 Live from the FIIA Barcelona Grand Villar 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. Hello, welcome back everyone. We are here live in Barcelona for HP Discover 2014. This is The Cube, our flagship program where we go out to the events and extract the signal from the noise. I'm John Furrier. I'm with my co-host Dave Vellante and our next guest is Antonio Neary, esteemed alum of The Cube. Been on for many years now, big time executive, VP, general manager, SVP. What's the official title now? Senior vice president, general manager. General manager running all the enterprise group. Congratulations. Thank you. The Cube is a good, lucky term for you. You get promoted, everyone, you get promoted all the way. Why do you think I'm coming back? We love you. Great to see you. So now you're on the big stage, you're an executive committee. What's it like? What's going on? Tell us the update. No, actually, listen, first of all, thank you for having me back. As I said, you bring good vibes, but I love being here talking to you. I mean, this is a great way to connect with customers and tell our story. Listen, very exciting times. I mean, the industry is going to a massive change. HP is in the forefront of that change. We actually make a good progress at HP. The fact that I have now the responsibility to drive the enterprise group, it gives me a good opportunity to tell the customer, right, what is the journey to the new Starlight team. And one of the things I come to the realization, right, that, hey, you have to be consistent. And, you know, we're talking earlier, said, what is your strategy? Strategy has not changed. Same for the last three years, right, to become the preferred solution provider for the new Starlight team. The key is the journey and the innovation around it. And what is really great to see is the innovation we are bringing to the market. You know, Antonio, one of the things that I love about talking with you is just understanding your background, how you grew through the organization. You've been, you know, great career. But you've also been part of the change that's happened with HP. We've been at theCUBE now for 50 years. So we've seen it as well in all the different groups. Certainly, Cloud is a lot different than it was before. The infrastructure group says it was before. Now you're in charge. So this strategy hasn't really changed in a few years. But now there's a new spring to the step of HP. Meg Whitman's keynote was very impressive. She's on the stage every day. She's out there with three major messages. Innovation. We're not dead here at HP. Innovation is happening. Customers and partners at the center of every single talking point. And so that's cool. That's great messaging. But now it's trickling down. The people are all in their positions at showtime, as we said earlier. So what's the show? What's the plan? Actions happening. What are you guys doing? Where's the results? What's going to happen? What's the execution plan look like? Well, first of all, I think it comes down to leadership and execution. You call it showtime. For me, it's all about leadership and execution. And the reality is that we chose a path. We gave a mission to our engineers. We have, what I believe, the most talented engineering community in the IT industry. And we have what I call a world-class set of experts on the services side. Because at the end, you have to have the services leading the conversation. And customers, you know, it's not just about the technology. It's about business outcomes. And one of the things that we are really making a good effort is shifting the conversation with our customers. What are the problems? What are the business results they're trying to achieve? And remember, they are under a huge amount of pressure. You know, they need to do more with less. Meaning, the budgets are not getting bigger. They're getting smaller. They need to be more agile, more cost-effective. They need to deliver services faster. Because at the end of the day, time to value is how they compete. And so, when I look at our roadmap and the innovation, it's all about delivering three business outcomes for our clients. So what's the pace right now? Now, obviously, you've got customers that are under a lot of pressure. You now are in charge of the group. It's clear from Meg that with cloud and the changes, the pace of HP itself is on a pretty torrid pace right now. So what's the pace like internally and with customers? How fast is it going right now in your mind? How would you describe that to customers? Yeah, it's going really faster than the people ever thought it was going to be. I mean, Meg talks about the fact that she had never seen in her career the pace that this market is moving and is astonishing. And whether it's business model innovation, whether it's technology innovation, but again, if you think about it right, cloud, mobility, security, big data are driving that change. And from the infrastructure standpoint, we believe infrastructure really matters. So you have these trends from best of breed to converge infrastructure to integrate the solutions. Software-defined data center made a huge change. Obviously cloud is going to dictate a different type of business model. And this is where when we think about IT, we think about workloads centristically. Because at the end of the day, you have to align the infrastructure and the orchestration around the workloads. And that pace of innovation has to accelerate. Well, your infrastructure matters, Lon, translates into an investment strategy. It's actually unique in the industry. When you see companies running from parts of the infrastructure, or others entering in very narrow slices, you say, no, we want to be the infrastructure platform we're going to invest in. And then you see the machine that's like, wow, that's the next generation of infrastructure. And that's why we're making investments there? Yeah, and I want to talk about that a little bit. But you also get the organization right when you move services, technology services into the EEG and then you've got converged, you basically follow the converged path. It's important to get the organization right, isn't it? Let me talk about that a little bit. Well, yeah, because at the end of the day, customers are looking for a solution. They are not looking to buy a server, or a storage, or a networking box. What they're buying is the solution to deliver through business outcomes. And having a group of people that don't have to drive that conversation, which is a services-value-oriented conversation, is fundamental in this new style of IT. And the way that we do our services, in our case, plays a huge role with our professional services and our consultant services, but also with the support services behind the scenes. And so we integrated TS, right, in that construct because we knew that customers are looking for help. At the end of the day, it's all about a journey. Some people are going to still consolidate and virtualize infrastructure, and some people are already moving really quickly to the cloud. But then you have to move at the pace to be able to work that journey at their own pace. So you've aligned those businesses, but they still are businesses that you report on. You know, Meg talks about them on the call. You kissing the servers. I love it. I want to talk about that too. And I've said to John, HP's got this big business that's a legacy business, that's a managed decline business, and they make investments as they need to in that business, but they're putting all the emphasis and all the innovation in the hot products. So what's the challenge you have as the leader of this business? I wonder if you could talk about that dichotomy. Your goal is obviously to get the new stuff growing fast enough to offset the decline in the old. So how's that going? Yeah, I mean, listen, you know, HP made a promise to customers to keep them on a journey, and the reality is that you have to deliver against the promise. Let me give an example. We are very committed to the UNIX business. Right. We are committed to the integrity of that platform, and we will continue to support customers through the life cycle of that platform. We continue to relate what is the next generation of that platform. I just want to be clear. We will continue to invest in that business. But at the same time, there is a different path that customers want to take, a path that's more open, and that's why we work closely with Intel with the next generation of the Integrity Superdom X, but I tell you, we continue to support and invest as well. Are you giving a path? At the end, it's all about choice. One of the things we really are doing a better job is to focus on what I call the 80-20 rule. 20% of the things are going to drive 80% of the outcome, and ultimately it's about making choices based on priorities. So the fact that we continue to invest in networking is a big, big deal. I just want to reinforce that networking for us is a core component of the data center strategy. Where it's flex campus, flex branch, or flex fabric in the core of the data center. The software defined networking is going to be a massive change as you move to the cloud. You have to enable that journey. Storage, with all the answers we make here, think about how far we came from three parts, but at the end you need to provide a converged storage architecture to the customers for the journey to the cloud. And ultimately one of the big connectors is HP OneView. And HP OneView is the single pane of management for the entire infrastructure for physical and virtual. And now we are integrating HP software in that infrastructure. So connecting our software assets with the HP management level is another aspect that we're making huge investments. So it's always a trade of balance, but the reality is that customers need to have a choice. But we do it in a very open formal way. That's why we pick open stack, open source and we're committed to that. Yeah, and focusing that 80%. Yeah, so a couple things I want to share with you we always like to get the hallway award to the product that kind of like steals the show. OneView right next to us is getting a lot of buzz. And this is not because they're next to us. It's just good buzz. Multiple feedback from the top independent bloggers. OneView is one of those highlights. The other one is the EVO rail kind of thing obviously the machine gets the headline, right? But EVO rail speaks to the partnering strategy and OneView speaks to some of the software innovations around customers dealing with it, right? So that brings up the whole multi-vendor. How do you guys compete? I see you want to have a polymorphic like a storage environment. You want to have some competitive strategy advantage with products, but you also have to partner and be open. That's still a core tenant of HP. Absolutely. So talk about that and how you guys are balancing that piece of the business. You got to do more partnering and how is partnering changing with converged infrastructure? Is it still the same? Is it different now that you're bringing things together? What's the update on that? No, no, no. So listen we will give customer choices. So the reality is that customers have many, many choices. So many customers are on a VMware path but they love our infrastructure. So you have to integrate that infrastructure with that partnership. And so our partnership with VMware is very, very strong. It goes many, many years ago with our server business we are evolving it to a converged infrastructure partnership. We are integrating VMware with our HP OneView so that customers if they decide to go to a VMware cloud stack, they can use our HP OneView to integrate with a VMware cloud stack and still manage that heterogeneous infrastructure. The same with Microsoft is exactly the same thing with our Hyper-V. We, HP are the largest Hyper-V installed base for Microsoft. Why? It's because again, we have a strength which is called compute and we are building around that strength together with Microsoft. And the reality customers will also make Azure as a way to deliver the value. Has integration changed at all? I mean, integration has always been a key strategy for compatibility. You integrate in with and connect with the customers, right? With VCE, with EMC first we saw that partnership. It's kind of rocky right now with Cisco. Just to be clear, it's falling apart. You said it, great, you said it. It's falling apart, but that doesn't end the story there. Well, it's been subsumed to me. EMC had to take it back in. Cisco said we don't want it. There was a conflict there, very clear, right? I mean, when you try to virtualize the network and, you know, that's the way that Cisco profitable is clear. There is a conflict of it. Yeah, if EMC didn't buy NYSERA, they might not. I mean, it's a choice, right? They glued themselves up. Okay, but they knew that. They kind of knew that was coming, but their business was doing well. So, like, that's the notion that people looking at is the integration. What do you guys look down the road for future innovation areas that you can speak to without, you know, giving too much confidential information? What are the key areas that you want to take it to the next level? Well, first, what I think is very important, the management of the infrastructure. You're going to continue to see huge amount of innovation with HP 1.0. We believe it's fundamental to our strategy, because managing that complexity with the simplicity of a platform that manages heterogeneous infrastructure, that's why we, if our customers decided to stay on a Cisco path, what we are giving them is the ability to manage Cisco and HP with our tools. What that means you can reduce tools by 50%, and you can manage all of the infrastructure with the power of one finger in a common user you know, user interface. So, the reality is that you're giving them a choice, but you drive the simplicity at the same time. So, HP 1.0, you're going to see a lot of innovation there. More predictive analytics, more capabilities to support other type of third-party components as we go forward. Think about the convergent infrastructure. You know, we went through convergent infrastructure 1.0, HP was at the forefront of that. Now, we're going to convergent infrastructure 2.0, but also we're moving to hyper-convergence. Right? So, the evil rail is an example of a partnership we did with VMware to address, you know, SMB and mid-market type of customers that need the enterprise-class converges at SMB level. And that's why hyper-convergence started. But then hyper-convergence actually gives you an ability to integrate as a scale-out architecture so that you can scale as you volume grow. That's going to be a lot. So, scale-out, we always love scale-out and scale-up is what customers want, not just scale-out and get stuck. They want it both, right? So, that's another way you can see a lot of innovation. Now, think about the compute, right? We always talk about providing the right compute for the right workloads and the right economics. I know Alan was here earlier and HP is the only vendor out there that can provide all the compute resources to manage all the vast majority of the workloads. And storage, obviously, right? So, I'd love to ask the questions now, the head honcho, and we knew you win. But there's M&A conversation Dave always and I have on the queue. What's your buy list look like? I mean, you guys have a list of companies out there? I can tell you, definitely, we will always consider M&A's. I mean, I think Meg was very clear about this, right? She said, listen, the pace of the market is so rapid at the end of the day, even though you are increasing your own R&D investments, the reality you will have to augment that with acquisitions. And so, HP now If you're moving fast, you've got to have the organic coming out of the labs, filling some gaps Okay, but two years ago I asked Meg at an analyst meeting, I said what's the better use of cash, acquisitions or stock buybacks? And she said debt pay down. Those two years ago she said we're not going to do any of that until we pay down the debt now. We pay down the debt, we are almost at five points change in positive cash flow. And you've done about a billion dollars in dividends in stock buybacks and a few tokens. So now you're in a position to start being dangerous, in my opinion. And I think as you reported out, it's necessary to keep this changing world. Absolutely necessary. So that is the next question What are you guys looking at? I mean Categorically Attention, startups before Antonio's got his shopping list out so No, in all stairs, we love to There's a lot of white space opportunity out there What are you not looking at? You're not looking at an all flash array company, I bet Is that fair to say? We're going to look at Is that too much? They don't want to pay four billion for it? I will say we look at everything that's of value to the customer and it helps us move the agenda forward. I think, you know we are very proud of when we came three years ago I mean we made huge progress in the transformation of the company Stabilizing our revenue profile Positioning ourselves for the next generation of the new stall of IT Paying our debt back and actually being in a very strong position now Improving profitability the innovation that we bring into the market And again, you know We saw Scott Welleron, but he actually gave up his cube spot for some of his rising stars like Shane has done They're doing billions in revenue from zero The service aside is booming Obviously customer demand is high Where's the rubber hitting the road for you guys Give me the final word Where's the action Well Continue to deliver the problems to the customer So you said it earlier, right? Customers and partners are in the center of everything we do So for us channel partners are very very critical In fact, Meg, Mike Nefkins and Dion where yesterday Robert We're together speaking to our channel partners from the floor Just to share the excitement about our strategy and the innovation And we can sense that the partners are equally excited because now it's not just the product It's also how we enable them in that journey to the new style of IT We're going to continue to invest in our channel partners from the sales enablement, technical reference architectures, value proposition point of view, while at the same time giving them the tools to go and compete And then you will continue to see a ton of innovation You talk about the machine The machine is a vision for the future But many of the components of the machines are going to start showing up in our current products way earlier than that How's Moonshot doing? Moonshot is going very well We introduced two months ago the first industry ARM 64 bit solution which is targeted to specific workloads We've seen a lot of interest I can see here across the whole the Moonshot booth It was a big signing last night with the Foxconn deal Let me think about it We enable significant cost reduction by reparteting public cloud workloads on-premise And they are deploying Moonshot You guys, it's good The strategy hasn't changed in a few years now It's showtime Here on theCUBE, it's showtime We have all the data we're sharing with you Antonio Neary, good friend of theCUBE Now under a lot of pressure, under the gun Still looks cool as a cucumber Look at him, he's not breaking his sweat at all I am confident Very confident, you're in a good position Great to see you A strong part of HP has been and continue will be in the future in the enterprise split as you guys go on Good luck with that This is theCUBE, we'll be right back live here in Barcelona after this short break We'll be right back