 Live from the Sands Convention Center, Las Vegas, Nevada, extracting the signal from the noise. It's theCUBE, covering HP Discover 2015, brought to you by HP. And now your host, Dave Vellante. Welcome back to HP Discover 2015 everybody. This is theCUBE. theCUBE has been documenting the turnaround of HP and we're really seeing HP starting to transform itself, transform the industry. Steve Deitch is here, he's vice president of cloud at HP and Yang Peng who's the CEO of Union Reed, a CDN based in China. Gentlemen, welcome to theCUBE. Thank you. Steve, good to see you again. Great to be back. It's a high energy action here going on at HP Discover. Yeah, there is. I was saying you got some good love at the keynote this morning or this afternoon. We did. HP using that stuff internally and you're getting traction externally. So how do you feel? I feel pretty good. I mean, since we last talked to it, it was several months back. The momentum continues. The strategy we laid out three years ago and continue to execute it, consistent strategy by the way, about the world going open and hybrid is clearly playing out. Customers are making decisions on what applications are going to stay on-prem and what are going to go off-prem and they need a very effective way to manage that complexity and get all the benefits of a hybrid IT environment. And our customers are coming to us and looking for that. We made some really exciting announcements yesterday that just further the execution of that strategy, both Cloud System 9, which we've talked about before, then the latest version of our flagship on-prem offering, Private Cloud, but also I call it our hybrid IT anchor. And I like to say, as customers are going through their journey from Private Cloud with traditional apps to New Native with OpenStack to managing multiple clouds, you've actually got a solution from Yield Packard that addresses all three of those elements in one solution. Management layer, traditional apps, Healing and OpenStack, and the management of off-prem, all part of it. I mean, we're really excited actually. And I mean, I'd say really the operative word right now is execution against that strategy. All right, so Yang, let me bring you into discussion. Tell us about Union Read. Tell us about the company and history and where you're at. Okay, thank you. My name is Yang Peng and I'm the CEO of Union Read. We started this company in 2009 and it has been offering CDN services, the content distribution networking since then. And we partner with China Telecom and China Unicom in China and our business go very fast. Yeah, I'll bet. So, I mean, any partnership with China Telecom you better be prepared to grow fast. So specifically, what kind of CDN services do you provide to Telcos? Oh, so currently we provide the CDN services for internet players. So basically, we deploy about 200 nodes around the country, about 200 IDCs. And we provide the bandwidth and the speeding services for the CDN. I see, so how many people in your company? I mean, can you give us a sense of how large? We're about 100 people and many are developers. Yeah, and now what's your relationship with HP? Well, we are the first deployers for HP Heading in China since last August. And we are happy we can partner with HP to deploy the OpenStack-based solution for cloud services offering in China. So you're using OpenStack? Yeah. Okay, can you tell me more about what you're doing with OpenStack and why? Why you choose OpenStack? Well, firstly, it's open. Yeah, it's in the name. Yeah, you are. Yeah, and the main reason we use OpenStack because we saw the customer in China are facing lots of challenges in terms of cloud services. We know lots of people, about 70% of the high or big enterprise already deployed a private cloud solution. But in this year, maybe more and more people and the enterprise would like to embrace the hybrid IT or hybrid cloud solution. So our customer tell us they are facing challenges in terms of security, cost-saving, scalability and productivity is kind of an issue with cloud solution. So they want to use OpenStack to resolve these challenges. So Steve, it sounds very similar to the story we hear from a lot of customers in the US and Europe. I don't have a ton of experience in China. What are you seeing in terms of the adoption of technology in general, but specifically cloud technology in the region? In China and across Asia Pacific, it's exploding at this point. In a lot of cases, a lot of green field activity. But we actually, we see a very balanced business for cloud at HP. I mean, there isn't one region dominating the other. China is equally as large as the other regions. Right. As we look at the cloud business, the unique thing around China is just the mammoth scale that we're dealing with. The Union Read is dealing with China Telecom, China Mobile. These are not mom and pop service providers. China Mobile has how many, 700 million subscribers or 600 million subscribers on a massive scale. And so providing services to somebody that is not the faint of heart. Union Read actually, which we didn't met is the first Chinese member of the healing network. Oh, okay. So for folks that aren't familiar with the healing network, which we announced last year and we're driving towards launch on November 1st, is a ecosystem that we've created where service providers, value added resellers, ISVs and other partners are going to collaborate with HP to build, deliver hybrid solutions, particularly with Union Read, public and VPC type of solutions in China. I see. So what do you do specifically with HP? With cloud and even non-cloud, other relationships that you have, services, what, how close is the relationship? How deep does it go? Well, I would say it's very deep. Currently, you know, I mean HP Healing Network provides a very good platform to, I mean, the service provider, the VARs and the ASVs, and they help us in four aspects. The healing platform is an open stack solution and the services are integrated by Healing Network and also, you know, the financial innovation and also the most importantly, the go-to market strategy and the different channels. In China, you know, because with the city and business, we have lots of IDC hosted services as well. So we partner with HP to provide our current city and business customers the up there if they want to change to the host to the cloud. So it's really, I mean, the synergy is quite there. So we like to partner with HP. Now what specific services do you, what's your unique value that you bring to China Mobile and China Telecom that they either can't do themselves or why you and not some other company? What's unique about your services? Well currently, you know, we partner with China Telecom and China Telecom is mainly because we're focusing on the software development and you know, they are big operators and so the main unique stuff with us is the software development and the maintenance capacity. So we kind of like do the dirty work for them. Okay, so talk a little bit more about the content that's being distributed in China. You know, here it's all Netflix every night. It would be downloads in Netflix. What's the Chinese consumer consuming? Yeah, well it's the similar, it's really similar. It's about the video streaming and the download and also the files, like currently people use the smartphone everywhere and they upgrade their apps every day. So they download not only in the video, streaming the video, but also download the files, the apps, it's similar. Now Steve, HP just announced a deal in China, divested, you did a joint venture, actually divested part of your Chinese operation. What does that mean for you guys? Is that sort of a separate sort of orthogonal deal? Is it something that affects you dramatically? I think it only, yeah, absolutely. It only benefits I think everybody given the collaboration we have with the local entity. Let's explain that a little bit. So what HP has done is it sold a majority interest to, and I can't pronounce the... I can't either. King's Hua, Tsinghua, Tsinghua University which is one of the premier research institutes in China. We've actually now, the networking business which actually the joint venture will be called H3C which we already had, our Chinese networking arm was called H3C. So it takes on that name, H3C and that collaborative joint venture actually brings the servers, the networking, the storage and our technology services and fully exploits just the power of the Chinese engine, the distribution, the relationships, both from a governmental on a nationwide down to the province level. And at the same time, HP maintains full ownership of the cloud business, of the software business and of the enterprise services business. But there's a tight collaboration between them and there will be cross selling. So as we go out and sell cloud that the joint venture arm will sell it as well as well as we will. So it'll actually be cross OEM. Okay, so you have a partner that's local, that's from a customer standpoint, you know them, you trust them. And so it's another distribution channel for you and it's just more leverage in the region. It's more leverage and it's look, there are unique things about the Chinese market that I'm sure all your readers are well aware of. This was the best possible way to ensure that our customers were getting the best technology at the best value in the most efficient way. It was very clear to us. So what's new? I mean, what's next for you guys? I mean, what's the future holds for your company, for you know, what's your vision of how you see this, your company evolving and what role will cloud play and HP specifically? Well currently, we believe in China the cloud business will grow very fast. And currently we are trying to involving four kinds of customer from the enterprise, different industry, mainly education, healthcare, transportation, enterprise, yeah. Yeah, and so you have the advantage of a lot of greenfield, we call it, right? So meaning you don't have a lot of legacy applications that you would have to rip and replace, right? I mean, new company, fresh start, if you will, so you can grow very, very quickly. Where do you see the center of innovation in your business? What is it, is it speeding delivery of content? Is it new types of content? Is it enabling new business models? Where do you see the main emphasis of innovation? Well, the main emphasis of the innovation would be the virtual computing and the network of virtualization. These are what we are focusing on. So we believe originally in China and in as we are you'll need to buy, you'll need to spend a lot of capital for your company, for your enterprise to do the IT. But currently with the on-demand IT, so the hybrid IT and all of these requirements ask for you to do the virtualization. So this is our focusing on. And Steve, from your standpoint, HP's challenge obviously is to define cloud as you see the world and as your customers see the world. You're always in a, there's always a marketing tussle, you know, this is cloud, that's not cloud, this is cloud. At the end of the day, it really doesn't matter if your customers are efficiently delivering IT services and providing a platform for future, you know, this digital economy or what you guys call the idea economy, that's really what matters. So what does that platform of the future look like? How would you describe that? So I'll oversimplify something right now because it was, and I won't take credit for this explanation or description. I will, one of my HP colleagues, we were having a conversation with a bunch of partners on Monday. And cloud will essentially become, you know, let's go back 10 years ago when people were talking about, hey, I want to get onto the internet or I need to go to the web or whatever. People are doing, now that sort of faded away to where you never said I've got to go onto the internet. Cloud will be exactly the same way, whether it's next year, five years from now where it will just become the IT paradigm. It's very, very clear to us. Now there's, you know, it's a distinct thing now. It's, you know, people are confused by it. You know, the cloud, what is it? You know, there's a lot of comedy in it actually at this point and a lot of confusion. But I see it as over the next several years as the confusion subsides, the technology matures. I see it as being just there. I see it as being the IT thing as we go forward. That's interesting. And that portends maybe not so much for Union Read because you're a relatively new company, but it portends a reorganization of types within traditional companies where they may be saying, okay, today it's something different. I need a cloud division or a cloud group or cloud brokers and we talk cloud everything like the old dot com, right? It was, so that's just sort of to get subsumed. I think that is spot on. I think what you're seeing right now is, because if you look at the challenge of the cloud and we're using it at a distinct entity right now, three points of the triangle with technology being one of the three and being the least important. People and processes are going to be much more important as you look at fully exploiting the benefits of the cloud. You've got to look at essentially standardization of processes, automation of processes and so forth, which a lot of people aren't looking at right now. Some are. And then probably the more one is the inertia in the organization. Because to your point, you're spot on. Today you have server admins, storage admins, application developers, networking admins, architects. Maybe that disappears in the future. Maybe you have somebody, you know, if you're using shared environments, you may have a cloud architect that takes over or you may have a cloud administrator or it just becomes an IT administrator. You know, you have examples of customers out there that have drastically reduced the operating resources because they've adopted it. Or it becomes a software developer. Exactly. Exactly. So I think you're going to see enormous transformation. Over time. I mean, this whole talk about infrastructure as code, you guys have popped on that. I presume you guys are doing a lot of what we call dev ops. You know, maybe talk about that a little bit. What's your development environment look like? Well, the development is really similar. So by the way, the dev ops kind of process, we are applying every day. All right, Steve, we're out of time but I'm going to leave you with the last word because you're so articulate. You are. I first met you at VMworld, I think it was 2011. We were a lot younger then. Yeah. But we're wiser now. Yeah, so you say, so you say. So we've kind of seen this thing come full circle. Everything we were talking about in 2011, it's come to fruition today. So, how do you sum that up? Tie a bow on where we're at with cloud. So I think we actually saw this coming. Three, four years ago, like you said, the world was going to be open. The world was going to be hybrid. People were going to look, I'm amazed at how far it's come. And I'm also surprised at the acceleration now. When we met three months ago, when we met last year, I was saying, wow, it's moving along. But it's moving along now. The biggest striking thing for me over the time is that it's just continuously, it's not slowing down. It's not plateauing out. It's moving faster. Forget all the technology aspects. It's the business models. It's the organizational thinking. It's just business driving the need for what we foresaw three or four years ago. And I see it going faster, not slower. And probably my final word is, the more interesting part of this is, the little guys are going to be the big guys. Meaning that everything we're doing right now and everything we saw is leveling the playing field. The world is flattening and the cloud is flattening the playing field. Flatten it out. Steve and Yank, thanks very much for coming on theCUBE. Well said, I really appreciate your time. And it's exciting, you know? We're in the eye of the storm. And it's moving fast and it's going to get faster. So may you live in interesting times. I think that was a Chinese proverb and we sure do. All right, thank you. Thank you. All right, keep right there. We'll be back with our next guest right after this. This is theCUBE. We're live, HP Discover 2015.