 Live from the FIA Barcelona Grand Villa Compensator in Barcelona, Spain, it's The Cube at HP Discover Barcelona 2014. Brought to you by headline sponsor HP. Here are your hosts, John Furrier and Dave Vellante. Okay, welcome back everyone. We are here for the end of day two wrap up. This is The Cube live in Barcelona for HP Discover 2014 European edition. Dave, day two, wrapped up pretty good. Keynote, Meg Whitman's back out there again. Again, the summary here at HP is very, very consistent. You have three major themes at Meg Whitman's drilling down and hitting like a drum beat. Time and time again. One, technology innovation is alive and well at HP. She's not skipping a beat. She weaves in innovation, innovation, innovation, sprinkled in some R&D, disruption, innovation. Number two, customer. Customer's at the center of the value proposition. That is absolutely the HP story from their roots. Bill and Dave Packard even through all the changes, customer centric, three partners. She's hitting a consistent buzz, drum beat on that buzz, three notes, innovation, customers, partners. And the tone is kind of trickling down and it's showtime. It's very clear from her team and the execs that it's showtime, lights are on, the cloud is here, the cloud is a transformative crisis, if you will, as Pat Gelsinger said on The Cube. Never waste a good crisis, cloud is it. Begging on cloud, driving the big data bus and converged infrastructure. What's your take? Well I think, I agree with you, the innovation, we're hearing that theme a lot. And the innovation is pinpointed, I'll say. So basically HP's challenges, they got all these businesses and many of them are in decline and managed decline, but because HP's so customer focused, they're not just going to leave their customers in the lurch. So they have to focus innovation on those new hot areas like 3par, like the NFV, like the Helion Cloud, and those are the areas that are getting the R&D benefit, they're getting the budgets. So that's sort of point number one. The other point I want to make about innovation is, HP, I've said this since 2010, it's the HP's got to get back to its roots, invent. And you're seeing that in two forms. One is incremental improvements to existing product lines. Again, like the 3par all flash array, right? Maybe it's a little bit more than incremental, but it's focused on existing products. The second is big bets. This machine thing, John, is really interesting and it's a big, risky bet. I mean, I don't know if it's going to pay off, I have no idea. It's a nice little flagship show pony that could bring out like Watson, IBM, that, you know. It could be the, the IBM's Watson. You got to have some eye candy, you got to have some headroom, as we always say. And it's good. When Fink talks, I listen, I get more out of his keynotes than any of the others. Others are very high level messaging and, you know, Meg's good and Vecti's good and you know, blah, blah, blah. But Fink gets up there, I learn a lot. I sit there, I take notes. No, he's a total geek. But the thing about Fink though is that he's open source centric and I think today we heard on theCUBE specifically and the clear message throughout the show is, software, open source software is the ethos that's going to be powering the engine of sort of certainly the cloud group. But here's the thing. That comes down from it. But here's the thing on the machine. I don't think HP has any idea of the economics of this thing yet. I mean, they must have some internal idea, but I'm skeptical that the machine is going to be able to compete with Flash, right? Big part of the machine is Memrister. Flash has got such huge volumes. I just don't know if that's going to be a new thing. Well, Dave, the market shifts fast. As you know, we've covered Gen 8, Gen 9, Moonshot. You know, some things, you know, can go off and just really take off like a, like it's nobody's business. Look at the data care stuff happening out of the service groups from zero to billions of dollars in revenue in two years. I mean, so that's blowing up in a big way. And the key to the machine, because of the big question about the machine is what software is it going to run? So the key to the machine is HP, I think talked about today, is developing a variant of Linux that will run on the machine. And they're going to do an SDK to get developers. This is a big developer moment test for HP. And John, you've talked about this a lot. HP's need, and we talked to young Johns about this couple, I don't know, shows ago. The need to build that developer community without a developer community. The machine is a total failure. So what do they got to do there? So here's my observation and description maybe for some of the management there. One is HP is a great culture. I think, you know, with all the turmoil, all the stuff going on, it's always a side show. It's always laughable in some way, but deep down good people work here. They have good culture, but they have to transform it to a new modern era, not only just on the product side and the technology side with open source, social media is going to change how they do business with their customers. So this new style of IT, I buy that, I get that, it's a nice punchline, but they got to start doing a new style of how to do business, right? And that means interacting with customers. So I think they seem very weak on this whole digital transformation, meaning I just don't see HP really nailing it with social media. I see engagement, I see talk about that, but there's always going to be customer web pages that they need to have, but they can always have that. But now they got to do business in the crowd. They got to do business out with a peer review. We had the person on from HP software who said, people talk to their peers before they talk to the vendor. That's a new expectation by the user. So I think the companies that will be successful in this transformation need to have the social presence, the community ecosystems that Steve Dykes was talking about that's on his agenda. If they could do what Steve and the cloud group's doing with that community focus, I think then they do that company-wide, they'll be a winner. So community is not just for developers, it's now customers. So I think it's interesting how they parse that out and be curious to get more information. But to me, that is going to be table stakes and that's not the old lead gen, get them by the throat, give me your email address. I want to sell you something, a little bit different style now of business around social. That's something I'm not seeing a lot of with technology. They certainly got the autonomy stuff. I want to see more of that. So to me, if they move that quickly, they'll win. Yeah, well, they got good command centers, a good eye candy. It's just how to really leverage social media in the business. I saw signs, join the conversation, like what conversation? They had a hashtag. Yeah, okay. So I rest my case. Up in, use the hashtag, I guess. So the new style of IT is a good tagline, you got to have it, but is there anybody doing old style of IT? Any more claiming they do old style? IBM's got cloud, big data, security, mobile, VMware's got an EMC, the third platform. I mean, everybody's talking about these new trends. Well, I mean, I look at Oracle, right? I used to beat on Oracle all the time because I call them the Intel code, extracting rents. They always increase their prices and finally customers revolted. I think SAP is another company that I see is struggling with large purchase prices. Anyone who has large costs of software, the old way of doing it is large license up front, large time for deployment. That trend is clearly pulling back and you're going to see, I want more like Royal Philips, which is I want license that's going to be by as I grow consumed by the drink, and that's cloud and I think that's the big head. So my reference model for all these discussions of new style of IT is Philips. I say, could they do business with Philips under the model that Alan Nance laid out? That's my new mental model. It's the Nance's law. But here's the thing. Nance's law. It's Nance's law. Hear what I'm saying? Amazon's actually using the video, saying see, Amazon, Facebook and Google invented the new style of IT. Let's be honest about that. Even not everyone can build their own IT. That's what they did. No, of course. Everybody's trying to mimic that style and they're looking for companies like HP to help. But here's the point about Oracle. Oracle can play in that new style of IT. They can go and say, yeah, sure. Well, we have cloud. We have infrastructure as a service, platform as a service and software as a service. Boom, boom, boom, clean. Now, peel back the covers. It doesn't necessarily all integrate the apps. But there's a lot of integration there. So as critical as we've been in Oracle, that was a red herring at the Churchill Club. Larry Ellison stood up and said, oh, cloud, water, vapor, blah, blah, blah. It was a red herring. He had clear plans to move to the cloud. Yeah, he was going to milk as long as he could and he shifted, he's shifting over. But still. I don't see it as a flip. No, I don't see it as a flip. I said he was milking it for as long as he could. So that was, what, 2008 or nine he had the Churchill Club video. We went to what, Oracle World, past five years, really two years ago he's just moved to the cloud. This year it's just started shipping products. So, you know. Yeah, but they're breaking it out in their financials. Very clearly. IBM's got like a gazillion billion dollar business cloud business. They're like, all right, well, that's everything. Does Amazon break it out? Does Amazon, no. No, but people break it out for them. You know it's a subset of other. Okay, so wait, carry the stupid. Amazon's hiding the ball. This is the point I'm making. Amazon's hiding the ball. IBM, you can't parse out what is and isn't in there. HP's not even really getting, multi-billion. That's all we know. Okay. Multi-billion. For which company? HP. Yeah, I wish, I don't know. IBM, I don't know. So this is why, I got to give Oracle Props. They tell you exactly how much money they made in infrastructure service, platform as a service, software as a service. They break it out every quarter, give you compares. It's very clean. And I give them a lot of credit. They're serious about cloud. Okay, so I got to ask you about our afternoon. We had Mark Interonte, Tom Norton, Steve Dyche, all from the cloud group. Big bulk investment in cloud. They built it out. They're going to scale it up this year. They have a great community model. They got good social media. They got a good team over there. What do you think their chances are? Well, we like this term heavy lift. And HP's cloud has been one heavy lift. And I think Steve Dyche summed it up. Is that look, our differentiation is, we want on-prem, you want off-prem, you want public, you want private, you want hybrid. We got it all, and we'll stand up to the security and compliance edicts. My concern, John, is to me to compete with Amazon, you either have to have massive volume by Google, or, by the way, Google's not in the enterprise not competing with Amazon, because- Well, they will soon. We'll see. They have a lot of changes to make. They have to do what Amazon did to compete in the enterprise. We can come back and talk about that. Or, you have to have a highly vertically integrated stack of differentiation, like Oracle. And HP doesn't have the platform as a service and the software as a service and the database layer so they can charge like ridiculous telco march. So the quote we heard from a customer, buy your gear, buy your service, hardware and services, it's not worth anything when it doesn't work. So, yes, so HP's ace in the hole is the customer relationships and, you know, the HP brand, right? But the business model is, in my opinion, is going to be a lower margin business model for their cloud than, say, an IBM or an Oracle. Probably be higher margin than Amazon, but I don't know about that. I think Amazon over time could have a killer cost model. So we had great interviews today. We had a lot of storage, big data, cloud, good dang. I'm encouraged. Today was the meat and potatoes day of the queue. I'm encouraged about, I'm always been encouraged about three par. Three par, you remember I call it the gift that keeps on giving? It keeps giving. Just read my mind. I mean, I tell ya, IDC just came out with a report on all flash arrays. EMC topped it, what a surprise. Remember I said EMC is going to be number one. Pure was number two. I think IBM was number three. All up there, NetApp was, you know, four, I think. In shipments? This is in revenue for all flash arrays. I think HP's going to do some damage in that space because I tried to prod Craig on it, but he wouldn't bite. Now they, their lips are sealed. HP's share of its on-platform business, I don't know what it is, but I bet you it's less than half of the total spend. You know. They could kill it if they just sell to their own base. I know. And I think they're going to. I think they're going to. And I think the fact that their lips are sealed speaks volumes. So, you know, I got the little smile, like they just swallowed up the canary. But so like, to me, that is, I see that happening. So to me, you know, no one's going to come on the cube saying we got to see your weapon. We're launching in about six months and tell you about it. So I think the teaser for us with Nunez and that David Scott was this extensible architecture. And I think David Scott was forthright and saying, look it, you know, we was, you know, we had built an extensible architecture that works in all the three areas that essentially is converged infrastructure. So, so that's, that's going to be good. So that was great. Tomorrow we got a great lineup as well. We got two celebrities in our mind. One, Antonio Neary, Keeve alumni. We also have Martin Nicos tomorrow. We got Peter Evans, the new VP of global marketing. Paul Miller is coming on. Got some great casts tomorrow. Another, another heavy day. Dave, let's not try to stay out too late tonight. When you get a good night's sleep, Barcelona. Sounds good to me. Get a bed by two. Barcelona, we're live in Barcelona's theCUBE. Wrapping up day two, I'm John Furrier with Dave Vellante. We'll see you tomorrow. Keep watching and thanks for watching.