're in the penalty box. Well, now you're out in the open, you're out, you're out, everything's done. So now there's no place to hide, right, for HP. But let's all this show, obviously a good show, enterprise focus, you're obviously Telco, you've got Mobile World Congress coming up. Thoughts on that, can you share some insight? What are you guys going to do there? Well, how the show has changed over the years? Can you talk about that? The show or Mobile World Congress? Mobile World. Yeah, so this show, although this show is enterprise-centric, you know, I do have about a hundred or so customers here, especially in Europe, there's a lot of telecom guys. And in fact, we've had a lot of meetings and they've come, you know, part of what we do also with telecoms, we help them and they go to market and get to enterprise customers. So we have actually had a lot of activities here with telcos, but yeah, this is our show, obviously, is Mobile World Congress. You know, there'll be a reveal. I mean, we have plans there, you know, we, you know, this is a very important show for us Mobile World Congress, it's primarily an opportunity, you know, for Meg, myself, Antonio and folks to meet with the CEOs of our top customers that everybody's there. The main value of Mobile World Congress is that everybody on the top is there and you literally go, you know, for a week, hour-to-hour meeting with CEOs and CTOs of your customers and working through them. So that's very valuable and having Meg there, you know, is really a benefit I can have. Just going to do some calls with customers. Oh yeah, I mean, Mobile World Congress, like Meg is there back-to-back, day-in, day-out, meeting with customers. I mean, she's fully committed. Meg meets her customers a lot. I don't know, 80% of her time. Really, nice. She is, Meg is, you know, she's our top salesperson, right? Yeah, I like how she thanked Interkino. One that I love is when executives thank customers at the customer event. Before they get into the whole circumstance, pomp and serves, they say, thank you for your business. I love, you can't say that enough when you have good customers. Thank you for the business, especially now more than ever. Sargalai here, making ways, making things happen at HP, NFV, Telco, inside the Cube. Good to see you, great to see you looking good, getting in shape there. You got to take some notes from you on that one. Thanks so much. This is live coverage here at HPE Discover. I'm John Furrier, Dave Vellante. We'll be right back after this short break.