 Okay, we're back. This is Dave Vellante and with Stu Miniman. This is theCUBE, SiliconANGLE.tv's continuous production, live production. We're here at HP Discover, and we're here with Jim Gontier by a number of measures, the number one CUBE guest, you know. Thanks, guys. At the very least, in terms of frequency. But in other ways, too. So, welcome back. Thank you very much. Thank you, on contrary. This is someone I'm looking forward to this time. Great, me too. John Furrier, I just texted him when I was over there. I saw you in the hallway. I said, John, I'm going on with Gontier next. And he goes, I wish I could be there. He's on his way out here. He'll be here tomorrow. Send him my best. I will. So, and I asked him, where's the trophy? So, we'll get on that. So, I wanted to start off. Last time I saw you was with Project Voyager, Gen 8. We were in Vegas. You were on theCUBE. So, how has Voyager been received, Gen 8? And, you know, specifically with respect to, you know, the market, the forces, and how is that whole automation of system administration playing out for you guys? Actually, so the simple answer is the response from both industry, industry as an analyst, the financial community, and customers, most importantly, phenomenal. Phenomenal in that when we went out the door back in February, the last time we were all together, we said we were going to do a couple of things. A, we were going to redefine the economics and the expectations of the data center. B, we were going to add enough intelligence and automation that we would change the four things that CIOs care about. Their ops, their apps, their data center, power and cooling efficiencies, and also their service and support. So with all of those great things that we talked about, how we're going to give people a five month ROI, give their admins 30 days of per year of their lives back, and the fact that we're going to nearly double the compute per watt capacity, the take up rate from customers such as Citibank, JPMorgan Chase, CDW, so not just customers, but partners have all said everything we promised on Gen 8 has not only been delivered, but then more. So the focus on automation and the higher, delivers direct value to the system admin, clearly. Does that translate into higher margins, higher market share, both? So you know I can't talk about margins. Well, not specifically, but conceptually, right? But what I can tell you though is, folks are willing to pay more for when you can truly show them an order of magnitude differentiated value proposition. Let me give you a perfect example, right? Smart update, if we look at what we're able to do and I say able to do, uniquely able to do a smart update, you and I both know. An admin is probably the most costly and the most precious thing in data centers. And when you look at that, they spend way too much of their time just doing basic maintenance and operations. That's code for standing in front of a screen, watching the blinking lights. We said no more. With the amount of intelligence that we've built in with additive innovations, things like ILO, C of sensors, we could automate a lot of that. And basically what folks have been able to do now is, let's take for example that other computer company from Texas, you will spend or an admin will spend seven to eight hours in front of a screen doing an update with us. You spend basically about 15 minutes. When you can show a CIO that you're freeing up that level of capacity, that level of I guess we'll call it priority for their admins, they're willing to pay a little bit more to do that. So I call this the IT labor problem, if I may, Stu. So where our data shows that about 60 to 65% of the spend on IT, for when you look at servers and storage and all the associated infrastructure around it, is labor. And that's a problem. Because it's constricting innovation. So I'm going to agree with Thea both directionally. I'm going to add a little bit of spice on top of that. We know that basically 70% of most data center time is spent primarily on maintenance and ops. We think that's backwards. We also know that when you buy a server, so this kind of goes back to your questions around profitability, margin, and other stuff, which I won't answer directly. But when you buy a server, folks will typically spend between 6X and 7X, the cost to procure that server in power, in cooling, in admin, and in lost productivity. So when we looked at Gen 8 in general, we said, look, we're going to go transform the industry. And the way you go do that is you go after the most complex, costly vexing issues in the data centers. And we found three simple things. One, still way too many manual operations in the data center. Two, power and cooling, which the three of us know is a huge expense that every CIO out there pays. There's still a lot of, and it's not a bad thing, people walking around with clipboards. Where is that server located? How much power is it utilizing? What's on the faceplate of that server, as opposed to doing that automated? And then finally, downtime, which you know how much I hate, downtime. One hour of downtime for a typical web 2.0 company, $10 million per hour. So we told the team, that's your mission, that's your goal. We want you to take the collective brilliance of the HP team and go solve those problems in a way that nobody else does. Yeah, it's not just unplanned downtime, it's planned downtime. That's equally as evil, and yet everybody assumes that, hey, I have this maintenance window. Well, that's nice, but that server's still offline. You're still not collecting checks, and your customers don't have access to you. So planned or unplanned downtime, if we can help keep that to an absolute minimum, then you're getting the best possible return on that server, storage, networking, or any other converged infrastructure item you bought from us. So I'm wondering if I can jump in. You've mentioned a couple of big name financial guys who obviously massive deployments, but the one that jumped out at me, you mentioned CDW. So we really think the channel is really where a lot of the battle for this infrastructure is going on. CDW is the place I always look when I just want to find the list price of everything in the world there. And they're pretty demanding, so, you know, very. But they're great partners there. So, you know, what did they find attractive about Jenny? What kind of got them excited? So they found a couple of things. The first one was the offering itself. We were able to walk in with something that nobody else could give them. Yes, everybody had the next version of processors, but even the processor teams will tell you in order to truly take advantage of that, you have to have systemic engineering. So we gave them a differentiated value prop. Second thing is they have their own solutions teams. They have their own groups where they're building out these items. When they can walk in, look a CIO in the eye and say, these solutions will give you a rapid ROI, will help free up your admins, dramatically lower your power in cooling and make your life easier. That helps them sell more stuff. And then as a partner, because they are part of our Partner One program, which as you well know is a true end-to-end offering, it allows them as a partner to make more money faster with HP. So they got a combination of product, they got a combination of value prop, and they got a really good combination of partnership-type programs. So you heard Meg this morning? Absolutely. I thought she was good. She was awesome. I thought she connected. Don't just say good. She was awesome. She was, let's see, she was very good. Okay, there you go. Thank you. I'll give you that. And much, much better than a year ago, not Meg a year ago, but there was two pie in the sky a year ago. So today I thought she really connected with the audience, which is your people, right? Correct. Well, our people in terms of our customers, our partners, NHP employees. Yes, absolutely. NHP shareholders. But the enterprise, folks, right? I mean, she's really good messaging for the enterprise crowd. So she talked about four things of differentiation, and we're always looking for differentiation now. You got big, well-funded companies with a lot of cash and a lot of cachet. She said portfolio, breadth, engineering, openness in people. Yes. I want to talk about the engineering piece. So my question to you specifically, and it relates to some of the stuff we've been talking around Gen 8, is can you build in enough R&D around automation with respect to your competition, some big, well-funded companies that are banging heads with you, or do you feel like you've got to go out and maybe fill some holes with acquisitions? What are your thoughts there? So I can't comment on the acquisitions, but I can tell you, just looking, for example, at Gen 8, the types of innovation, the types of things we put in place, I mean, you guys know the Quants, right? We had almost 900 some-odd patents that we could have potentially filed. We had 150 customer-inspired innovations. So it's not a question of could our engineers have pulled it off? Absolutely, they do it every single day. The second thing is, we also know that we can't do it on our own. One of the items that we announced about three weeks ago was our proactive insight architecture and our proactive insight alliance. 19 of the other industry leaders, folks that you know, industry leaders in memory, like Samsung, industry leaders in networking, like Broadcom and various others, along with folks such as Hitachi, 19 industry leaders who looked at what we did on ProLiant Gen 8 and said not only yay, verily, I believe, but I'm going to go put resources, I'm going to go put expertise, and we're going to go help deliver on that value problem. Let me give you a really simple example. Smart memory, okay? Or HP Smart Memory. You take that standard memory, you put it into anybody else's box, you'll get standard off the shelf, white box, everybody else got the same thing kind of performance. You take that same smart memory, you put it inside an HP Gen 8 platform, because our partners recognize that we had this additional capability that we put into Gen 8, what you're able to do is once it's plugged in and it wiggles the line and says I'm inside a ProLiant, you get better performance, you get less power utilization, and basically for a customer, they get a much better price performance for that exact same memory that you could have put into somebody else's box. But because it's NARS and because of the Alliance, we're able to get that much more performance at a much lower price. So I wanted to ask you Jim about the competition. You like to talk about HP's greatness, which is good. And- I also like to beat the competition. You're not afraid of the competition. Absolutely not. I'm not afraid of talking about it, and we're on the cube. And our audience likes to evaluate things in competitive terms, right? They're making those choices. So you're facing continued competition from a variety of sources, particularly in converged infrastructure, you got some new players coming in there. My question is, how do you decide when to go after market share with, I've heard the executive say, we're not going to let price be the determining factor here. We're going to compete, versus going after more profitable business. How do you guys make that decision? So for us, it's not an or statement. It's an and statement. Last time I checked, I'm told our team, and I tell our teams, you've got to get increasing market share, you've got to get increasing profitability, and oh by the way, you got to keep out innovating everybody else. That's how we ended up beating the competition. And as you've probably seen, if you look at our share over the last couple of years, let's take the most recent, and I know she's not here this year, but let's take an IDC number, I'm referring to Michelle. So if you look at what IDC has said, oh yeah, a really good friend of yours and ours. If you look at what IDC has shown, in the case of blades, we still ship more blades than IBM, Dell, and Cisco combined. If you looked at the run rate that we've had in our industry standard servers, we've led the market since the day that we've invented it. So the bottom line is, we don't look at that as an or statement, we look at that as an and statement, and that's how we wake up every day going after it. Yeah, well IBM just made a big move. Obviously, essentially in my mind, anyway, is replacing its blade system with the converged infrastructure. After six years, yeah. Yeah, right. And by the way, you've watched what happened there, right? IBM's blades versus ours, when we originally went out the door with C-Class back in 2006, they were in the high 30s, we were like in the low 20s. Absolute share inversion. We're now in the high 40s and they're basically trending down. They had to do something. Yeah, it was a bold move. I mean, they didn't have to do something. And so that, I mean, to my mind anyway, it's effectively replaced. I don't know if IBM has said that, but I mean. They haven't said it just that way, but basically that's what it is. But it's pretty obvious to an outside observer. And of course, we all know well the noise that Cisco was making, using that US market share. But you've debated that. You've basically said, hey, we've held that. I don't have to debate it. You can just look at the numbers. They've got like 2% in terms of like the share or depending on which way you want to look at it. They'll tout revenue because whenever you have an expensive product, that's the one thing you want to tout. But if you look at units, it's still a very dinky number compared to what ourselves and others are doing. But that converged infrastructure is an enormous total available market, right? I mean, it's about 400 billion. Because it's everything. It's servers, it's storage. We want a very large share of that. Well, right. And you've got, so it was an opportunity, but it's also a threat, right? Because especially when you've got new guys coming in the server business, like your partner VMware, which is really not in the server business, but right, I mean, there's a server play there and of course Cisco. So you guys got on that trend early on. I mean, I said, Stu, I've said. Actually, we started the trend. We went out the door with that in November of 2009. Well, convergence probably goes back even further. We were talking, you know, blade servers in general, kicked off some of that discussion. You know, early technology is like he's general. But 2009 was the time frame, right? But absolutely, you know, if you talk about kind of the blurring of the lines between storage and compute, you know. And the term. And absolutely, can any converged infrastructure is a term. Yeah. Props to Bethany for the converged infrastructure term. Bethany Mayer, who was now running networking. And Dave Donatelli. And Dave Donatelli. I was in the room when Dave first came up with the topic. Okay. So there you go. A little bit of, you know, back to your history. So, but my point is, so yes, 2009 was the time frame. And I said for a while, that's a two horse race between, you know, VCE and HP. And now everybody's jumped on that bandwagon. Because I think they see the size of that opportunity. What is your primary differentiation there? So let's, since you've mentioned in the same sentence, VCE, VMware, Cisco and us. Let's take an example of converged infrastructure. So one of the things that we're really proud of this week is something that we did in conjunction with our storage team. And I don't know if you're going to have Tom Joyce or Dave Scott. We just had one. Oh, did you? Okay, cool. And we had Dave Scott on too. Perfect. So I don't know if David got a chance to mention what we refer to as the industry's first flat sand. We'll talk about it. Let's talk about that. Yeah, so there's a perfect example of converged infrastructure, right? And that's where we said we're going to converge servers and storage. Now, when the two teams got together, we took some HP leading innovations, virtual connect, which you all well know, as a matter of fact on virtual connect, we're just celebrating our six millionth port ship. So it's been a great rise in terms of the product. But when you take a best of breed platform like three par and you tie that to our best of breed server construct, which comes from Blade System and our C7000 chassis, and you put virtual connect in between, you can change an industry. Now, what do I mean by that? If you look at the way that VCs put together, yeah, by the time that you get between the server and the storage, you've got a lot of switches, you've got a lot of electromechanical, you've got a lot of HBAs. All of that turns into a lot of cost, a lot of complexity. What we were able to do, converge infrastructure style with our storage partners and our storage brothers and sisters, is that we were able to convert all of that electromechanical from a multi-tier network down into one flat sand tier that basically turns into two fiber channel cables between the two teams or between the two assets. So imagine all of that stuff that was in between, gone. No switch. No switch. It's literally cables between the two platforms. So the bottom line is not only can we provision faster, 2.5 times faster, not only can we cut the cost almost in half, but we can also even reduce the latency. That's an example of converge infrastructure. Another really good example is the same one that we had for Gen 8, right? We talked about how we were going to converge servers and services. And so between ourselves and Antonio Neri's team, what we were able to do there is come up with inside online. And with inside online, what we're able to do is not only find, fix, and get folks up and running much faster, but we can get them up and running faster 66% of the time and with a 95% first time fix rate. That's what happens when you look at things from an end to end perspective and you take that converge infrastructure optic and you apply all of that wonderful R&D innovation. That's the metric that people care about in services. Customers care about it. How long does it take to fix my problem? And by the way, will you fix it properly the first time? The first time, yes, absolutely. So those are two examples of convergence when you look at servers plus storage, servers plus services, and there's some other fun ones coming out that we'll talk to you over the next couple of shows and the next couple of quarters. So there's been a lot of focus on the data center and the mid-range and large-scale enterprises. I'm interested in the small business, the channel and your long-term vision for HP systems business. Okay, so perfect example of what we've been able to do there and this is where you have to think different. One of the running jokes on the SMB team is I once told them everything that has made you successful in enterprise, forget it. It will cause you to fail in the SMB space because in the SMB space, it really is about simplicity. It really is about ease. It really is about access. If you put on that customer's headset or their mind space, they're interested in how do I manage my business? How do I protect my business? How do I grow my business? So what we're able to do, and our micro-server is a perfect example of that, who to think that you could have a ProLiant for a $400 price point that has all the innovations, things like ILO, things like error protection. Everything that you would expect from a standard server, we were able to put into that particular class but it wasn't just about the product. It was also about the programs we put in place for the channel. It was also about the offerings, pairing that up with some of the things in terms of wireless networking and various components. When we did that, again, runaway, asymptopic rise in terms of sales. I wish I could tell you the number, but let's just say that- Oh, come on, you can't. No, I can't. It's a cube. I like you guys, we're not going to do that. All the more reviews, yeah. But the fun part is, let's just say that in the last 14 months, we've sold six figures worth of that particular product line and it's a brand new product line for us. And that's Dell's sweet spot, right? That SMB, I mean, that's what you'd think that- Yeah, and I just happened to pick on one product which was the microserver. I could get into our rack product, I could get into some of our other platforms but that's an example of when you take a convergent for structure mentality, when you really think about it end to end, life cycle, optic and you put in place everything associated to make that product line successful, that's what makes us who we are. So is the channel the best route to market or I know you're going to say yes, or the service providers? Well, for SMB, let's just say today's optics, the best route to market is probably the channel. Now, there is this phenomenon going on that, you know, and I like to joke with the team that, hey, in the future, you know how you're going to instantiate SMB? It will be somebody reaches into their pocket, pulls out a credit card and that's how they end up getting their SMB infrastructure. So we have to be vigilant on both ends. What's the product that will be on-premise and then how do we make sure that we put that in place for the cloud provider who's going to be servicing that customer or not only have something on-premise, but we'll also have something parked in the cloud. Yeah, and there's definitely a big channel land grab going on. I mean, you just pointed out, the channel is right now the priority. Correct. You guys are being very aggressive. I mean, everybody, right? And so... But we're also being very aggressive on the cloud side too. And that's where we get... Talk about that a little bit. Well, I mean, case in point, if you look at some of the things that we put in place with, let's say, our SLI, right? Most of our cloud providers are looking for the perfect mix and match of server storage and even GP GPUs, depending on what they're doing. We gave them that class of platform. If you look at the larger story that we've been saying about how we're going to transform servers in general, we said back in November, we were going to go do Moonshot. Moonshot is focused on primarily the low energy, high density class platforms. Again, back to convergence. We partnered with our business critical team and said that we were going to go do Project Odyssey. That's where we're going to take what has traditionally been mission critical and now be able to put it on x86 by working with Microsoft and with Linux and other partners, and then there's Voyager. So no matter where you are on that server continuum, we're taking all of that innovation. We're taking that entire converged infrastructure mentality and we're putting it available across the board. Well, plus, I think it was Nick Vanders we had on earlier. Probably. And he was saying, he was explaining to us that, if you go with the all HP stack, there's benefits but we'll in our cloud support anybody. Well, that's the beauty about our thoughts in that we don't want to tie you into a monolithic, kind of like 2001, the four, one by four by nine, big black thing that's sat in the middle of the room. We're not going to tie you into that monolithic stack where you get one choice of server, one choice of hypervisor, one choice of, I guess we'll call it storage with us. We'll work with everybody else's components because our customers are telling us they got to have a heterogeneity. I told them, I said, don't say that in front of Jim Ganti, he goes, no, this is a big part of his strategy. So. No, no, no, no, no, no. There's good, better, best. But if somebody wants a heterogeneist, we're all making sure we're doing that. And by the way, even that first flat sand that I talked about, one of the questions I got was, oh, well, virtual connect. It only worked if you plug it into a three-par unit. No, it works with everybody else's stuff if you choose to take that more costly, complex, higher latency approach. All right. Jim Ganti, thanks very much for coming inside the queue. It was a pleasure. Great to see you. Same here. I'll see you in the next seat. All right, keep it right there. We'll be right back with Dave Donatelli in just a minute. This is theCUBE live from HP Discover. Keep it right there.