 Live from Las Vegas, it's theCUBE, covering HPE Discover 2017, brought to you by Hewlett Packard Enterprise. Everyone, we are live here in Las Vegas for SiliconANGLE Media as theCUBE, our flagship program where we go out to events and extract the cylinders, talk to the thought leaders, the experts, folks making it happen. I'm John Furrier with my co-host, Dave Vellante. Our next guest is Pete Murray, Worldwide Vice President of OEM Sales and IOT Go-To-Market for HPE Enterprise. Pete, welcome to theCUBE. Thank you. So OEM, people are basically original equipment manufacturer. They basically take your stuff and they put it in their solutions. Why are they interested in doing that? Obviously you have the good product and IOT's hot. This is a new journey and a lot of people are figuring it out. What's the premise behind the growth and the business opportunity for you guys? We see IOT as a great opportunity. Whichever analysts you talk to, they all are consistent on one thing and that is there are going to be billions of devices connected. If you talk to some of the estimates, there are anything between 20 and 30 billion by 2020. What that does is create great opportunities and really exciting things can happen when you connect the unconnected, which is today. We're working with OEMs and we've got a successful program for many, many years and a lot of our OEMs are starting to look at the marketplace and see great potential to enhance what they offer to their customers and ultimately deliver additional business value. We would agree with you. We think it's hard. Dave and I are coming in and make Whitman's keynote. We think the numbers she was dating in terms of data in IOT is understated. We think our numbers show a little higher but that speaks to the pressure for folks to add value solutions, social providers to go to market with an IOT solution. What is the profile of your customer that's OEMing the HPE products? Is it apps? Is it driving? Is it the driver on the app side? Is it verticals? Can you share some insight into the landscape? Yeah, sure, by the way, our data figure we use is about 44 zettabytes by 2020. But who knows, it could be my figure. We're focused mainly by industry and we're working with a lot of our OEMs in industries such as the healthcare business, telecommunications, transportation, we basically spend time allowing them to focus on what they're really good at, bringing their intellectual property to solve business problems in their industry. What we bring is what we're really good at, which is providing an innovative, quality-based, compute-based solution with a world-class supply chain and global support. We think that's a really, really good combination and it naturally extends into the IOT world because a lot of our OEMs are operational technology partners who have got something to say in that marketplace. And usually they've got the expertise in an industry segment to enable IOT, enable benefits to be seen. And we want to really help them to do just that. Can you give an example and specifically the issue of YHPE versus the potentially other choice out there or growing their own? What are the reasons why they come to you guys? What's the benefits? Well, first of all, we think we've got a great OEM program. So it's a great base to start, stable offering, quality innovation and global presence. But on top of that, when you look at the IOT world, we think we've got some really compelling assets. We've got assets around connectivity, security, location-based capability. We've got the ability to compute at the edge where we think there's a lot of significant reasons and benefits to do so. And lastly, we've got our own IOT platform called the Universal IOT platform and that can also deliver great benefits. If you put that together with a partner ecosystem to be able to solve problems, we think it's pretty compelling. So Pete, take us through the cycle. OEM and sales cycles tend to be very long. They beat you up, stress test you a million different ways. What's it like in your IOT world? You mentioned healthcare, telco and some others. What's that qualification cycle look like? Well, we usually start with a business problem, whatever the OEM is trying to solve. And then we work out how we can best work with them to help them deliver it. Ultimately, the most important focus is their customer to deliver a good solution. So we go through the technology cycles, make sure that we can deliver to the service levels that they're interested in. And then we start thinking about the technology if there's additional innovation that's required. So our technology teams will be working closely together. And then we start looking at where they plan to deploy from a geography perspective, which region, which customers, which targets. And then we figure out how we can support them in that, how we can obviously supply and ultimately make sure that we can provide a great service to their clients. So the cycle can take a while, but planning is critical because when you actually start ramping volume, you want to make sure you've got the right plan in place. Well, a company like yours has some advantages there. Like you say, your global distribution. Now, how much of the work that you're doing and expect to be doing is custom activity? I'm sorry. Custom, how much is custom versus kind of, you know, selling the same solution multiple times? And how does that business scale? What we tend to find is that we've actually got some pretty strong offerings that our customers use off the shelf. And so in a lot of cases, customization is relatively small. But as we're moving into the IoT world, a lot of the fundamental business problems we're trying to tackle are the same, but each implementation is just slightly different. So we're seeing a little bit more customization as a result of that. But a lot of the time, customers are really interested in our core offerings because we think that they're both industry leading and also solid. So it's maybe some special enabler as opposed to some heavy engineering effort, right? Yeah, I mean, typically in the OEM program, we'll work with customers if they want to rebadge or rebrand or they're looking for the equipment to be in a certain different format or they want the packaging or the distribution documentation to be different. It's those sort of customizations as well as the base technology if there is a requirement to do that. And how do you go to market? I mean, do you have sort of an OEM sales force or is it direct to those OEMs? Is not a sort of two tier? I mean, I wonder if you could describe that a little bit. So we've got an OEM sales force worldwide. We're breaking down by the three regions. We work with our end user sales teams. We also work with partners that are dedicated to sell OEM based solutions as well. So it's both a direct and an indirect way to market. Our OEM sales teams will be working with our end user sales teams also because there's a certain amount of knowledge and expertise that's needed. And our end user sales teams don't necessarily have that. That's what we bring to the table. And we've got many, many years of experience of doing just that. So it's a combination, but we do have dedicated resources from a sales side. The second thing we have is we've got program managers and technologists that are dedicated to OEM. So when we start working with an OEM customer, we make sure that we can bring in people who understand the product life cycles. They also understand the technology so that we can go through that innovation curve with them as well. So talk about the life cycles a little bit. I said the sales cycles tend to be very long, which is generally true of OEM business, but the life cycle times are oftentimes very compressed. So you're under a lot of pressure to keep innovating. So talk about that. Is that the case in sort of the use cases that you're entering and how are you dealing with? With IoT, it can be very varied to a product cycle that can be down to six to 12 months to some cycles that can be 10 years or more. So if you think about it, if a customer's designing a piece of sophisticated equipment and they want an embedded compute solution within it, what they don't want to do is see lots and lots of change. So sometimes the design can be current for five, 10, even 15 years. We're asked to support for those type of life cycles. So actually it's quite a mix. And as long as the product is competitive in the marketplace, we're really, really happy to work with our OEMs and support that. And you need a scalable architecture. I mean, you got a support. The headroom. Yeah. What's your observation on that? And how are your customers on the OEM side approaching that? Because they have to also put a compelling product out there to handle the headroom. What's the current state of the art, if you will, in terms of the tech? Well, one of the things is once they build a solution, they don't really want to change it too many times unless it's innovating and offering more to their clients based directly. And so what we tried to do is we work a change management cycle to allow that to be as easy as possible. But when we bring new generations of technology along, so here at Discover we're talking about Generation 10 as our new offering on our compute server side, which I'm sure you've heard about. You know, we work with our OEM customers to actually plan when they will implement it in their life cycle. And obviously what they try to do is to marry it up to providing additional innovation and benefit to their clients. So it needs to be planned, but when it's planned correctly, it really can make the difference. So take us through a conversation because I think this is interesting because you guys have a lot to bring to the table portfolio-wise. You got Aruba, yep, you got the hardware, you got the converge software infrastructure, all that great stuff. When you talk to the customers, what are they comparing you to? I mean, competition-wise, there's a lot of noise out there, certainly in IOT, we heard from Deloitte talking about some of the things that their customers are facing on the joint solutions. There's a lot of decisions, there's a lot of obstacles there. How do you guys compare and what are those conversations like? The conversations we have, they start with what's the business problem? What are we trying to solve? And the usual areas that people focus on are how do you drive efficiencies, cost saving, number one, business challenge. The second is how do you innovate and drive additional differentiation against your competition? So we start there, and then we start looking at potential ways to solve those problems. So we start looking at use cases around things like preventive maintenance, condition monitoring, location-based functionality. We're looking at things like smart city solutions. And then what we try to do is to then come down to the assets that we've got and the capabilities we've got as a company to solve those problems. We never start with the technology. We always start with the business problem that we're trying to solve. And how do you compare at the end of the day when your customer lays out the solution? Vis-a-vis the competition, where do you guys shine? We think we shine really well. We think we've got a compelling proposition. We've got some great IOT assets. We've got some innovation that we're bringing, particularly when you look at some of the security features of our connectivity, when you look at our ability to compute at the edge. We think that we've actually got a strong message to say compared to some of our competitors on the block. So we think we've got a strong story and we think we've got a reason to have customers come talk to us. We talked to Intel recently at Mobile World Congress and then at South by Southwest. And they have the pillars of societal changes, autonomous vehicles, smart cities, music and entertainment and smart homes. They're kind of core pillars for the 5G and how all this network transformation is happening. Where do you guys, I mean outside of meat entertainment, which you guys do business in, but like those are other areas like smart cities, autonomous vehicles and intelligent home. Those are IOT havens, right? I mean you guys see those as really big markets. Yeah, we do. I guess the biggest market that we're looking at is really around manufacturing right now because we see opportunities to drive, as I mentioned earlier, on efficiencies and cost savings out by collecting up and using the data which they're currently generating but they're actually not looking at the business insights within it. So manufacturing is a key opportunity for us. We're working with some really interesting customers to drive some great business outcomes. We're also looking at smart city. This week we're announcing some work we've been doing with Tata communications in India connecting over 400 million of their citizens and delivering additional service value on top of the platforms that we build around security, around healthcare and other things. But we think one of the biggest markets right now is around manufacturing and that's where we're trying to put a lot of energy. Well I wanted to ask you Pete about the data because data is abundant but the insights around that data are very scarce. And so when you think about an OEM business, how do you think about the data play? It sounds like I inferred from what you said that you're helping people get value out of the data. Are you also utilizing that data in other ways in your business whether it's predictive maintenance or some kind of aggregate or talk about that data? So the answer is yes in all counts and the data is absolutely critical. When you're building a preventive maintenance solution in order to get to condition monitoring you've got to collect enough data, look at the trends and then be able to take action based on it. We're working with companies that are really, really experts are doing that. So we've got relationships with the likes of GE Digital with their Predix platform. So we're doing a lot of ghost market activities with those. We're working with other customers like Natural Instruments and PTC that have got that data insight and that history and that level of industry touch and expertise that when you work with them in partnership you can actually drive some significant data insights for customers. So for us it's about getting the right partnerships in those areas to generate the business insights and ultimately address the business challenges associated with them. Well Pete, we really appreciate you coming on theCUBE and looking to keep monitoring the progress. Certainly customer adoption is always a great metric and IOT is hot, low hanging fruit manufacturing. Some of these industries are ripe because they're all set up for it but certainly the network transformation is happening and congratulations on the great progress. Thanks for coming on theCUBE. More CUBE action live here at HPE Discover 2017 in Las Vegas. I'm John Furrier with Dave Vellante. Stay with us for more day one coverage after this short break.