 Hi, I'm John Furrier with SiliconANGLE.com. We're back inside theCUBE here at VMworld 21 with my co-host. I'm Dave Vellante of Wikibon.org, and we're here with Mike Bannock, who's the VP of HP Networking. Welcome, Mike. Thanks, Dave. Mike Cube, alumni, three times now. Three times is a charm. And, you know, VMware's the keynote out there talking about virtual machines, movement of mobility of virtual machines, integration of, whether it's storage or whatever, and applications. All this relies on networking, right? So you run marketing over at HP for the networking group. So tell us, Juan, what you guys are announcing. Let's get the news out of the way, and then we'll just jump in. We got some specific pointed questions. You guys are doing real well from what we were talking about. So just tell us what the news is, and then we can go into some real pointed questions that we have. Sure thing. We announced a few things that are very specific to the VMworld audience. First thing we announced was we did some performance testing. You know, one of the things we've had is a point of view that networks need to be flatter. We need to remove a layer from the network to eliminate latency, eliminate those unnecessary hops so that things can run faster, whether it's a federated application, or something like virtual machine mobility. Because in our point of view, VMotion's becoming the new killer app in the data center. And so what we've done is we've performed testing that evaluates our core innovations in our flex fabric solution, and see how that actually contrasts with what you could build with just regular networking gear. And what we found is that VMotion can actually run nearly twice as fast. And in the event of a network failure, our innovations actually recover 500 times faster than traditional networking protocols like spanning tree. VMWare obviously is a big partner of HP. I think like number one or number two for you guys in terms of this in this area, right? So, you know, from your perspective, how is VMWare doing in the marketplace? And are they doing all the right things? And cloud is changing, obviously, and the networks power that. So what's your take on VMWare? Are you ecstatic about their positioning? Are you happy with the results of the environment? Is customer uptake strong? And how is your networking side of the business affected by this massive turmoil? We're seeing hurricanes and transformations going on in the marketplace. So tell us one, that, and then how VMWare's doing and then how the market's reacting to that. Yeah, so VMWare's a very strong partner for HP. When you look at people using VMWare, more than half of the VMWare running out there in the market is running on an HP server. And so when we perform testing like we did with network tests with David Newman, and we're able to demonstrate tangible benefits to customers, more than half of which these VMWare customers are running that on HP server infrastructure, they now have some tangible reasons why using an HP network, a flex fabric solution from HP networking, is actually going to bring them even greater benefits. It creates a very strong stickiness between the servers and the networking, which is really the whole point of a converged infrastructure to create a very integrated solution of network, servers, storage, power cooling, and management so that customers can have these shared pools of resources, one architecture to run, any application. And so we're really excited about VMWare being a partner. We're very excited about what it does for our business. And we think that this actually brings even more market opportunity for us as we continue to grow our networking business and our storage business. So one of the things we talked about earlier in theCUBE with other guests is that this idea of delivering, and we was a quote by the CEO of Puppet Labs, who's an open source guy, and we asked him about the future and now. He said the biggest challenge that he's seeing is solving today's problems in the customer base. So you guys have a lot of benchmarks you mentioned, the case study. What is the number one issue around VMWare in terms of that is a challenge or an opportunity, as they say, that is hitting your world in the networking side. Is it performance? Is it the virtual machines? What are those key issues? It is clearly around performance. When we look at statistics from Gartner, one of the things that they've done is taken a look at the trends in adoption for virtualization. So what they've actually published as a strategic planning assumption is that by the end of 2012, more than half of enterprise workloads are going to be running on a hypervisor. And VMWare clearly plays a very big part of that market with their leading market share. And the other thing that they've said is that it's driving this huge growth in IO within the rack. They're seeing a 10x factor increase in traffic in the IO in the rack. And what they're seeing is a transition in the data flows too. What they're seeing is, as people use virtualization more and more, that 80% of the traffic in a data center is going to go between server and server, rather than server to user. So what customers want to know is how do I get ahead of this? How do I actually solve for this problem? And how do I do it in a way that I'm, you know, I don't have these cycles where I'm ripping and replacing? Give me a pragmatic blueprint that allows me to get ahead of the curve and buy something that has lasting value, longer term amortization. So that's server access management pattern that you just mentioned. Is that what's driving the need for the flattening of the networks? Is that correct? Absolutely, that's definitely one of them. Anything that takes the latency out of the network between those servers gets customers better prepared for that dramatic increase of server to server traffic. Because, you know, think about it. I like, I use this analogy because it's very human. I went to see a bunch of customers in Japan. I said, look, I took a direct flight from San Francisco to Narita. I didn't fly to LAX, Honolulu, Guam, Bangkok, and then Narita. And people all laughed. I said, because it would be really very slow and long and it would be a horrible user experience. Well, that's what's happening in today's data centers. Legacy, hierarchical, multi-tier data centers are forcing traffic between servers to take that kind of path. What we really want for that better performance and that better user experience, more importantly, is that direct flight. And so flattening the network is going to actually give us. Give us that. And that's what we're doing with our FlexFabric solution as part of the FlexNetwork architecture. What about new apps, big data? Is that part of the driver as well? Absolutely, and you know, so all of the, another thing that customers really want is they want simpler things to buy. So we're creating these systems. Virtual system is one of the things that's in the news this week for HP. We also have some things we announced that HP Discover app system, specific around applications like Microsoft Exchange. And this gives the customer one skew to buy. So there's three tiers of virtual system. So if you want to be able to scale to 750 workloads, well, there's a skew you buy. That takes a lot of the mystery out of the equation. It gives them a complete bill of materials on that one skew. It gives them something that they can roll into the data center, plug in, and it's up and running. And the best part is, is they want to scale that out and they want to move to something that's more on the category of virtual system too. Well, they've already got the right building block in place. They don't have to, they don't have to rip and replace that. They can just add onto it. So I want to help me cut through the marketing hype. VP of marketing, oh, it's hard, but I'm going to ask you anyway. So that flattening of the network is that, I'm trying to determine is that a CIO imperative to simplify operations near term now? Or is it more, you know, longer term supporting these outlier applications like Web 2.0? Help me understand that. It is very much a CIO imperative. The conversations that we engage with are largely with the enterprise data center architect because he's the one who's chartered with this forward thinking about how do I get ahead of the curve for that 80% server to server flow that Gartner is talking about. So that person's pushing you when you're saying it? Absolutely. And usually he's getting the tacit authority from the CIO to do this because the CIO has also learned another thing which is this unlocks stranded capital. So we talked to IDC and, you know, roughly around a billion dollars is spent every year to buy the switches that go in the aggregation of a data center network. So the three tiers are access, servers and storage plug into that. Then it's like merging highways as you get close to the city. Those switches, those access switches connect to the aggregation tier. And it's like where the two interstates cross in the center of Dallas. Well, those, you know, that's the core. Well, if you can get rid of that aggregation tier, you know, in every global enterprise data center, well, there's a billion dollars that doesn't have to get spent on the network. Can I get spent on innovation? And the CIO, he realizes, before he got out of bed this morning, 70% of the budget got spent just to keep the lights on. So he's looking for any way to deal with a flat budget to find funds, to create, you know, to be able to innovate in this business. So HP's are still relatively the new kid in the block in networking. I saw in your announcement today, you cited some market share numbers. I think the figure was around 12%, if I understood it correctly. So your major competitor still has a dominant share of the market, but the fun fact is- But decreasing. Well, let's talk about that in a second, but this is the first time in a decade, I believe, any competitor has had more than 10% of the market. So what's happening there? Your major competitor says that combined, three common HP is not gaining share. Your numbers that you showed, which are not HP numbers, what was that? That's absolutely false. So, well, the Del Oro numbers that you showed today in the announcement suggested that consistently you've been gaining share over the last several quarters, but- That's true. You know, help us squint through that. What's your perspective? Yeah, so Del Oro published numbers just recently for second quarter of calendar 11, and it shows that we're at 11.9. We were 12% in the first quarter, so relatively flat quarter over quarter, but when you look at the changes over a long period of time, which is actually what Del Oro urges everybody to do, let's just look back to when the market was at its peak, and HP and three common were separate businesses, just to debunk this myth right up front. So at that point, if you were to add the revenue shares for those two separate businesses, it totaled 8% in the third quarter of 2008, and today we're at 11.9. So that's 390 basis points increase in our market share. Well, in the same time, you know, Cisco's lost roughly 600 basis points, nearly two thirds of all the share that Cisco loses goes to HP networking. So we are truly transforming the networking industry. We were the first competitor to Cisco to break through the 5% ceiling, and the first one to break through the 10% ceiling, and we're going to continue our path forward. Yeah, so, I mean, IT market's like, like at least two competitors, you know, ideally more, so, I mean, even Ketchup has a second, you know. Oh yeah, once in a while, right? And competition is good. Dave Donatelli says this repeatedly, he's absolutely right, and what we're doing to drive competition is we're accelerating innovation. You know, when we talk about all of the new things that we're doing, we're talking about the problems we're solving for customers that are dramatically better technology than what our competitors are bringing to market. That's what customers want. They want somebody that says, I understand your problem, I'm going to do something serious to fix it, and they know that accelerating that pace of innovation is just going to benefit them in the long run. One of the places we put a huge amount of emphasis around accelerating innovation has been around management. And the things that we've done there, just to provide one pane of glass to manage the physical network, whereas our competitor, they could require 30 different tools. And now we've actually expanded it to manage also the virtual network. So virtual switches, virtual machines, that VMware is actually delivering to the market, we can discover those automatically. We can map them to the physical network. So somebody today, they get green, yellow, red status indication for switches, access points, routers. Well, they can also get that for a virtual switch or a virtual machine. So we can also provide the full management of that device. So we're taking a leadership position to bridge the management of the physical and the virtual world. Good. I guess so. On the competitive note, everyone wants to know obviously competitors, market share, you know, it sounds like there's a lot of fud out there. You can claim that the numbers are great. But I want to know what the features are that you guys are crushing it on innovation. Because that's a really good story for HP right now. I mean, obviously your group is really doing well. You mentioned some of the business highlights, but talk about you guys vis-a-vis the competition, specifically around the VMware and virtualization space. What are you guys doing specifically better on a product basis that trumps them? Well, you know, I mentioned this whole idea of flattening the network. So, you know, one of the key pieces of doing that, one of the key enablers is having scale, both at the axis and at the core. And one of the ways you get that, because you can only put so much in a physical package, you run out of space at some point. By virtualizing multiple switches, so they look like one, you actually create a single logical device, shares one forwarding table. So even though several servers, hundreds of workloads are spanning many racks in a row of a data center, the switches that they're all plugged into at the top of the rack, they all behave like one switch. So it gives them that direct flight. So it's improving the performance of VMware. Now, one of the things we've also done is we've taken that technology where we virtualize those switches. We gave it a really interesting name. We call it the Intelligent Resilient Framework, or IRF. We use that same technology on all the switches that we have. So we can do that the access layer with all the access switches we've got. We also do it in the core. So one of the things we announced today was that we've doubled the capacity of our core for the data center so that we can scale the size of the data center beyond what we had in the past by a factor of two. So before you could put two core switches together for 256 wires to be 10 gigabit ethernet ports, now you can double that to 512. And so that's another key piece of thing that we're doing to drive the innovation in the market. How far ahead are you in the competition? So I mean, is that ahead of them or what does the other guys do? Well, the other guys are actually forcing everybody to use a mixed bag. It depends on what product you talk to them about. It's like, well, if I'm still a Cisco customer using Catalyst 6500s in the core of my data center, well, you're using VSS. If you're using Nexus, using something else to virtualize them, the IT guys are all kind of scratching their heads going, you know, I have to keep learning something new. Whereas we're providing a consistent technology for doing all of this. People learn something once, they can use it in multiple places. The IT staff's becoming more agile as a result if they're an HP customer. And, you know, when we look at delivering these apps, we're actually innovating in the campus far ahead of where our competitor is. So we're flattening those networks, we're lowering latency by 75% in products, you know, compared to what our competitor is selling. And that's having a big impact on customers getting ahead of the video way. Because, you know, it's expected that more than 25% of the content that goes across an enterprise campus network is going to be video in some way, shape, or form. And so people have to get ready for that. How about this issue of merchant silicon versus custom ASICs, right? I hear a lot of talk about that in the networking business. What's your take on that? As you go to merchant silicon, how do you differentiate? Oh, so there's a couple of things that we should talk about there. First, it's like two different weapons in your arsenal. And so you kind of make a decision as you're building a new product line or you're building a solution, what is the right weapon to choose? Some cases, you know, using custom ASICs gives you an advantage. You can integrate specific functions that give you a competitive edge. When you look at some of our access switches, you know, we had an HP Innovation Day recently. We invited a lot of people from the media into HP Labs in Palo Alto. We showed them some innovative stuff around OpenFlow. We've built that into ASICs. We're far ahead of our competitors and the merchant stuff in the marketplace. Another thing you can do is you engage with a merchant silicon provider is, you know, they're very willing to build some custom features into that. So, you know, using merchant doesn't mean that you've lost your competitive advantage. It's really how do you engage with them as a partner, not just treat them as a supplier of vanilla chips. And does it become more of a software focus in terms of the differentiation strategy or is it? It does in a way because what the, what you're able to do in a custom ASIC or what a merchant supplier is willing to do for you on a very custom basis and chips you're buying from them, then comes to life through software. And that's how you can make things easier for the customer. You can hide the complexity for them. Okay, we are here inside theCUBE at VMworld 2011 with Mike Bennett, the VP of Marketing at HP. Final word for you before we break here is what's the one thing you want the folks out there to know about HP networking around your business, your current situation, customers, partners, friends. What's the one thing you wanted to know? Well, you know, I think one thing everybody should know is what Gartner's advising people. They recently published their new 2011 Enterprise Lambda Magic Quadrant. The Quadrant, I saw that. Yeah. There's only two guys in the upper right, I know. Right, there's only two companies in the leader quadrant. HP is one of them. Their advice is that customers should be engaging HP for any branch campus or data center deal. They would be wrong not to look at them. The Amdahl Coffee Cup. And we grew our business, when you look at our revenue from the third quarter, grew 15% compared to the same period last year. So we're earning customer business and we want to earn everybody else's. Okay, we'll be back with the next segment here inside theCUBE. I'm John Furrier with Dave Vellante. Inside theCUBE, our flagship telecast here at VMworld 2011. Wrapping up day one, having a great time with Mike Bennett, VP of Marketing at HP. Thanks, John.