 Live from Las Vegas, it's theCUBE. Covering Discover 2016 Las Vegas, brought to you by Hewlett Packard Enterprise. Now, here are your hosts, John Furrier and Dave Vellante. Hello everyone, welcome to our exclusive coverage here at SiliconANGLE Media's theCUBE of HP Discover 2016. This is theCUBE's SiliconANGLE Media's flagship program. We go out to the events and extract the signal from the noise. We'll do 100 events this year. I'm John Furrier, my co-host, Dave Vellante, also the co-CEO of SiliconANGLE Media with myself. This is our sixth year covering HP Discover and a variety of other events. We'll be here for three days of wall-to-wall coverage, top executives, customers, practitioners, people implementing the cloud, people implementing IoT. And we're expecting to see HP really put out their plan for going past the turnaround. And of course, Meg Whitman would not be doing her thing if she didn't spin out a business unit, Dave. So Dave Vellante and I kick off day one. Watch the kick-offs, watch the wrap-up, that's where we kind of pull it all together. Dave, what do you expect to see here today? Obviously, HP Discover, there's nowhere to hide. They did the split, that's well behind and we covered that at HP Discover London. We're seeing HP now putting out, really, this is their card. Their enterprise group is now cohesive. They've spun out the outsourcing consulting group, the services group with a joint venture, if you will, joint spin-in, spin-out, whatever you want to call it. With CSC, which is essentially taking all that old outsourcing stuff, putting it out there, but they will retain their technical services organization, of which we'll talk to the leader, Scott Weller, today, to find out what the scoop is. But the bottom line is, HP E, HP Enterprise, is really, has to put it out there. And people are talking about HP not doing well. That's been the narrative over the years. The last show we were at, we saw them with a spring in their step. What do you expect to see from HP this week? To make them show the straight and narrow, show the growth? Well, John, Meg Whitman is entering her fifth year of what she proclaimed would be a five-year turnaround. And so now it really is time for the performance. And I've been saying for how long, you know, in theCUBE, this company has to shrink to grow. And it's exactly what's been happening. Not only did the company split apart, now it's a $52 billion entity. It's getting even smaller with the CSC spin-out, spin-co, whatever you want to call it, that you mentioned. That's about a $20 billion revenue nut that's going to spin out into this merged or joint venture between CSC and HP. So HP essentially, John, is going to be a $32 billion company. Now they grew about 5% in constant currency terms. We're starting to see some quasi-consistent growth across the company. Now the challenge, of course, and the upside is that the market cap trades at about 60 cents on the dollar, right? So you would think a company like HP could trade at least one to two X revenue. So there's a lot of upside for HP shareholders and its customers. It's been investing more in R&D and it's just getting more focused. The last thing I'll note is that old HP, you know, I've been saying two things. It's got to shrink to grow and it's got to get back to its roots, which are invent. And I think it's really now in a position to do that with a combination of organic R&D and with the $12 billion in cash, it's got in the bank, it can start making some acquisitions. Yeah, HP's made their bones on quality products over the years and that invention, that innovation strategy. And they've been talking about the machine. We'll hopefully hear much about that. We've heard an announcement yesterday that they're involved in Star Trek, kind of putting out the future. Again, that's the way in the future with Star Trek. And I said on theCUBE years ago that everything on Star Trek will be invented some day. We're almost there with the holodecks and everything else on all the virtual reality. But the reality, Dave, is that HP's got some assets. Their channel is strong. They've always had a good channel of distribution. They've always had good products, but now that the box mover kind of company that they were once were has to move into solutions. And I'm looking for HP this week to see if they have that kind of messaging and the product to back it up. That means not just product or speeds and feeds, the solutions. And finally, they have the services. They always had a good services organization. And I know they're spinning out the outsourcing, but can they bring IT into a modern era, the new style of IT, as they call it, to bring in the hybrid cloud? Can they deliver cloud? Now, HP stumbled with the cloud over the years and that's well documented. But the one thing that might give them some lift, some wind in their sails, so to speak, is the trend of IoT. This really tips the scales in favor of HP, in my opinion, if they can get that right. If HP has a false start on IoT, that could be really troubling for HP. So I'm looking for the solution mix, the leverage of the channels and how they will adopt to the new channel, services model from the top system integrators down to the VARs and Vabs and the normal resellers. And then finally, what is the IoT play and how does the cloud integration game play into that? If they can lay that out, I would think that they're on the right track. So I'm looking forward to see what they have in those fronts. Well, I think your point about the channel is very important. And of course, with the Dell EMC merger now, you know that HPE is going after a lot of the channel partners of Dell, but EMC in particular. You know, EMC's got some really strong solutions providers and that's your point about shifting from box selling to solution selling is right on. And I think, you know, HP, so if you think about IBM, IBM's got its Watson, its whole cognitive thing. I think IoT is definitely a lure for the channel for HP. Now, of course, HP's got to compete with Dell and EMC on great products. Okay, fine. So streamline a product portfolio, do great and converged infrastructure, all flash server leadership, you know, software maybe needs a little work within the talk to Robert Young-John's about that. But an interesting hook for HP is IoT. It's the future. It's the big wave. So John, you and I have been tracking this for quite some time. You've been digging into it. You've gone deep with Dr. Tom Bradovich who's coming on a little later. Talk about IoT and the importance as a lever to HP. Well, a couple of different things going on with HP. Listen, I'm going to go back in history to talk about it, talk about the present. The only reason why HP's not in the graveyard are the many computer companies like DG, Data General, DEC, and others in Wang. Wang, Apollo. Is that they had a culture of innovation. They had skunkworks. They had things going on in the labs. But it was the laser jet that saved the company and that was really an attached peripheral to the Wang word processing days. But that was riding the wave of the personal computer generation. And what happened with the laser jet was that spawned a computer products kind of vision and huge revenue growth. Multiple stocks plus in the late 80s through the 90s got them into the wind tail business. And from there it was history. They went from eight billion to like 36 billion in like five years. Massive growth and they took advantage of that wave. Now going forward today, the wave that they missed in my opinion was cloud. They really missed the cloud. They got hung onto the box thing. And now they saw that with Meg Whitman coming in. You can see them kind of make some decisions saying, look, we're not going to be a public cloud. We're going to bet on hybrid. We're going to bet on integrated services kind of multi-cloud. And then they kind of like, we'll wedge a position in there. The new laser jet like moment for HP today to capture growth is IoT. IoT has two aspects. It's an application and it's also attaching to the cloud if you will. So for the HP to get back in to the cloud, like I said earlier, the wind in the sails for this new lift will be IoT because you have IoT apps, you have IoT devices and you have IoT networks. HP actually has leadership in those siloed categories. You look at Gartner's siloed magic quadrant analysis, but to bring that up horizontally and tie that together and integrate them together is a huge opportunity for HP. It'll lift the services organizations on technical services. It'll bring in the product sales, Intel and others will make a ton of dough on compute and software. And this machine and or IoT will be key. So can they create a new category of IoT? Can they get the growth? That is what I'll be looking for. So the stock is up 24% year to date. It's at a 52 week high. So those are some positive signs. Interestingly, in the last conference call, the Wall Street analysts were pushing Meg. I mean, the old EDS organization had a great quarter. They grew around 7%. So a lot of the people were saying, well, why are you selling it now? It's starting to do really well. It's starting to throw up some cash. I think it was the right move because HP shareholders will be able to participate in whatever growth they have because they're going to own half of that company. And as well, it gives it more focus and it just strips out all the baggage. Now the other piece that Wall Street was pushing on HP because remember they sold some security assets and tipping point, they sold the Trend Micro. The Wall Street analysts were questioning whether or not HP should further diversify or divest itself of software. I think that would be a huge mistake. You're talking about IoT, critical that they're able to leverage the Vertica, the machine learning components, the ability to do analytics at the edge. That is a key component of IoT that I'm going to be looking for and talking to Dr. Tom and others about to see if HP can really, truly bring that end-to-end IoT portfolio together. Dell talks a lot about end-to-end. I think end-to-end IoT from the edge into the core is going to be more important going forward than that full-service supplier. Now granted, it's the supply chain, Michael Dell will get a lot of leverage out of that, but I think in terms of momentum, edge-to-core with IoT is really key. And HP software has to kind of step up the leadership game on this, in my opinion. HP's never been known for their software, but if you look at that integration play, the district of Dell EMC will be the software. So HP has a play there. Oracle is an example of, on the other end of the spectrum of Dell EMC, where they've essentially co-opted HP's messaging. You know, the cloud machine, they're actually calling the product the cloud machine. Actually, we use the word machine. I'm sure Mark Herd and Larry Ellison are having fun with that, but HP has to get this machine from hype to reality and use that as a flagship. At the same time, HP has to integrate. And in the number one trend we're seeing across all of our CUBE events that we've gone to, whether it's SAP Sapphire, all the IBM events, Oracle events, and industry events, is that integration's key into the cloud. I know HP's been late to the game with Docker, but it's still super early. They're not late. They're late on the early adopter side, in my opinion, in terms of like being pioneers. But the fast followers on the rest of the market will follow on fast for DevOps and composable services. That developer community and the channel will be critical from a software enablement standpoint. So if HP can nail that and provide a robust infrastructure, a digital infrastructure with apps at the edge, that will be a killer for me to see. So, now we'll see. We'll see if they're walking the talk. We'll see what the releases are. We saw some announcements here with Healing in Cloud. We saw one view, which we were impressed two years ago when they showed that. We'll see an update on that. They have a release out there today. So three other things I want to point out. You know, all flash data center, that's what the HP storage is going for. You know, it's three part of the gift that keeps on giving. We kind of know that story. The second is converged infrastructure. When have Rick Lewis on converged infrastructures or growth area for HP? HP was one of the first to actually use that term. But in my opinion, HP fell behind in converged infrastructure. Now is sort of playing catch up and leapfrog now. And I think, you know, the third area that we talked about, which is critical, is IoT, but also Aruba. HP's networking business, John, grew 67% last quarter. Even when you take the Aruba acquisition out, it grew 17%. So networking is now cruising. I think Aruba has given it a real tailwind. That is a critical piece to IoT, isn't it? Well, absolutely. The networking piece with Aruba is going to be a nice jewel in the connections of all the different devices. But you mentioned converged infrastructure. I would agree with you that they've kind of lagged behind early on, but that was because the company was kind of in transition. We saw some turnover at the executive level. But with all flash now, that announcement today is pretty important because that kind of highlights what 3PAR was bought for. 3PAR had nothing to do with all flash, but their entire 3PAR value proposition fits beautifully into tiering and all flash. So you got that now kicking in. So converged infrastructure really looks good with HP. If you combine converged infrastructure concepts with wireless and IoT, you have in essence, the opportunity to have a new category of converged IoT infrastructure. Because at the end of the day, that will be a battleground integrated into the data center through hybrid cloud, through public cloud, and obviously wireless is a backhaul. A quick storage aside, the 3PAR had a huge pivot from spinning disk into all flash, didn't miss a beat. Look at NetApp just had to buy SolidFire, IBM had to go out and buy Texas Memory Systems, EMC had to buy ExtremeIO. All these legacy storage companies had to buy, HP didn't, they were able to leverage that asset. So that turned out to be a great acquisition, even though they paid 2.5 billion for it. Well Dave, a thing about HP is that with the spin out, and now they got rid of the outsourcing, which by the way, I thought was actually a good move. I mean that outsourcing game has changed. We talked to the top system integrates from the center, PWC, Deloitte, Capgemini, they're all changing their delivery models because of cloud. They're changing their core competency on how they deliver solutions to their customers. So HP's customer, customer, customer through the SIs and these large partners is significantly changing. So getting rid of that baggage, I don't want to say baggage. I'll see if my- I think it was baggage. I would argue it was pretty quick. A quick aside on inside baseball, Heard bought that because he thought he could replace all IBM mainframes with HP servers. Failed strategy. So good. Well exactly, my point. So that old outsourcing game is gone because the people that were in the outsourcing business, the big SIs are changing their delivery methods. So I think that's a sign, that's why the stock is up with HP. I think Wall Street rewarded Meg for that bold move because basically what she did was she cut down and moved that out. I still think HP's got a lot more cuts to do in talking to people close to the company and internal. There's still a lot of overlap. They still got some work to do, but if they can sharpen their go to market with the new categories like IoT, all flash under the hood and the convergent infrastructure, they could win that. And again, what's going to be really important is the growth in technical services from helping customers put solutions on the table and through the channel, that is going to be ultimately where I would see the dollars coming in. They can make that a seamless operation with the channel, with the cloud, with the software, then I think they'd be in good shape. Yeah, it's all about focus. It's all about, as I say, getting back to the roots, inventing and bringing in organic tuck-ins, proving that you can do M&A and still watching for software improvement. We got to see software improvement at HP. Okay, well, we are kicking off day one of three days of CUBE coverage. I'm John Furrier with Dave Vellante. Stay tuned. Of course, we'll be broadcasting the live feeds. There's multiple places to stay in touch with us. The most direct way to watch the live feed and interact with myself and Dave is go to crowdchat.net slash HPE Discover. And there's no spam in there. So if you want to jump in and do some Twitter chats, and if you're from LinkedIn, you can also log in as well as a Facebook user's login. You got to log into chat. Go to siliconangle.tv and click on the HPE Discover or check out our new Crowd Pages product, crowdpages.co slash HPE Discover. We're putting all of our content there. That's a live stream. We'll be there as well as the keynotes. I'm John Furrier, Dave Vellante. Keep watching. We'll be right back. Thanks for watching theCUBE.