 Live from Las Vegas, Nevada, it's The Cube at HP Discover 2014, brought to you by HP. Okay, welcome back everyone. We're excited to be live in Las Vegas for HP Discover. This is SiliconANGLE and Wikibon's The Cube, our flagship program. We go out to the events and extract the student from the noise. I'm John Furrier, the founder of SiliconANGLE. Join my co as Dave Alton, co-founder, chief research analyst at wikibon.org. Our next guest is Bethany Mayer, senior vice president of the NFV group at HP. Let me see if we can get this title right. SVP and GM of HP NFV. Yes. So, you were running a multi-billion dollar division before HP networking. Obviously, things are coming together. You're now on a new assignment. Share with the folks out there, what is the NFV group? What's your charter? What are you getting your arms around in? And what are you sticking your teeth into? Sure, so, over the top competitors. So, folks like Google, Amazon Web Services, even Facebook with their WhatsApp acquisition. And essentially, they have to move faster to bring services to market. And they have to do it in a more cost-effective way. And in order to do that, really what they need to do is they need to begin by virtualizing their infrastructure. Doesn't that sound familiar? So, basically, they have over the past 20 years built very proprietary solutions with vendors out there who essentially have proprietary products quite expensive and they really can't move very quickly and it's a very expensive proposition. So, you're being nice. They have old technology. They have old technology. So, what I'm looking at right now is, Google just bought a satellite company for half a billion dollars for drones. Okay, they're going to save for satellite pictures. I'm sure that's going to be for internet access. Netflix is super popular. They've got Comcast buying Time Warner. Huge stakes in the content business. But under the hood, it's archaic systems, something to say. Well, in the carrier space, it is very old systems, very disparate, very difficult to change, and service rollouts take a very long time. And so, what they needed to do was, they needed to move to a platform and infrastructure that's much more flexible, that can move services in and out very quickly and frankly can make them money instead of right now, they're losing money. So, the idea here is to virtualize their core and then create services on that virtualized platform to then go after some of these over the top folks that they are really in trouble with. And they're moving massive amounts of data, right? Yes, absolutely, absolutely. So, that's why, so it's like SDN for telcos, right? Is that a fair? SDN is part of it. It's virtualization of their infrastructure, whether it's compute, whether it's storage, or whether it's networking. So, SDDC, right? Yeah, it's basically the entire thing. And there's essentially, there's a consortium of service providers that got together carriers that created particular use cases and standards. The Etsy organization created use cases and standards to follow for folks like us saying, look, these are the use cases we need and we'd like to see capabilities from different vendors to solve for this. So, HP has created a program called OpenNFE that consists of an architecture. So, a complete architecture that- That's OpenNFE? That is, it's called OpenNFE. That's an architecture that provides infrastructure, orchestration for both cloud as well as the network itself, virtual network functions and integration into their OSS-BSS, which is how they build their customers. So, we've built that architecture. We're also partnering with several partners that include network equipment providers like Alcatel Lucent, like NEC, like Nokia Siemens. Is Brocade involved in that? Brocade's involved in it as well. So, we have several different partners, Intel's another very large technology partner. So, we're partnering with other companies to create these solutions, these use case solutions and then sell those solutions to the network service providers. We were talking to Brocade at the OpenStack Summit. They were really kind of talking about some of the stuff that we talked about going back four years ago. The network's a bottleneck. So, but now you're starting to see the acceleration of that pressure point. So, with virtualization, with NFV coming in, I got to ask you, this feels a lot like an engineered system from the ground up. So, you ran the division in networking. So, you were involved in SDN. I think you were the first ones to ship OpenFlow, which is essentially SDN before anyone else. So, you know it's in the kitchen, so to speak, for ingredients, right, it's out there. So, what do you pull it from the tool chest within HP? You've a war chest of R&D. Give us the Bethany view of the landscape. I mean, who's your sous chef internally? What tools are you getting? And again, Tom Joyce is having great success with his group, with his conversion system. So, give us some data. What are you cobbling together? What meal are you going to cook? Well, so we have, I think we have a great offering in terms of the architecture. I mean, it includes the converged infrastructure as the baseline for the infrastructure itself. And in fact, converged systems is going to play a part here too. It includes our OpenStack capability. So, one of the real, strong, unique value propositions HP offers is our OpenStack cloud orchestration capability. It's something that no one else in the industry has right now and something that we can offer immediately along with our expertise, right? We have our SDN controller portfolio for virtualizing the network. And we offer virtual functions, virtual network functions in different kinds of applications like a virtual services router as a good example to be able to sell that as well. I think we have two really important selling points for HP. One is, as you mentioned, we're open. We are an open standards-based company. We're a heterogeneous. We're very up for choice for the customer. And then the other piece is we also have today a very, very large business with the telcos. So they trust us in many of the things that they're doing and they recognize that as an IT provider we can really change the paradigm for them and end with them. HP's been a supplier certainly on the mini computer side, high performance systems on that. And they certainly telcos are billing systems that are very complex. Now you got to get into the content business. You're talking about essentially the consumerization of IT or the new style of IT as Meg Whitman says. That's complex, right? So now they have an edge device to consumer. Are you guys involved in those discussions all over the edge? Are you guys talking just network? How far up the stack do you kind of have, do you reach with your initial? Well, you know, initially the carriers want to talk about infrastructure and how they change their infrastructure. Now what HP has to offer in addition to our infrastructure, our cloud offering, our orchestration capabilities, we have endpoint devices as you said. So we can provide an end-to-end solution for them that utilizes a new infrastructure that's fully virtualized, agile, cloud-oriented, and basically ready for them to compete with the Googles and AWSes. But we also have end user devices that we can bring to the customer for them to take advantage of to sell new services on. So we really have an end-to-end offering that I think is completely different from the network equipment providers they worked with in the past, as well as some of the folks that on the consumer side, that we see in the market today. Well, the telcos never get there in your mind. I mean, of course you can't say that because you've worked with them. But like, I mean, we've been seeing this for a decade. Over the top, I mean, cable is a threat, you know. Well, so some things have changed. First of all, they have new competitors, as you know, right, I mean, AWS and Google are pretty threatening competitors. But also, they recognize that these new services that they have to provide are the difference between them making money and them losing money. Because right now, with their wire line services and even with their cellular services, they're not making the kind of money they did in the past. And so that is changing how quickly they're doing this. And I have to say, just because I spend a lot of time with these customers on a daily basis, they are pulling us. It is not the other way around. We are not pushing them. So they're pulling, they pull the alarm, they are setting all the bells and whistles off, get everyone geared up. So that's why I want to ask why the separate business unit was that you were going around when you were running the networking group, talking to these customers and they said, talk about that a little bit. Well, so it is a new business unit and the reason for it is because it's a Pan-HP business unit. So it goes across all of our technologies, as I said, from the end user device all the way through to our infrastructure products, as well as our services. I mean, this is the other aspect of it, right? So we really needed a business unit that was a point focus for the telco environment. We needed to show commitment to the carriers that we're here to help them change the paradigm for them. And we also needed a set of experts that could design the products to fit into a telco environment to sell into their core networks. And so that's this group. So is it P&L? Yes, it's P&L-based. So you've got an engineering organization? We've just started, so we've just started the organization now. We've been building it over the past several months and we're doing something different with regard to R&D specifically. So there will be some assets held in the NFE BU specifically, but what we're also doing is we're funding all the BUs to build products in a way to go into the telco market very specifically using this paradigm. So it's a combination. And we want to take advantage of all of the great products we have in HP today. We want to modify them slightly to meet carrier requirements. And then we also want certain assets that are important to this new paradigm to be part of the NFE business. Organic, like management or telco specifically. Very interesting. Yeah, so we're trying to take full advantage of everything HP has to offer. That's very unique in the industry. Really, I think about another company that can do this end to end. I can't think of one actually. And one that's been in the telco space now for the past many, many years. We already sell billions of dollars into the telco environment. HP is a very safe company to do business with in this respect. How big is this market in relation to the say networking market, is it? Wow, well we've sized it in the tens of billions. I mean right now the sizing we've seen for our total available market is on the order of 24 billion over the next four years. It's a big, big opportunity. Yeah, that's big. And what was the networking, what is the networking business? Is it, it's got to be, what, 50 plus or is it that big or? For the network? Yeah, the networking side, yeah. Oh, well so for the overall network market, the networking market is probably in that range. And that includes the NFE piece? That would include it, sure. But the carrier market and carrier spend is huge. I mean carrier spend is in the hundreds of billions if not trillions of dollars just overall. And then if you look at it just in terms of this TAM, it's about 24 billion over the next four years. So it's significant. Yeah, that's great. Large number. Large market. And the other really wonderful thing for HP, it is an incremental business for us. Meaning that we haven't been selling into the core of the carrier network to date, right? We've been selling in their IT data center, but we haven't been selling in the core. And they're looking for IT based solutions to go into their core in order to, as I said, generate revenue more quickly and also lower their costs dramatically. What's the channel strategy? I mean, is there a portion that's direct? Are you going to be using specialized channel partners, existing HP partners? Yep, so there is a channel strategy. It's a combination, there are some direct. But as well, we have partnerships with network equipment providers like Alcatel Lucent, like Samsung, like NEC, and NSN. We also have channel partners that are services oriented as well that we work with. And those are the Tecma hindras of the world and the Wipros and services companies, Tieto, that sell into the carrier space already. And we'd like them to promote our products into that market. And you're part of the enterprise group, right? No, actually, I'm not. My organization is part of the cloud group. And the reason for that is, So you've brought to Martin, you said? I've brought to Martin, yeah. Reason for that is one of the biggest end points of the journey for virtualization by carriers is the cloud, right? They all have to create cloud capabilities throughout their infrastructure in addition to services for enterprise, but also to create cloud capabilities to do things like virtualizing services in enterprise businesses, right? All of that has to be cloudified. And so the journey to the telco cloud is a big part of that. So they have to be an enabler for that. Exactly, it is an enabler. And what's the outcome for them that they can now compete more effectively with these over the top? Yeah, I mean they can basically change their, the trajectory of their businesses because right now, many of their businesses are actually decreasing in revenue and increasing in cost. So they can change the trajectory and they can compete with some of these folks who are now absolutely in their face, right? Google and AWS. If you look at Facebook as an example, they bought a company called WhatsApp, right? 19 billion. Yeah, WhatsApp do. It uses an over the top service to deliver instant messages for free. Nobody pays for those, right? People thought that was a crazy acquisition and a lot of it was stock based. And look at Facebook, stock has done since then. So it's actually turned out not to be so bad, at least for now. But so, help me clarify something. You said this is largely an incremental business for HP. But you've got existing relationships with the telco. We do. Because we sell into their IT based data centers today. Okay. And they know us for that and we do a lot of business with them there. We do business in other places within their, still within their core to some degree, but really much of this is, again, with such a big paradigm shift and virtualizing their infrastructure, this is such a new opportunity for us. And one other piece to note is, HP is the virtualization platform. In fact, the largest virtualization platform in IT. The most VMs land on our computing platforms, right? So if someone knows virtualization, it's HP. Who do you compete with in this space? Is it in-house development or? To some degree, we compete with certain apps. A good example of that, again, is Cisco. We compete with Cisco. We compete with Juniper, Huawei. They're there building proprietary stacks. They would like to keep things the way they were in the past, right? Which is buy our very expensive box and all of our boxes and tie them all together and there you have a service. And the issue, of course, is those are, again, expensive. And tying those all together ends up taking months, if not years, to create a service. And, I mean, their competitors can spin up a service in a matter of weeks, right? So it really is a significant change. So there's the cost factor and the agility that they're, they can't, you're saying they can't make money with the traditional model? They really can't. I mean, if you look at some of them, their debt positions are very large. And so they really have to make a change. And they went out and, you know, built the specs and the standards to ask the vendor community to help them make that change. Beth, they talk about what you're excited about. Obviously, you got a fresh clean sheet of paper. Got some charter from Meg Whitman. You're in that kind of like the group of folks where we're going to put together the future. Certainly the tail goes, a lot of stakes at risk for your customers. What is, what's the exciting elements of what you're doing? Share with the folks what's going on. Well, so first I'm excited. This is a totally new set of technologies. I mean, virtualizing the core of the carrier network has never been done. So I'm very excited about that. I'm excited that we're, we are going to be able to help them get to the cloud, which is a huge part of our strategy as a company. So I'm excited about that as well. I'm excited that I just hired a wonderful CTO, Pradip Sen, who's from Verizon, very well known in the industry. He came on board, awesome, awesome individual, was head of the Etsy committee. So really feel like we did something great there. And I'm excited about what we're bringing to the market, what we're bringing to these carriers in terms of a solution. I think we have a good solution. I think we can offer them real value and help them change and change quickly if they wish. You, you are well respected in your division when you were managing the networking group. Some were speculated and then you were going to be on the beach clipping coupons, you know, chilling out a little bit with this new group. Sounds like you got a lot of action going on. Share with the folks your plans. What's exciting you there and the group there? And you got a lot of people you're hiring. What's the objective? What is the, what's your objective? I mean, you're not on the beach, you're not clipping coupons, you're running hard. Share with the folks the charter. So, I mean, really the charter is to, is to create a revenue stream for HP that's completely new in the billions of dollars over the next three or four years. Very quickly ramping up. I just want to mention that I'm very proud of the performance that I did with HP Networking. I grew the business 12 consecutive quarters, exiting last quarter, my final quarter in May, six and a half percent growth. So, I'm very thankful for the opportunity. I'm very proud of it, but this is a new opportunity and it's even more revenue potential. And it's in a very cutting edge, bleeding edge environment where nobody's done some of this stuff before. So, to me, I'm excited about that. It's a new job, you're more nimble, you have, again, small team growing from the ground up, the division's big. I mean, how many people were in Networking when you left? Well, thousands and thousands of people. I can't say how many, but thousands, multiple thousands of people, yes. It is a very large organization, yes. But, and we'll keep growing this, too. So, you're excited. I am, I am very excited. And I think it's something great for HP and I'm looking forward to what we have to achieve. Just for you, so that you know, we're in several POCs right now. I mean, we've been in, we're in multiple POCs across the world. We're in a field trial with BT. We'll go to deployment next year. So, I mean, this is real. This isn't creating an architecture and waiting for them to come. This is, we're out there. You know, I think Dave and I always talk about, again, Tom Joyce just was an example. He started to put up some numbers on the board for revenue very quickly. He went from zero to 60 miles per hour, like overnight. And you look at that. We'll be in the hundreds of millions next year. I mean, other successful modern infrastructures like combination of flash, not, not, it's a cobble together, but yet re-engineered solution. So, that seems to be the future. So, that's hundreds of millions from a standing start. Yes, that's right. Yes. Bethi, Mayor, great executive. We love having you on theCUBE. One, we've been watching your career since you've been doing the whole open flow, since we've been doing theCUBE here. We've been great success at the HP side, looking forward to what's happening in the telco. Always great to have you on. This is theCUBE, extracting the seeds from the noise. And FV, folks, remember that, the telco business model for HP in the billions soon to be, Bethi Mayor. We'll be right back after this short break.