 Live from Madrid, Spain. It's theCUBE, covering HPE Discover Madrid 2017. Brought to you by Hewlett Packard Enterprise. Hi everybody, welcome to Madrid, Spain. This is theCUBE, the leader in live tech coverage. And we're here at the conference center in Madrid covering HPE Discover 2017. This is HPE's European conference for years. We've been covering not only the US version of this show but also the European version of Frankfurt, Barcelona, London and now moved to Southern Europe and central Spain. I'm here with Peter Burris, my co-host for the next two days. Peter, good to see you. Good to be here in Spain. And we're going to be covering the, we've been covering the transformation of HPE under the guidance of Meg Whitman for the last six years. Of course it was announced recently that Meg is stepping down. Antonio Neary is going to take over so we're going to be reviewing that. We're going to be covering all the innovations that these guys are announcing, talking to customers. And very importantly, something that you've been talking about is juxtaposing HPE as a long time enterprise company with a lot of customers. Juxtaposing that strategy with the other end of the spectrum this week at AWS re-invent, Amazon obviously growing very fast. Many of the decisions that Meg and her team made are a direct result of the cloud effect and other things that we'll be talking about. So, welcome. You bet. Thanks for coming on. Hi, it's Madrid's a wonderful city and this is a great place to be running a conference like this. It's one of the transformational cities in the world. So let's start by looking at Meg's tenure. And when she came on and she inherited a mess, everybody knew about the acquisition issues that they had with autonomy. So she inherited that from Leo Apatecker and really kind of took one for the Silicon Valley team really and said, set the time, look it's going to take us five years to transform this company. So it started with an organizational sort of look and it took some time to get that right to understand who her team leaders were going to be. And they made some missteps and sort of had to shuffle the deck chairs a little bit. So they did that, they had a public cloud misstep but eventually they got that right and they decided that they would split the company into HPE Inc and HPE. At the time, it was believed that HPE would be the growth engine, HPE Inc would be the cash flow engine. It hasn't totally worked out that way but one of the things that came out of that was a much better balance sheet. HPE's got about $5.8 billion in cash now. It started to make some acquisitions that we'll talk about. But essentially, Peter, it emerged from that split as a much more focused company, as I say, a better balance sheet, much smaller company with a focus on essentially a lower margin business to be able to compete with the cloud and with essentially China. Your take on the last five or six years under Meg Whitman. Well, I think you summarized it pretty nicely. I guess I'd say a couple of things. The first thing is if you think it philosophically, HPE was one of those companies that believed that size was its own virtue in the technology industry. And while that's suitably true in certain domains, it's not necessarily true at all. The complexity and the interplay of technology, solutions, software, hardware is such that one of the places where you get the most leverage out of something like that is at the customer interface. Are you capable of pulling together all that's possible in the tech industry and presenting to the customer in a form that the customer then can turn into value? So HPE for a long time, just presumed that size was its own virtue, focused on acquiring as much stuff as possibly could to feed that and probably left the customer a little bit on the sideline and didn't really focus on the customer. I think that was probably Meg's first good move is to step back and say, let's not act as though size is its own virtue, let's stop the acquisition, let's focus on what we have, which is mainly this large portfolio of customers and refocus the customer on the company on that. And that's a good thing. So I think the first thing that they did is they went back to the simple observation that HPE's always had, that we don't exist if we don't have, we don't take care of our customers. Second thing I think that they did is as you said, the Leo era was about, oh, we're going to be a software company. And I think they strongly pulled away from that. Where the idea was to get as many software assets as possible and try to figure out how to weave them together. They pulled away from that, although we agree that it's a misnomer that HPE got out of the software business. Clearly they got rid of a bunch of assets that they couldn't use. They've reinvested in other assets that are more true of their heritage. We're going to see some big announcements this week about that. And that's really focused on making infrastructure better, right? Exactly. And ultimately the, it's interesting that there's no question that AWS is crafting the new look of the computing industry. But it's not a complete picture. And it's not going to be a complete picture. There's going to be plenty of room for companies to move. And some of those companies are easily going to be tens of billions of dollars in size. And so the vision that HPE has, the direction that HPE seems to be going has the potential to be very complementary to that other vision. As we like to say, the goal is, for customers, is the caught experience where the data demands. And that we know that the data's going to be at the edge and we know that the data's going to be, a lot of it's going to be on premise. And so as a consequence of that, there will be a play for a strong, multiple strong companies who are focused on delivering at the edge, great technology, great management capabilities, and delivering true private cloud into a company where they got to put their proprietary data assets. Okay, so what that really says is, HPE and its competitors who sell on-prem actually need to mimic to the extent that they can that cloud experience. So we're going to be unpacking that. I mean, HPE talks a lot about flexible capacity. We're going to try to unpack that to see how cloud-like it really is. I mean, it's not identical, but it certainly gets to be much more of an op-ex versus a capital throttle. As well as the ability to deploy quickly and let's cut to the chase. Reduce non-differentiated IT labor costs. And that's something that, we're going to unpack with some of the customers here who maybe used to be in the business of provisioning infrastructure and tuning infrastructure and likely moving toward a role in digital business. So just some of the financials, HPE, the new HPE is roughly a $30 billion company. The stock's done okay since the split, but it's still trading at less than a dollar from a valuation standpoint, a revenue dollar. So trading, its valuation is well under that 30 billion, probably in the low 20s. So there's a lot of upside. Certainly a company like HPE, if it can show some growth, which it eked out on a constant currency, about a 1% growth last quarter, if you take out the tier one server business that it's exiting, the growth is actually a little bit better. And there are some bright spots. Certainly Aruba has been growing like crazy. And it's interesting, Peter, HPE is going to put forth a new financial reporting structure next quarter. So they're going to eliminate the whole, remember it was EG and it was networking, et cetera. They're going to bundle everything into, or much of the core business into hybrid IT. That's going to be their biggest business, server storage and core networking and services. And they're going to have, essentially the edge is going to be a second category, which is going to comprise Aruba and Edge services and all the wireless stuff. And the third category, interestingly is financial services, which has been growing like crazy. It grew by over 20% last quarter. So HPE is now saying, okay, this is the face that we are going to present to the street and they're going to try to present it as a growth company. And certainly the largest business is going to be hybrid IT. And then you got two growth businesses, the edge and financial services, which is really about creating that cloud experience to a great degree through some financial engineering. Yeah, and look, that's smart. Because as we were talking about, that the whole concept of where the scale is going to be in the future is where Amazon is at putting all this stuff together and putting all these assets behind the wall so you get a service out of it, or in the customer engagement side of things. And the only way that HPE is going to be successful at replicating or putting forward this notion of what we call true private cloud, that where you do get the cloud experience, but you get it on premise where your data requires, is by looking at things just in that way. Sources at the edge, finance that allows you to buy as you go, and then great server technology that can run the workloads where they need to be run based on the availability of the data. So last thing I was going to say, so I asked the question five years ago, can HPE, can HPE get back to its roots? Remember the old logo, Invent? And I sort of tweeted out, I didn't think HPE's strategy was to get there. I thought at the time that was sort of an imperative. And I had a little discussion with somebody from HPE on Twitter where they suggested, hey, there's a lot of innovation here. And we've talked about the difference between innovation and invention. And if you look at some of the acquisitions that HPE has made, SGI, SimpliVity, Nimble, some of the smaller acquisitions around cloud technology partners. These are really focused acquisitions. Yeah, very focused, tuck-ins, and a lot of innovation there, is I guess what I'd say. And we're going to, again, unpack that innovation. We have HPE folks from labs coming on as well. And we're going to talk about invention, innovation. We're going to talk about that all week. So keep it right there, everybody. This is theCUBE. We're live from HPE Discover in Madrid. We'll be back right after this short break.