 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. Back to sunny and chilly London, everybody. This is HPE Discover 2016. And this is theCUBE, the worldwide leader in live tech coverage. Antonio Nierius here, Cube alum, Executive Vice President and General Manager of the Enterprise Group at Hewlett Packard Enterprise. Great to see you again, sir. Thanks for having me again. Our pleasure. Thank you so much for making time. I know you're unbelievably busy. This is essentially your show. And congratulations on a new role at the company. Expanded role, fantastic. Things are consolidating. The story's getting cleaner. No, actually, we are very excited about our strategy and the refocus on the company of fewer things. But also for my peers because ultimately they will become more relevant as well in a pure services play or in a pure software play. So I think it's good for them. It's good for our customers, most importantly. And then for the remaining company, really the focus is making a big difference. And you can see here on the floor. And you're talking about the services and the old sort of EDS business now going to CSC and the software business, the microfocus and leaving a pure play, really infrastructure company. No, really. We are a hybrid IT company. Oh, okay. Which is different than pure infrastructure. So as we said, our strategy is to make hybrid IT simple. It's to power the intelligent edge, which is campus branch mobility in IoT. And then focus on services, which as you know, we have an incredible technology services business, which ultimately have the expertise to help customers move from where they are today what they need to be. So is that the nuance when you say no, Dave, not a pure play infrastructure company because we have that services piece? Is that what you mean? Well, remember one third of our business in the remaining company is services. And what we do in services, we help customers to advise, transform, design, implement and run. So, and how for the company is actually services in terms of people. Yeah, and I wouldn't forget services. That's where we first met. You were running services. And of course services last quarter were a big performer growing. Actually, HPE as a company grew year on year for the year. Not a quarter necessarily, but I've said for a number of years now, HPE's got a shrink to grow. So you shrunk. And now the growth can be doubt, yes? Well, I think we are pleased with our total fiscal year, 16 performance. The enterprise grew 3% on a constant currency basis. We brought incredible amount of innovation, next generation of software defined infrastructure, which include composable with HPE Synergy. I know you had Rick here earlier. The hyperconverged platform, which was named the best hyperconverged platform by the CRN. We now announced here the integration of our HPE Cloud system with HPE Synergy. We also brought the composability aspects of our technology down intro hyperconverged. We talk about the progress we made with all flash, three bar, where here I announced now, now customers can procure all flash at three pennies per gigabyte a month. The whole Helion Cloud suite innovation, HPE OneView, but also the unlocking of the partner ecosystem. This past year, we completed integration of Aruba. I completed the acquisition of SGI, the partnership with Arista. The massive investment we're making together with Microsoft on Azure integration to really deliver the hybridity experience. All the strategic investments like Docker, misosphere, scality, really leaning in and introducing new technology. So it's been a busy year. We grew 3%, we improved year over year, almost 90 basis points on our profitability. And less than a stop out there, but I think we are doing the right things. And customers actually now understand the power of this portfolio. And this last two days was a testament of that, and you can see here on the floor. You got a lot going on. I talk to my buddies on Wall Street, they said you addressed them at the financial analyst meeting. They were particularly intrigued with the whole capacity on demand piece of business. Flexible capacity, yeah. Flexible capacity. And I think they, I'm paraphrasing, but I think they, you talked about the lumpiness of the business and how that potentially could help address that problem. Well, I think about what customers are looking for, right? They need hybrid IT, and they need a consistent experience where they are on-prem, off-prem. That's, you know, it's not just where they deploy their apps and the data, but also the way they consume it. And we are really committed to drive the innovation there, but also the innovation of the business model. And so what if we can bring the perceived benefits of the public cloud economics on-prem, not just from the technology perspective, but the way they pay for it. And that's where flexible capacity has a huge role there, because we can actually model that capacity to their needs and pay only for what they need. And that's why customers now like that model, particularly, you know, certain customers who are very OPEX-oriented service providers, for example. And so we are very excited. That business has grown dramatically for us. It's a really interesting business. Where do you see that business going in terms of the growth rate? How big a part of your portfolio it becomes? Looks like there's a lot of promise there to go beyond storage. Yeah, I think, listen, they made the announcement of the three gig, three pennies per gigabyte a month. The reason why we can do is both the technology in three part, the metering capabilities we have on-prem, and the services, because in the inflexible capacity is a services-led offer enabled by HPE financial services, which provides the financing capabilities in this utility-based model. It's growing high double digit. Now, as you know, buildings much higher revenue, revenue much lower because you have to mature over time. So we are building a big pipeline and one of the reasons why TS grew in the last two quarters is because that momentum we built three years ago, and if you remember when I was here talking about TS, the transition of the portfolio from the break fix to this new style of services, data center care, inflexible capacity. Now that's materializing in our P&L, but the pipe is getting bigger and bigger and bigger. The snowball is getting bigger and now what it comes out on the other end is now showing in our P&L. And I'm looking for sort of a similar wave with IoT. It's early days in IoT, so it's not driving, I presume, a huge amount of services revenue yet. But I- Well, on the consulting side, we are now getting a tremendous amount of requests to come in, help them advise, what are the business outcomes they can deliver with these IoT platforms? And remember in IoT, we actually focus on three segments, transportation, health care, and manufacturing. And underneath those segments is about specific use cases. For us, IoT is not the internet of everything, is really being more pragmatic of what we do and really focus on very specific use cases where our infrastructure with the control systems, the apps and the analytics, and the broader partner ecosystem, which is a total different partner ecosystem that we are used to in the IT space. We're talking about partnerships, we're done with Snyder Electric, LG Predix, PTC, you saw the demo today of a fantastic use case where we are basically doing predictive maintenance on these manufacturing lines using our converged offline solution with our analytics right there at the edge. But what customers now need to define is what are the business outcomes they want to achieve and how our technology, our solutions and these partners can deliver against those business outcomes. And we had National Instrument in Vegas as well. I think we have Bill Rue coming on tomorrow from GE. Yeah, Bill and I, driving the teams together. So obviously GE Predix is the hybrid IT cloud for the IoT, why? Because it's not just a platform, they have the knowledge, the content understanding of these vertical segments and the power of the platform is in the analytics, in the algorithms that when you collect the data you are going to get it sent to the predicts, they can analyze it based on the sub-geomatter expertise they have. Now what we're going to do is take also that GE Predix and bring it to the edge. Take that little stack, put it in our converged systems so the customers can get those decisions done faster. Do you see that relationship with GE growing into something more than it is now, that it is just a partnering relationship because they are clearly out front with Predix, very in line with where you're going with IoT. Yeah, Bill and I are totally committed to make this very, very big for both companies. It goes from engineering to go-to-market to business models. I think we are just at the beginning of it, but we wanted to be very focused on what we start because ultimately, like I said, which GEOs, which verticals, which use cases, and then ultimately how the go-to-market works. We have obviously credibility with the CIOs. They have credibility with the OT side of the house. We are bringing IT and OT together. We want to be the IT in IoT. They have all the expertise in these verticals from manufacturing to healthcare. We have the IT expertise. Let's bring it together and let's deliver integrated solution to our customers in a hybrid IT oriented or just also on the edge. And that's where Bill and our team are working actually daily on this. And you see some of the use cases here we're doing with them. So Bill and I have a very ambitious as in that we're trying them together. They're the thing that we're excited about is the SGI acquisition. Yep. Sort of relatively small acquisition, but big lever for you guys potentially. Well, I think about the power of the segmentation tells you where the market is going, right? So think about it, we talk about public cloud, the reality is that when you look at the data center, the market's still a hundred billion dollar market and within that market there are pockets of growth. Let me give you an example. High performance compute is a 12 billion dollar of the hundred billion dollar market which is growing seven to eight percent. High performance data analytics, workloads like HANA or SQL, you know, are growing as well is probably two billion dollar market growing also seven to eight percent. We have a phenomenal portfolio as you know with HP Apollo on the high performance compute, ProLiant and SuperDom X on the mission critical side with SGI now complement everything. Now we got the supercomputer on the high performance compute with the SGI ICE. And then on the high performance data analytics we have every form factor for every workload. I think people don't realize that the HPE already is the leader in high performance compute. We own 41% of the top 500 supercomputers. With SGI we take it to the next level. That was without SGI. Superdoms or HPE Apollo? Apollos and blades because when you look at the large actual implementation of supercomputers many of them have been done with blades. But now the form factor is Apollo and ultimately how the fabrics GPUs are integrated are driving the next level of scalability and obviously power consumption is one aspect of it. The other piece of the portfolio is Aruba. Yeah. Very exciting. We saw on the keynotes today. Yeah. We have a number of guests on. Yeah. Looks like a great acquisition with a long way to go. Well, I have done too, Aruba and SGI. So I'm very proud. I think we knew that Aruba was the right acquisition for us three years ago. And you can see the benefits. It's a software-defined campus branch solution. Actually it's a fantastic platform to address new adjacencies. Think about SD1 as an example, right? Think about IoT as well. Security, ClearPass is a big element for our IoT strategy, a critical element because security at the edge is going to be top of mind for CIOs and OT partners as well. And then for Aruba, actually it was the right thing to do as well because now we're getting massive amount of traction with large customers. When they were standalone, they were not able to get traction because they didn't have the scale or maybe even the credibility to support large deployments. An example of that is what we did with Home Depot, right? Massive refresh, 2,800 stores. And the reason why Home Depot decided to leverage HP with Aruba is because now Aruba is part of HP and therefore they have a piece of mind that we can deploy. So, and then it's an incredibly innovative company, Kirti, co-founder, can see a little bit around the corners what's coming on. And they have a very, very focused strategy of this. In the server business, we had Alan on earlier. And of course we were at Dell EMC World a while back and Michael Dell was sort of bragging about being number one and seeing units. And we said, well, it's really revenue that was most important. Alan said that recent Gartner data showed that HPE is now number one again in units. So it's always fun to talk about the numbers but your leader in revenue for, I don't know, 80 straight quarters, it's been out. 82 quarters. 82, who's counting? 20 years. Well, can you speak to the Dell EMC merchants? Certainly a distraction for them for the last several months. Has that changed the market dynamics for you? Yeah, but first I want to go there because I want to make sure I don't lose that. So listen, we don't chase share for the sake of share. We chase what is the right profitable growth for us where we can add value. So we obviously spend money, innovate to bring value to customers and the customer likes our solution. That's why our focus has been revenue share. But as you know very well, right? Units are driven either by China which now represent 25% of the market or the large service providers. So that's the reality we deal with it. Now in term of what I see Dell EMC, listen these are two totally different strategies. Dell EMC decided to get bigger and lever their balance sheet. They have 60 plus billion dollars in debt. They have to serve that. The place there is to take cost out, okay? And they have a multitude of architecture which is confusing, really confusing. Which architect do they plug where? So they have a ton of work to do which means this structures one aspect but also from the solution offering perspective they will have to do a lot of work because in the end, you know, which one I buy. On our side we decided to get much more focus on everything we do. And the new company after these two spin mergers is basically the enterprise group. And so we are very focused on what our strategies to provide hybridity solutions built on the next generation of secure infrastructure while at the same time we power an intelligent edge through campus branch mobility and IOT and have the services to make it happen. Our balance sheet today is $7.6 billion positive. And by the time we're done with these two spin mergers we're going to have $12 billion of balance sheet in the balance sheet. Which means we can invest organically, make strategic investments like we have done with some of the partnerships here like Mrs. Ferb Docker and others or make acquisitions like we've done with Aruba and the SGI. But it will be acquisitions where add to their portfolio in a common architecture driven approach. Okay, can you speak to any gaps in the portfolio now or any opportunity areas that you'd like to fill? Mobility management for example? Well, I think, you know, we're focusing on all aspects. Clearly at the infrastructure level I think we are very well covered, right? You know, but I think, you know, when you think about the software defined elements of this, we have an open approach. Obviously leveraging open source, integrating these partnerships, strategic partnerships are key. So we're integrating Docker and everything we do. But then, you know, all these aspects around software defined in cloud is our potential targets for us. Because ultimately we want to sell only two products to our customers, HP OneView and Helium Cloud Suite. When you talk about the software defined at the center stack, it's only one product. HP OneView. And you saw it here on stage. The integration with Docker, integration with Arista, and integration with Azure in a multi-cloud service brokerage approach. But then that multi-cloud solution is based on the Helium Cloud Suite which actually integrates multiple stacks. VMware stack is part of it. HP OpenStack, the Helium OpenStack part of it, we did this relationship with SUSE so we can accelerate that. And then, you know, these new solutions like container-based or misosphere, you know, the next generation of data-centered operating systems. Storage business. How much more can you squeeze out of 3PAR? Is there more legs there? No, I think, you know, 3PAR, the beauty about 3PAR was designed from the ground up, thinking about convergence and thinking about all flash. So listen, we're still only 12% of the market. So there is another 88% to go. And you can see the acceleration to all flash. You know, last quarter we grew 100% in all flash. That's faster than anybody else on the market. And so we are very proud of what we're doing and also we continue to add new features, new capabilities. You know, and then one example of that is the resource management solution where basically you can take direct snapshot in a backup approach without adding any software in the middle. Obviously the dupe and compression are features that customers want. But then ultimately I think there's still a long ways to go for 3PAR in terms of growth and then bring it value. Now the other thing is that we're taking the data fabric and then making available as well in a scale-out storage solution standpoint. We talked about the machine a little bit because you guys, you know, made some noise about it this year. We're learning that the machine is sort of a mainspring of innovation and you pick and choose pieces to put into your portfolio over time. Can you give us some color and comment on the machine? Well, you saw yesterday on October 24th, we actually booted up the machine. And that was a very important date because we prove that the memory-driven computing is going to be here soon. And you know, if you think about the big data, think about the need to run analytics much faster. I was meeting there on the floor in the HP labs where we are showcasing the machine and one of the CIOs of a stock exchange in a very large country told me, Antonio, I need to be in the microseconds. I want this for my exchange IT because they need to push the boundaries, right? And so we are very proud, you know, we told the market three years ago with Martin Fink, which is now retired and now the labs report to me that this was a totally radical, different approach. And we prove it, it can be done. Now, what is the journey for now? It's basically we are going to showcase now the next version of this in the next couple of months with some of the workloads we have been testing. Second is we're going to take the silicon photonics of the machine and actually put it in the back lanes of our composable infrastructure with synergy. So by the end of next year, you're going to have silicon photonics and synergy. By 2018, you're going to have the non-voluntary memory part of the machine, which we are calling the memory store inside every product we ship, both from the memory perspective as well from the flash perspective. And then eventually when we finish the operating system that will be able to handle this amount of memory capacity and algorithms, then we can ship the machine as people are seeing it today. In my understanding, Antonio, is that there are certain sort of development tools that you guys are using that you've had to develop to take advantage of some of these capabilities. Will you make those commercially available and open source them? Well, let me give an example, yeah, absolutely. So we are contributing, for example, the memory fabric, which is part of the machine. We made an announcement last month in a consortium. All right, of course. Many, including some of our competitors are part of it because we are opening the ecosystem. So we are contributing that to the open source, to the open market so that everybody can innovate around this. So we are going to make that available to everyone. But obviously, I mean, this is a major development process and effort and it's interesting when using current technologies to develop the next technology as people don't realize that the biggest product in thermal memory you can buy is the Superdom X, which basically attached 64 terabytes of memory to the CPU. We are using that machine to develop the machine because you have to rewrite all the memory algorithm to be able to manage the scale of memory. Remember, we are thinking here, set a byte of memory eventually a few years from now, but the petabytes in a single addressable memory will be available here soon in the next three years. Are you keeping any intellectual property through patents or otherwise? Everything we do is being patented right now. But there are elements of that ecosystem that we make available to our partners because ultimately, since this is a memory-centric approach, every type of CPU will be able to attach x86, GPU, FPGAs, ARM-based solutions, and so forth. And so that connectivity with the ecosystem, we are making available to everyone. So it must be a reference architecture in effect at the moment? Actually, it would be interesting because we think infrastructure has to be optimized to the workload. And so in some cases, you may need more GPU or more acceleration like FPGAs. In some cases, you need less core and more memory. So that type of optimization can be done based on the workload. I'd like to see the labs having moved into your organization. I think that's a very important move for Hewlett Packard Enterprise. I wonder if you could comment, because I feel like as though for years, the labs are sort of off doing its own thing and not enough sort of product innovation came to market. Do you expect that that will change now, given the organization? Well, that was the main reason why we did it. Now, I have to say Martin and I are friends for many years. He has done a phenomenal job, laid the vision. He deserves the credit of the machine, right? And the vision for the future, including mesh computing and other things. But what we decided to do is take that and make it closer to what the R&D is, because in the end, I need to take those innovations and market it faster, because why wait three, four years to leverage the silicon photonics capabilities to connect compute and storage? While we don't do that today, this is available. And so, and even memory like nonvoluntum memory make it available today, whatever is available. Instead of waiting three, four years for the full solution. So that was the main reason why we moved the labs to the enterprise group. And you expect that acceleration to happen. Great. Well, great vibe here at the show. Was that your soccer ball or the football in the keynote today? You know, they know I'm a very passionate guy when it comes down to football or soccer. So they wanted to use that use case. No, it wasn't mine, but hopefully I have some time to go play. Because normally I play twice a week. Really, you still play? I still play, yeah. What team do you follow? It's a big question. So at the core, you know, I'm still a Argentinian driven guy when it comes down to sports is Argentina. And you know, and my team is Boca Juniors. Hardbreaker, yeah. Boca Juniors. What position you play? Central forward. Okay. Yeah. So you're running a lot. I used to. Now use my body in a different way. Old man soccer, it's a beautiful thing. You know, you're sore the next day, but you're gonna play twice a week. You're gonna be through it. So that's great. Congratulations. Very good. It's actually a stress reliever. Oh, I'll bet. The problem is when I get in the field, I want to win. Like I'm doing today, you know, leading a 28 billion dollar business, you want to win. And when I get to play the soccer game, I win. If I don't win, I pick a fight. At least I have some fun. Yeah. Well, the stakes are high. You might as well have some fun, exactly. Antonio, thank you so much for your time. No, thanks for having me again. And thanks for what you do to bring, you know, the message to the world through theCUBE. You guys do a fantastic job. Thank you very much. It's our pleasure to be here. Thank you for having us. All right. Thank you. All right, keep right there, everybody. We'll be back to wrap. This is theCUBE. We're live from HPE Discover. Be right back.