 Live from Las Vegas, Nevada, it's The Cube at HP Discover 2014, brought to you by HP. Hi everybody, we're back, this is Dave Vellante and this is The Cube. The Cube is our mobile studio, we go out to events, we extract the signal from the noise, we've been unpacking cloud this afternoon with a number of HP executives. You know, HP, a couple years ago, Meg Whitman said we are all in the cloud and HP has been developing innovations. We've been covering those, we've had Sar Goli on a number of times talking about the progressions. The HP Helion announcement was a big announcement a few weeks ago. We're going to talk, go to market now. Kerry Bailey is here with Steve Deitch. Gentlemen, welcome to The Cube, good to see you again. Cube alum, first time Cube. It's great to be here for the first time. Thanks very much for coming on. Yeah, thanks. So, Kerry, let me start with you. Relatively new to HP, inside of a year. Came from Verizon, Big Telco. Little different culture, both big companies, but... Yeah, absolutely. How's it going? It's going unbelievable. I mean, and the main reason of coming here is if you think about this huge, huge transformation in the market, what's it going to take to win in cloud, right? When you think about the assets that we've got, that's why I came here. The hardware, the innovation that we have with software, the Helion, really capabilities that we have, it was just a perfect career progression to kind of come into a business that's transforming at the same time in industry's transforming, but it feels literally, Dave, like a startup times 10 right now. It's unbelievable. Well, you know, we've talked a lot actually about HP. I asked Meg Whitman, it was a couple years ago at the endless meeting, and I asked her, what about acquisitions? And she was really forceful with me. She said, we ain't making any acquisitions until we pay down the debt. Maybe we'll do some tuck-ins, but that is not our strategy. And so the follow-up, the obvious follow-up is, okay, how do you innovate organically? And so, to your point, I think HP has created these little sort of startup like culture, Steve. I mean, are you seeing that internally? That is it, actually. The cloud is important because the cloud is a movement. And you know, the new style of IT and so forth. But I think on the other hand, a secondary objective, or maybe the primary objective from Meg's perspective is to use cloud as a way to transform you with Packard. New style of IT, move quicker, be more nimble. Get in front of the curve as opposed to being riding the wave behind it. Let HP help define the new style of IT. So part of our transformation is your transformation. So now you're presumably selling into some of the industry that you used to go to, going through a huge transformation. What's that like? Yeah, I want to tell you, what's kind of amazing, if you think about the whole cloud industry, cloud was kind of like 2008 when it really started to pop and yet you look at the market, we're focused on the enterprise side. Enterprise is like 7% adoption, right? And that is the biggest change that I think is happening in the market is, there is a complete conventional wisdom change. What was originally thought when cloud came up was, hey, everything's going to be in these big mega data centers around the world. Everything's going to be public. Everybody's going to rewrite these big massive distributed applications. For the enterprise, that's not exactly what is happening right now. So it's much more hybrid, it's much more the demand for open, but I'll tell you that 7% adoption where we are today, it's about to take off. It is literally on fire in the market right now. I want to actually pick up on Carrie's point, Steve. I think you and I first met, I want to say was VM world. Maybe. Maybe, right? Okay. It's a long time today. 2010 maybe. Back when both our teams were better, the legacy and selling were a big time, yeah. To Carrie's point, 2008 was sort of early days. Pre-2008 was had the born and the web guys. Then during the downturn you had a lot of guys say, all right, we got to shift CAPEX to variable expense. We came out of the downturn and a lot of line of business shadow IT stuff occurred. And it seems like the core of the enterprise, the CIO organizations are actually adopting cloud now. They used to roll their eyes five years ago at the term cloud and now they're embracing it. Is that what you're seeing? Well, yeah, and it follows up with Carrie was saying is that the enterprise adoption is still in the high single digits. But what you're seeing now is that there's such an imperative around agility and speed and innovation and not only supporting the business but helping shape it, getting in front of it. And I think, and Carrie likes to use this a lot, IT needs to become the internal service provider to be able to do that. And CIOs realize, and any other lines of business and CMOs realize that in order to do that, you've got to adopt a hybrid methodology or a hybrid mentality, which is both an optimal mix of resources between on-premise and off-premise. Now the interesting thing is why adoption has been so low is the principles or the paradigm have an aligned enterprise requirements in the past. So things have been, you know, the paradigm for cloud was defined by other entities, non-enterprise thinking entities in the past. We won't, well those names will remain anonymous today. But what you're seeing now is as we move forward, the paradigm is shifting and the enterprise will define the path forward into cloud and hybrid. Okay, so if that's the case, I want to ask both of you guys to think about this. It's a trillion dollar business, you know? I mean, probably conservatively. Now, a much of that trillion dollars, obviously hardware, software and services, you guys got your big chunk, IBM has its chunk, Oracle has its chunk. With something as large as that market and as disruptive as cloud, I have a hard time believing that it's just going to be, okay, the oligopoly, the big vendors are just going to migrate all their customers to their cloud and it's going to be business as usual. I feel like with disruptions like cloud and specifically open source software, open stack, specifically, that something's got to give, that somebody is going to merge as the leader in this space. It's not just going to be status quo. Move everybody, all our install base to the cloud and that's it, everything's the same. Why are you confident that HP has a good shot at becoming that leader? I'll start with you, Steve. Well, you know, I think people underestimate the challenge. I think that gets to your point is, you know, and I think there's a lot of confusion around what it's going to take to reap the benefits of the cloud from an enterprise perspective. It's just, you know, and moving there and getting to a point where you have a optimal mix of on-premise and off-premise. You've moved your workloads or your applications onto the right deployment model. You're adhering to enterprise requirements around security, availability, latency, data sovereignty, security, cost. Look, that's not for the faint of heart, to your point. But most enterprise customers I think want to have a trusted, someone that's got a firm hand on the teller that can lead them in that direction. It's just not a fly by night or even a non-fly by night entity that's going to be able to understand those requirements. And as you said, migrate not only the existing workloads, by the way, understanding that if you move something to the cloud, it still has to tie back into the existing infrastructure, the existing processes, the organizational dynamics, the processes, and deal with cloud natives and cloud native applications. That's a complex endeavor for anybody. From an HP perspective, we've got all the assets to be able to help enterprise customers do that. Oh, so Kari, you kind of bet your near-term career on HP, your senior executive, I know a little bit about your background from our mutual friend. You could have gone to a lot of places. So, sort of similar question to you on your confidence in HP being one of those leaders. Well, first I'll tell you just personally, I've had a passion, my entire career, I've been trying to do IT as a service. And it goes back hosting days, managed service days, application service provider days. But there was never exactly all of the components to line up to make the industry move. Either there wasn't ubiquitous bandwidth, or there wasn't virtualization, or there wasn't enterprises with that need that they're going to move to this new model, right? So, just constantly chasing it. And when we spent about six years at Verizon TerraMark with, we had a lot of the assets. We had the network, we had the data centers, we had great platforms built on HP. We had all of that, but it took more to win in cloud. And that was the movement here. When you think about HP and you go, all right, we have literally every component that is there, the hardware, the infrastructure, we're committed to open standards, whether it's Cloud Foundry or OpenStack, whether it's Linux, we've been committed to this. And we have a go-to market, the world's largest channel, both indirect and indirect. And you add that together with the global reach and the fact that we have 117,000 people in our services organization that understand mission critical, you sit there and say, we're not a networking company trying to get into a business, or we're not just a software company trying to get into the cloud business. We actually are an IT technology company, but yes, we have to transform too to become faster and more nimble and more new style of IT. But when you look at our commitment of the assets and the fact that we have been on open source forever, we haven't wavered from our strategy. I sit there and go, it's going to be a multi-cloud world, I got it. There's going to, it's a huge market. Maybe one day we'll stop talking about cloud and it'll just be the way that we do IT. But we have all of it. And most importantly, you got a board and you got Meg Whitman and the EC. That's why I came here. The commitment for this, as Steve said, it's the catalyst of change for our whole company and our customers. That's why we're going to do well. So, Kari, I got to ask you. So coming from the telco world, HP of course has a great relationship with telcos. We had, yesterday we had a segment on network function virtualization and how you guys are, Bethany Mayer was on. We have a chance to meet Bethany. Sharp lady and she was talking about the need for, it's kind of like SDN for telcos and customizing hardware and software assets for the telcos. Obviously, you have a great relationship with those guys. But as you get into the cloud, you start selling cloud services, do those guys get a little freaked out and say, well, wait a minute, you're coming into my territory, how does that all work? I'm going to give you a, it's a great answer. And the reason why I lie, a great question, reason why I like NFV and cloud is what has inhibited the telecoms for so long is the over the top providers were coming in and basically taking their revenue. It started with SMS, it goes to voice services, what's happening, all that came in, right? But they couldn't respond quick enough because they didn't have open systems, their OSS, BSSs were hard locked, all the network features were black boxes. Now, and I remember the CEO of Verizon would always say, when you look at cloud and you look at our network, why can't they come together? And that was the answer. So, with Bethany as an example, we run the go to market with Bethany because NFV is based on open stack, is based on open standards. It looks and feels a whole lot like cloud and that's going to actually let the telecoms really generate new revenue streams. So, we actually think it's a great thing for the industry. Yeah. All right, Steve, last question for you is the bumper sticker is leaving Las Vegas. You know, the bus backs up, you put in all the equipment. The bus is leaving the sans conventions. What's the bumper sticker on Discover 2014 from your perspective? From my perspective, well, I'll tilt towards the cloud. I think it has to do with, you know, I think the announcement we made yesterday around the Hewian network is big. And it's a market disruptor, we believe. And it goes actually, it relates back to your question around service providers. So, the Hewian network and it attaches or it is a key element of our overall cloud strategy of not only helping clients build cloud environments, but helping them consume cloud services. And that consumed side for enterprise customers is both services directly from Eulah Packard or from a partner ecosystem from HP, including telecommunications providers. And we're all about choice, flexibility. There is going to be no one provider this year, whether it's HP or a provider. What we announced yesterday was HP is going to create a global open network of service providers that are going to deliver an unparalleled portfolio of services, geographic region quality of service to enterprise customers. It's going to be the open network and it's going to involve everybody from tier one operators, to managed hosters, to channel, to systems integrators, to the ISV developer community to essentially create a global federated network of standardized hybrid cloud services. And I mean, this is big. This is as Kerry would say, it's not a project, it's not a partner program. This is a core element of HP's strategy going forward. We're working with partners. We're going to lift everybody's boat. We're going to create a network that's going to deliver enterprise class services. And back to your original question, Dave, is going to accelerate the trajectory of the enterprise adoption. So truly interoperable clouds within that network. Correct. So, I said it was my last question and I got a couple more. Open stack, right? So you're going to have interoperable open stack clouds within your network. Do you think the open stack vision will transcend that network? Or are we going to see stove pipes of open stack clouds? No, our intention is, as being a leader in the open stack community is, the fundamental foundation of the healing network is open stack. It's the healing open stack platform that's going to not only create the interoperability, the workload portability, but it's going to give partners the ability to harness the open stack community innovation, both from a technical and from an economical perspective. All right, Kerry, my last question for you. We're obviously going to watch adoption. What are the other things that we should be paying attention to as indicators of progress? What are the things you're focused on, milestones and the like? Yeah, I think when you look at both us and our customer base, I will tell you, everything we've talked about here with our customers is HP is driving the enterprise adoption of cloud. So, if you look at the 4% and next year, it was 5% and 6%, our whole goal with what we're doing with the communities, ever whether it's on the foundations of open stack, or our commitment to what we're doing with Helion, you're going to see the enterprise adoption really begin to skyrocket. So that's going to be a measure of velocity. It is, it is. And I think it's going to be a hockey stick. And I also believe that the market will recognize us as the one who drove a new model, as Steve talked about, the Helion network. This is no longer about just a normal commercial model of, hey, we're going to sell our hardware and our software and you service providers go out there and good luck with it, right? We're in this together and we're in this in the major trends that are happening in the market around open and hybrid that will drive the adoption. So that's what we're focused on. And we do believe, as Steve said, everything's going to rise when we're successful in doing that and we have a strong commitment to it. All right, Carrie and Steve, thanks very much for coming to theCUBE. It was a pleasure having you. Thank you for seeing you. All right, take care. Keep it right there, buddy. We'll be right back. This is theCUBE, this is Dave Vellante. I'll be back with Jeff Frick in just a moment.