 From London, England, it's theCUBE. Covering Discover 2016 London. Brought to you by Hewlett Packard Enterprise. Now, here's your host, Dave Vellante and Paul Gillis. Welcome back to the Docklands of London. We're here at London Excel. This is HPE Discover 2016, and this is theCUBE, the worldwide leader in live tech coverage. Bill Philbin is here as the new vice president at GM of the Storage Division at HPE. Congratulations Bill, it's good to see you again. And Orrin Torstensen is here. He's the CTO and head of IT Systems Management at FUNAS, great to see you. Thanks for coming on. Thank you. So Bill, we've got to start with you. Again, congratulations, I'm stoked that they picked a technical guy to lead the Storage Division. HPE getting back to its roots of events. So really fabulous. Product guys are taking over. Well deserved, I'd love to see it. But give us the update on the division. Yeah, so we've had a very, very successful run. If you think about what HPE was six years ago when I started, we were like number five or number six in the storage business. So today, we're number one in internal external storage. We're number two in external storage tied with NetApp. This is as of IDC's latest numbers. We're number three in all flash. Number one in all flash here in Amia from nowhere two and a half years ago. So if you take a look at the strength of the portfolio from all flash to data protection to our entry portfolio everything is humming at Heeler Packard. Excellent. Jorn, tell us about FUN and what you guys do and what you're all about. Well FUN is a service provider located in northern parts of Norway. So we have been a service provider for the last 20 years or so with both services from our own data centers. We have two data centers up north and then we also obviously combine that with public cloud services for our customers. And our main goal is to be the spoke for our customers. So we want to own the customers and talk to customers and produce the services ourselves that we need to produce and we white labeled services from other partners as well. So I had my first experience with Norwegian airlines this week flying to Gatwick instead of going to Heathrow. It was very pleasant. It's like the jet blue of European airlines. It was fantastic. It was the most wired country in the world. And by the way, Norwegian Airlines through a partner of ours in Norway is on three part. Is that right? That's right. All the more reason to highly recommend Norwegian allies. I'm not kidding. It was a great experience. But so tell us about your story. We were talking off camera. You used to be an IBM partner when the Lenovo deal went down. You stepped back and said, okay, maybe it's time to reassess why and why HP, how does HP- Well, I mean, the world is changing and the world is changing quite rapidly and we also need some strong partners. And we had a partnership with IBM for a few years but we chose to go the HP way and actually in all sense, both on the storage part and on the server part. And I mean, if you just look at the event here today and you see the width and the expertise that is in HP, that's the partner that's value for us. They can choose and they understand us and they are quite near us. So they can understand our needs and they can pick out the products and the things that we need to do our business. And they've had a very strong sales engagement model, local country resource. I mean, the partnership between the two companies is absolutely fantastic. So paint a picture if you would of your infrastructure and sort of your operations. What's it look like? Well, we have two data centers as I said, located in northern parts of Norway. One primarily data center, which actually has been providing services since 1998 or something. And we just acquired the data center number two in 2015. So we have a setup that's, well, as good as it can get and we can provide services to all the customers that we need. Many of our customers are based in northern parts of Norway and in Norway in general. But I mean, it's not a restriction to where we want to provide services. And going from there, we have always been providing services on a per month per use basis to our customers. And the partnership that we have with HPE now, we have gotten a deal in the partnership, especially through the flexible capacity part that does that, underlines that business model from our point of view. So that we can use HPE as a partner to do the stuff that HPE knows how to do. That is installing and configuring, updating all the hardware stuff. So we can focus on all the customers and the value-adding things on all the customers. So you moved from a CapEx to an OPEX product. And was that an offering that was unique to HPE and when you were looking at the partners you could work with? At the time when we looked at it, yeah, definitely. And I mean, the whole model surrounding it. The one thing is the OPEX, CapEx bit. But I mean, it's just as important that what do we want to focus on as an organization? And my guys want to focus on our customers. And I mean, HPE knows their products. They can do the installment, they can do the upgrades. We don't have to have competence on that. They can do the capacity planning for us. So I was going to ask, how's that work? So HPE does the capacity planning? That's right. That's right. We have a monthly meeting with them just going through the different stuff. And this is both on the server side and on the storage side. And then we do the planning and see how do we going forward from this? So it's compute and storage on demand as their business dictates we deliver the services capability internally. And we just announced here at the show sort of the next installment of that called FlashNow which is for three cents a usable gigabyte you can get all flash storage. And this is in that storage sooner or later from innovation to sort of industrialization it always comes down to economics. And what we've just brought forward is an economic model that in our estimate is about half the cost of what a conventional cloud oriented storage service would cost you. You can half of that, three cents a gig usable per month in your data center. No data sovereignty issues. Norway's very big in data sovereignty, et cetera. But now how does it work in terms of so I get flexible capacity meaning I can, how much can I turn it on and turn it off at my, my will. Right, I don't think this is not a thousand percent meter that you can just, you know, it's not more power Scotty, right? But there's some granularity there. But there is a flexible capacity within the customers data center like Flynn's data center where we understand how their business is scaling and we pre-provision capacity as a result of that through a partnership, right? Yeah, yeah. So if I'm a retailer and I get a huge spike in traffic at the holiday season and it's double what I get at the rest of the year, are you going to put double the amount of the flash? That's what's required, sure. The interesting thing though is that from a storage perspective, most of that stuff has to stick because it's flexible compute capacity, you're absolutely right, but a storage pass, most of that storage has got to stick because you want to go back and do data analytics on what was purchased or returns or, you know, order, whatever. So from our vantage point, more storage you consume is great because it rarely comes back. We're seeing an increasing trend. Talk with a couple of hyper-converged vendors recently who are doing this, the OpEx, they put the box on site, they manage it remotely and you pay them a fee. Is this something that your data center customers are demanding in large-scale as well? Absolutely, I think as the pressures, you know, depending on what industry you're in, you know, all around a CapEx operating model, this is really what customers are essentially demanding and it's for customers who have scale and size and complexity that you can't go to Amazon or Google to go get, right? You know, this is the Netflix of the world or the Dropbox who just moved from AWS to all-HB infrastructure in their data center. That's the kind of scale that we're talking about with FUN and a lot of other customers are driving that economics model. So what are the characteristics of companies that are best qualified for this kind of OpEx model? Well, so first of all, I think Flash is going mainstream, right? So Flash was this boutique, you know, high performance, very expensive. Well, guess what, you know, at this point, we've long since, you know, gone over the crossover point where we're selling more Flash than we're selling spinning media capacity. So first of all, the first answer question is for just about everybody. Second of all, and the economics have to work though, right, so that's where you've got to look at your data change rate, the business growth, it's got to work for both parties. So it's really, to answer your question, it's a conversation you should have with your salesperson to figure out this is the right economics model for you. Are these companies who might otherwise have gone to the cloud or they couldn't, they simply couldn't? I think it is for companies who want to go to the cloud but are concerned about SLAs are on performance. And when Netflix is down, Mrs. Philburn calls me, right? It's like a telephone service at this point, right? If Dropbox is dead, we have customers who cannot run their businesses. And so I think it's from that vantage point that customers are not willing to make the trade off between availability and cost and we're giving that capability. That makes sense. Orin, how do you protect all this critical data? How do you protect all this data? How do we protect it? Well, I mean, this is something that we also use HPE for. And by now we're using the store ones capability. And we take that through the Veeam backup system. And I mean, through store ones and the did up specification that we have there, it's, well, it gives a case of economics. We have to store and we have to be considering the protection of the data, especially on the old flash side. But I mean, yeah. So we announced here at the show a good expansion of our partnership with Veeam and we now are into a resell agreement with Veeam. So a customer can actually buy from a single vendor, both the Veeam software as well as store ones. I think one in every 10 store ones boxes are actually protected by Veeam today. So we have expanded our partnership, which will make transacting business for people like fun a lot easier because it'll be on a single piece. Are you a Veeam customer? Yeah. You are, okay. You're not using data protector. No. Okay, so this is actually, that's another benefit of the micro focus software spin merge. Well, I mean, so data protector is the largest connect we have with store ones. So regardless of the spin merge, we'll continue to see them as a very strategic partner. But it opens you up, right? But Veeam, as we've had a good strong relationship, a development relationship with Veeam over the years as well and it gives us customers an opportunity to choose which is the right platform for them. Are they looking for a... And for us, I mean, most of this is historical. And where do we have competence and what do we want to do? And we have to connect to some partners. I mean, the fact that HPE and Veeam now connects is great news for us, obviously. Are you a VMware shop as well? Well, yeah, as of today, we are. But we are also converting that in quite a great extent over to Microsoft and Hyper-V. So Hyper-V? Yeah. Why? Why? Purely cost, actually. So V-tax? Yeah. But we have to, yeah. I mean, we are in the business that obviously are being crescent on margins and we have to earn our money. And as of now, Hyper-V is coming up with products that's not as good, but probably good enough. And to a cost that's, well, quite much lower than the VMware products today. Are you using containers or moving to containers in a big way? Well, we have been discussing, but not as of today, no. But what we're looking into and seeing, I mean, what do we want to do with our data centers going forward? And how should we handle the capacity? So that's an interesting discussion, obviously. And are you doing anything with OpenStack or no? No, not as of today. Okay, so Hyper-V, you nailed it. I mean, that's Microsoft strategies, good enough. Maybe not quite as good as vSphere, but it gets the job done. Yes. Significantly lower cost. When you moved to, would you brought Flash into your data center, what type of applications did you move off of spinning desk first? Well, first of all, we did the database stuff and think that required the high ups that we can get to all Flash. But going forward, we actually are moving everything. At the economics we're talking about, you no longer have to make this choice between what's on spinning and what's on all Flash, the benefits of all Flash, when it's lower TCO, lower energy costs, higher performance, better reliability. Because of the economic change, now no longer have to have that debate. It's easy to say, we have customers telling us, you have to say why you're not going to put it on all Flash. Yeah. Well, what is your requirement for spinning media? You're still selling almost half of your storage sales, you said are still spinning media. Is it, they just don't get it? There are customers who are slower to transition, certainly, than others. There are people who think for long term retention purposes, spinning media is still better for that. So there are some discrete use cases, but by and large, I think it is simply a matter of time before most of our customers are going to be running all Flash. We think so too. I mean, you say it's not even a debate anymore. Interestingly enough, in the Wikibon community, we continue to have that debate only because we've been so forceful about the all Flash data center, as you well know. And we've said, but there are, in fairness, the slower spin speed disks are still less expensive for archiving long term retention. There are some economic cases where that's the case. It's just a matter of time. We've said by 2020, that crossover will occur, but not everybody agrees. Obviously, we've had spirited debates with the Seagates and the Western Digitales of the world. We are happy to sell a customer, either. You really don't care, right? But you see the trend, and the trend is your friend. I mean, Orrin, what would you say to those customers who are holding back, who are still clinging to rigid media? Well, I mean, from our point of view, as our business case shows, the economics about that is not too bad. So, I mean, you want to, where do you want to use your time and effort as well? And you have some bottlenecks in your system anyhow. And you don't want to use time and energy on the disk side, and you want to have enough capacity and enough performance on the disk side. So, from our point of view, that was actually quite an easy task, and that combined with the fact that you also can have a whole other utilization on the flash disk, because you don't have to think about diodes. You can use all your dedicated space. So, I mean, you have to tap that also into recognition when you actually do the business case. Right, I mean, you need less to do the same or more work. If you buy a terabyte with all the flash, you can use a terabyte. And you're data reducing it very effectively with compression and de-dup. And I don't know if you've gotten into it yet, but you can share many, many copies on a single flash device, which you really can't with spinning disk. You've got to make, you've got to copy pretty. Because it only works so effectively. And so I think it just, it's really good to be a matter of time. And I think from a storage business perspective, you know, our business is going to have to change something because we're selling customers less capacity for performance and just more spinning media. I think if there's any decline in the storage market or flattening of the storage market, most people say it has to do with cloud or softwares of service or, I think it actually is this, we've done it to ourselves. All flash, better compaction technologies, right? Devices are living longer. Customers moving devices from three to five to seven years. All that means we have to find newer and newer customers to sell more stuff to you all the time now. So it isn't the, Bill, isn't the market elastic? In other words, if you cut prices, won't people just buy more storage? I mean, historically, that's been the case. No, I always think that storage markets like toilet paper, sooner or later you've got to buy it. Or rent it, if you're okay with that. Yeah, we're not doing a flexible capacity about what's going on with our customers. So I think sooner or later that's the case, but it is a much more aggressive market out there as a result because not only, we're feeling that, all the other vendors are feeling the same. So it's a much more competitive and aggressive market. And the good news is we're in the leadership in a pole position for all flash. And flash prices are coming down faster than spinning disks, right? So that's kind of inevitable as well. Yeah, I mean, think about a laptop. I mean, if you buy a laptop now, you don't must be insane to think it has a spinning device anymore, right? You wouldn't take it. Actually, I got one and I handed it back. In my refresh cycle, I said, it's got a spinning media nuts. I'm used to pressing the button and instant on, right? And so, I think that's the state of the art with moving storage too. All right, we got to wrap Bill, final thoughts. I mean, what does this partnership underscore? What's happened in the market? So that's sort of the relation. Is it the prototypical customer, right? Is it a customer who is, where there's a good partnering model, thoughtful, using the full extent of the portfolio, growing, three-part was known for its server-provider market well before we acquired them. This is living evidence that that is still alive and well, not only with FUN, but we've got a number of other service providers in Norway using the product day in and day out. So, we are really delighted to have you here and help us with this, and you're a lot more interested in talking than I am. So, yeah. All right, gentlemen, thanks very much for coming to theCUBE. I appreciate your time. You're welcome. All right, keep it right there, everybody, Paul and I will be back. We're here at London Excel. This is theCUBE, where HPE discovered 2016. Right back.