 I've at HP Discover, live in Barcelona, Spain, for the CUBE Silicon Angle and Wikibon's flagship program where we go out to the events, extract a signal from the noise. I'm John Furrier, the founder of Silicon Angle. I'm joined by Coase, Dave Vellante, co-founder of wikibon.org, and we're here at Tom Joyce, Senior Vice President, General Manager of Converged Systems. Welcome back to theCUBE, CUBE alum. New role, well, we're not a new role for theCUBE, we're interviewing you at HP Discover. Welcome back. So tell us, what's new with you? You have the new role. Tell us about your organizations growing, met some of your new guys you hired in. Tell us one, the focus. Again, let's review that, and what's changed? Okay, well, we started this business unit in May of this year, and so the last time we spoke on the CUBE, it was about 30 days after we announced the group, so we were just getting underway. We really didn't have the people in place, it was brand new, but that was at HP Discover in Las Vegas in June, and since then, we've built out the whole organization, and we've done some pretty major product releases, so to do that in a company of this size that quickly, and it's been kind of a Herculean task, but this week's been very exciting because it's some of the really proof that the things we set out to do, we can actually do, and we can do it with a lot of velocity. The focus has been to say, convergence has been a trend we've been all talking about for literally for years, and in fact, HP started to talk about convergent infrastructure back five years ago, and over the course of that five years, we've made a bunch of big technology bets. We've bet on three par, as you folks know well, we've bet on HP networking, and we've developed new ProLiant Gen 8 new blade system, cloud system, matrix, a lot of new things. And it's worked, right? It's worked extraordinarily well. Customers have bought it. We've seen tremendous growth in that category of offerings, but the customer's been coming back pretty consistently and telling us they need it converged more, right? They need it to have much greater simplicity. They want to squeeze the efficiency out of it that you would expect out of convergence. They want the whole business model to move faster, and so the goal of the team was to basically take everything that we know about convergence, everything we know about converged infrastructure to all these new technologies, and bring them together to do something fundamentally new. And there are kind of two big dimensions of that. One is what do we do at the systems level with the software? Certainly with the hardware platforms. What do we do with the product? And the other is what do we do to HP's business model? Customers are telling us look, it need to be easier to deal with. And I think every company needs to be easier to deal with these days. They want different model for support. When they order it, they want it to show up in days, they want it to be in production. They just want simple across the board. And so we've focused a lot of attention on bringing together the components and engineering them in a really tight way, but also kind of re-engineering how HP does business for these offerings. And the goal will be to say the things we learn about changing the business model, we want to apply to other areas of the business in the future. So that's kind of the goal of the group. What was the reasoning behind setting up the group? Was it because it was a speed to market? Was it integration of technologies? Was it one solution set for a workload, all the above? Give some insight into the creation of the group and why? Well, I think in all candor, we've done a fair number of things right over the last few years in terms of doing solutioning. But what we've found is that in order to do some of these complex solutions, getting a lot of organizations within, even just within our company to work together, it can be done, but it's difficult. So a tasking a group of people with a mission to do this and to take things from wherever we need them gives us an ability to just break glass. And so that's the first thing. And the second thing is there is a difference between what the product and the offer, if you will, is going to look like if you're doing a converged offer versus what you're doing in the piece parts. We actually don't want to just combine the components together. We want to drive convergence into the components. We want to engineer our own, the stuff we need to do ourselves in order to really make it a unique offering. So it's a combination of kind of how do you coordinate across a large organization, but also this is a different product. Doing a converged product is different and it requires a high level of engineering. So those two things led us to say this is a discipline in and of itself, it's a category we need to double down hard on convergence and do it in a new way. I'm glad you brought that up because I wanted to push on that a little bit because it's not just a go to market, right, clearly. So I wanted to ask you, do you have an engineering component, you just said you do. I wonder if you could describe that a little bit. Where do the piece parts leave off and where do you pick up? Yeah, that's a great, great point. So I'd say that there's a number of different parts to that and I'll cover it as briefly as I can. So we have a system integration and engineering team. So that's a reasonably large team of folks that actually do hardcore engineering about, say we take three part, we take store virtual, what do we need to do to those products to engineer them into a converged system? Now some of the things we need, we add in. A lot of the things we need, we would go to David Scott's team in storage and say here are the requirements for your product to make it work in a converged way and they do that engineering. So that requires engineering work and engineering cooperation. The second group of folks, and it's actually the largest group of engineering head count that I have is doing the converged management. Because that's where you separate the men from the boys if you will, is that user experience. It's not just the console and the look and feel and the gooey and the single pane of glass and all that kind of thing. It's also how do you automate? If you take server storage networking for virtualization, you want to build in automation capabilities. So that's the second big piece of it. And the third piece which I count as engineering is operations. So when we go say hey, we want to collapse down how long it takes to get one of these things from an order through build, test, ship. If I want to get that down to days, that's an operations task but it requires kind of engineering level operations folks. So as we kind of thought very early, like the last time we talked to you about what kind of an organization we need to do this right, there's clearly systems engineering, there's software engineering and then there is operations engineering. Okay and so that last piece, the operations engineering is a lot of business process involved in that as well. What kind of people are actually affecting that? Is it literally engineers or? Yeah, it's a combination of folks that have engineering skills and have really hardcore operations skills. So we kind of, we brought in people from the outside but we also picked off some of the best people inside of HP that really know how all these systems work, right? We needed to find people that understood how the order process works, how the manufacturing process works and so that's what we put together. And I think they've done an absolutely stellar job. It's interesting what happens when you tell people we want to take all the skills you've learned and apply them in a totally new way. Initially it's like eye opening but once they actually realize they're free to do something different and break some glass and that they've got the support of the management and from Meg on down here. Meg has spent time with me, with these operations folks saying, look, what are you learning? What are you finding? How can we take what you've learned and apply it somewhere else? And it's exciting to see what they can do. Tom, what are some of the conversations you have with Meg when you talk about the group? I mean, she sits down with you, you mentioned, what is she saying? What does she talk to you about? What are some of the things you guys talk about? Well, I'd say it's been an evolution because we're all learning, right? And I think the first set of conversations with Meg were really, she's driven us to think about segmentation which is, you know, I've done marketing and business development for my whole career so that's kind of, that's what you're supposed to know how to do, but Meg takes segmentation to an entirely new level. It's all about, let's understand who these customers are. What is our focus going to be? What is our focus not going to be? Where are you going to play? Where are you going to not play? Xuma backgrounds. Pretty much, exactly. I mean, she comes at it definitely from, you know, the Procter and Gamble and a view of the world. What businesses do we want to be in? What businesses do we not want to be in? And it has applied that here. So she put us through the mill, frankly, and making sure we got our segmentation right and what we're going to target. And that's things like saying, okay, what's the difference between the customer that today is buying primarily virtual infrastructure which is a $32 billion market and the customer that's buying cloud? At what point do those two meet? At what point do they not meet? How are you making sure you build your product for that customer, giving them a path to the future, but really is something that solves their problem today? So that was the first set of things. I'd say the other two places that she's really driven us is on the marketing and making sure that we got a good story and that we can tell it and it's clean and clear. Hopefully you saw our product that announced me yesterday. Sharks, yes, great. You know, we called the product, the code name for the project inside the company here inside my group is called Project Sharks. And I can go into the reasons why it was called that, but when we launched it... But we'll do that. Why Sharks? This is a good story. Well, there are a couple of reasons. The main one is, you know, when we started the group, you have to get people to think differently, you know, think like a startup. And, you know, the initial instinct of people is to say, hey, let's, you know, combine our products together and that's going to be the offer, which is, you know, not all that compelling really. And we kind of said, look, we want to think about what's a metaphor for what this product needs to be. And said, you know, a shark is the perfect hunting machine. There's nothing wasted. It's extremely efficient. It does what it does very, very well. You know, every part of the shark is designed to do two things. At one end, it eats. And the other end, it provides thrust. It goes fast, right? And said, let's design a perfect virtualization machine. And then that kept people thinking about, all right, what needs to be in it? What doesn't need to be in it? And so when we, you know, this is kind of inside baseball, I guess, but when we went down the path of doing the naming on it, you know, we came up with the names Converged System for Virtualization. Well, the conversation with Meg was, hey, what if we called it Project Sharks and told the world that? And that became, you know, a fun thing. So when the product came out on stage yesterday in her keynote, we had the Jaws music playing and it came out and everybody kind of went nuts. I think you would have big applause and it was just fun, right? So, yeah, I think that's another place she's helped us, is let's get creative on the marketing. What can we do? And that's, you know, she's, I'll tell you, I haven't, I'm not saying this just because she might be watching, but she works extraordinarily hard and she gets deep down into the business and especially in that marketing zone brings a tremendous amount of horsepower. That's great, good stuff. And we have great feedback on Meg. It's been good. We can't wait for her to sit down in the cube. Meg, we're looking forward to having you on the cube. You'll be, we'll get you. Don't worry. Meg, they're great guys. You ought to come on. Yeah, she's been great, great, great to have that new management style. And also the other feedback we've heard from Meg, also on Meg, is that, you know, she doesn't put the fear of God on people enough to give them enough pressure to be successful, but does people be happy in their jobs? You know, be fulfilled. And so like, that came across clear in her keynote when she talked about the humanization. You can see her focusing on the people aspect. Fairly, fairly strong here. So, you agree that's something that you're saying? Yeah, I think that's absolutely right. I mean, she talks about trying to get the right people in the right job at the right time. So a big part of, you know, being happy in your job is to make sure that you've got a job that you're a good fit for. So that's definitely something that she has focused on. You know, she does, you know, she does do deep reviews. I mean, think about it. This is a little business unit with no revenue yet and an enormous, enormous company. And we've been in front of her probably every other week, you know? I mean, that's incredible actually when you think about it. Well, I hope she keeps her eye on cloud because that's certainly a dynamic here with Amazon. We just had reinvent and the stuff that you're doing was certainly seeing the enterprise. So I got to ask you around your group because converged infrastructure has been hot for many, many years, as you know. And right now we're at the boiling point. It seems to be getting hotter and hotter, especially even though the stakes are higher too. Now you get cloud underneath, you get private cloud. Data center is changing. We're just on the Gardner data center hashtag. Last night doing the crowd chat, Dave and I. And it's clear that the confluence is all kind of coming together. So I got to ask you, relative to your targets, the shark thrusting through the water, are you assuming, we'll say great white because it's a hunting machine, are you targeting certain use cases, size of clients? Can you just go into a little bit more color on the prototype of the, the prototypical customer and why you're building these systems? I'm assuming it's for larger scale, specific workloads. I mean, can you just elaborate more? Yeah, you know, I think we didn't want to duplicate what other people are doing. Again, you know, the notion of the project sharks was let's think about what's really required here. And so we had a couple of, we had a number of ideas that are different. So clearly you got to bring all the parts together. It's got to work better than the sum of the parts and the support model and the interface and all of that. But we also believed that if you look at what some of the other converged offerings have been, including our own, they are too high end. So we have an enterprise offering. We call it Converged System 700. That goes after the high end. But we also built, we call it Converged System 300 and we pushed that down as far as we possibly could. So this product has an entry price, it's street pricing of well under $100,000 with a VMware license or a Microsoft Hyper-V license. So you could be a sand shark or a great white. Yes, that's right. If you could be a Mako, it could be a sand shark. Hammerhead. That's exactly right. It's a hammerhead. So I think that we also think it'll continue to move farther down the- So you envision moving up and down the price performance curve? Absolutely, yep. And I think if you look at what we did with 3PAR, when we acquired the company, it was up in the higher end. It was certainly large service providers. And our mission was to drive that same technology down as far as we could. And I think it's good discipline. If you really want to be efficient, you've got to squeeze out as much as you can. Now the good news is that when we did that, this was some of the real engineering work we did, to get that Converged System 300 to be really effective, we were able to actually ring out a lot of extra performance. If you compare it to like a Vblock 100, we're getting substantially more performance than what they can do. And that's a function of the fact that, we do have new technologies, some of these new Converged Infrastructure technologies that we built over the last few years, that actually when you put them together and you engineer them right, you can really, really achieve something. So yes, I think it's going to be something that's not just high-end, it's broad-based. The other thing is, there are kind of two classes of, if you say workloads or use cases. There's general-purpose virtualization, and these systems support VMware, they support Hyper-V, and the goal is to run basically any app you can run in a virtualized environment on top of that. SharePoint, SQL, Exchange, whatever you're going to do. So that's very broad, right, broad-based. And then you have specific things. So in addition to having a Converged System 300 for VMware as an example, you can have a Converged System 300 for Vertica. It's the same hardware, but it just does Vertica. And over a period of time, you'll see us qualifying and bringing out more ISV offerings. And the punchline for that is if you're a customer and you're building out your virtual infrastructure, when you bring in that Vertica thing, it has the same support experience, right? It has the same management experience. It has the same velocity. I order it, it shows up in a matter of days. So that becomes something different than thinking about appliances. It's a data center strategy. And what's different about it? It's optimized for MPP workloads and those type of database workloads, right? It's a re-optimized for those type of database workloads. But it's not, you know, when I buy the Vertica thing, I get a totally different support experience and buying experience. Everything I buy is going to kind of have the same process, but it's going to do its job. But you could expect something for relational database or maybe ERP or big data or whatever. There's a lot of things we can do. And I tell you just the hint would be that big data, that's obviously a key growth area. It's an area where customers are spending money. They're putting budget out there. But most big data today, a lot of them are science projects, proofs of concept. If you could get that packaged up as an offering that was more ready for an enterprise, people would buy it. And the same is true for things like client virtualization and VDI. So a couple of other questions while we have time. I want to get the business update because you're in a hot business. So John and I were talking, you know, going through sort of the HP financials at the kickoff and one of the things that stood out yesterday when we were talking was the converged business, your business, growing like crazy. Give us the high level business update, whatever you can share with us just for our audience. Well, I think there are some things that have been commented on that are really interesting. And one that's close to my heart is what we've done in the converged part of the storage business. And I think it's no mystery. And we've talked about this three years ago when I was on with you guys that we weren't happy with where we were with the older storage technology. So we made some big bets on things like FreePAR. And I think when we acquired FreePAR, it was about a $170 million revenue company. And it was a $2.4 billion acquisition. So $174 million inside of a company. It's a long way to go. It's a long way to go. Well, we're finally at the point where that converged business has grown to where it's as big as anything we've ever done and growing much faster than anything we've ever done. I think you're publicly saying 47% growth is what I heard in the earnings call. So that's massive. And the second thing I wanted to touch bases on, even though we had Kevin Garrison on this morning, was the channel. So this seems like you're going hard after the channel. To me, there's two channel players there. One's the reseller channel, the size, and so forth. And the other is cloud service providers. So I wonder if we could talk about that a little bit in terms of the strategy. Well, again, a lot of what we do in the channel is things that we did pioneer, I think, at least for HP around that three-part 7,000 launch, because that's been the most successful product that we've introduced into the channel in quite a long time. So a lot of those plays that we ran there, we're doing here. And the channel's critical to what we do. I mean, we've been a channel company throughout our history, and there's definitely an opportunity to do better and do more there right now. What do you need to do for the channel? Well, guess what? You need to provide them good economics. So when we did this... It's about the margin for that, right? It's about the margin. You talk to the customer, it's kind of, what's the value prop to a channel partner is, if I sell this, can I make money, and how predictable will be, and how fast do I get to that money, right? So the kinds of things we talked about with the product also relate to that channel partner. We can go in and say, hey, if I sell one of these products and it takes me 10 weeks to get it installed, that's bad. I'm going to sell something else because I need cash flow and I need margin, right? Because when it's installed, it's when they can start to bill for migrations in their own services and things where they actually make a lot of money. So when we go in and we say, look, this thing from order to install, up and running, serving VMs is 20 days, the channel partner says, okay, my time to billings is exceptional, right? They also, we tell them, look, you're going to get a very predictable margin. You're going to be able to, if we can make it simple enough, be able to train more of your people faster, you're going to get more of your sales people out selling. It's integrated, so you don't have to have three texts go out and configure the thing for the customer, server, storage, networking. It's just, we're trying to improve the whole velocity of the business. And clearly the focus is on the end customer, but there's a tremendous knock on effect for the channel partner if we do it right. So that's why they said about time, Tom. Pretty much. And then the cloud service providers, HP really embraced the cloud agile program that three par started. So what about cloud service providers? There's a little bit of competition, obviously, with HP cloud, but you've got a good cloud service provider business. What's the uptake potential there? How's that initially looking? Well, I think when you look at the channel and when you look at the service provider business, my view is it's pretty heterogeneous, right? There's all kinds of different place. People trying to figure out what's my angle for this business and people have different points of view. I think where we've done really, really well is on those service providers that are saying, look, I need to move to the next level because I'm trying to pursue some business opportunities like big data, like SAP HANA in the cloud, things like that. When they're trying to look for new business opportunities they're looking for efficiencies and that's where three parts done really well, that's where Blade System does really well. And I think the next wave for us is going to be Moonshot. I mean, the Moonshot server for a service provider gives them a level of scale and a level of efficiency that, you know, it's a breakthrough, right? So I think that for those kinds of service providers we do extraordinarily well. Now Moonshot's actually interesting. Does that put you into markets that nobody else really plays in from a converge standpoint, doesn't it? And you know, think about it, Moonshot is still, it's early, right? I mean, the product was announced in April of this year so it hasn't been very long but if you listen to people and again, especially service providers or people that are doing web hosting in their own company or providers, it's a compelling thing. I mean, we're running a very large portion of hp.com on Moonshot and Moonshot, I mean, that website's getting hammered this week, still just fine, right? And the economics around that, I mean, we're running on a very low power, very efficient space utilization and that whole eating your own dog food thing, it's playing extraordinarily well. Awesome, all right, John, well, John, you usually do the bumper sticker segment, but lay out the bumper sticker for HP Discover. What do you think, when the car leaves the parking lot of HP Discover here in Barcelona, what does it say on the bumper sticker? Okay, how about, welcome to the new Shark Week. Everybody else better get out of the water. Not Sharkonotto. That's for all you Twitter fans. Okay, this is theCUBE, of course. We're excited to have Tom Joyce, newly minted SVP at HP, great group. This is the future, I think. You guys are lighting in a bottle, great approach. I think you're going to see these kinds of large end-to-end systems just continue to grow. The new HP, new style of IT, that's their bumper sticker. This is theCUBE, our bumper sticker is extracting the center from the noise. We're glad to do it here. We'll be right back at the short break with our next guest.