 Back here at HP Discover, we are in Las Vegas for HP Discover 2013. This is siliconangle.com and wikibon.org. It's theCUBE, our flagship program where we go out to the events, extract the signal from the noise. I'm John Furrier, join with Dave Vellante from Wikibon, a very special CUBE guest here. George Kedifa, executive vice president. I guess you're EVP on the executive council. What is your official title that's on the, the, the buyout? On the business card. Yeah, on the EVP. Yeah, executive vice president HP software. On the executive council. Yes. Welcome to the GM of HP software too, is that right? Yeah, yeah. And the GM of HP software. It just didn't fit on the card. Welcome to the CUBE. Thank you, thank you. We always love to get the leaders of the, of the, of the business in the CUBE, just to talk about, you know, casual business. So the news you announced today was Haven, which is a big data. You have big data. Yeah. You have IT management software. IT is SAS. Right. And mobility, and this is all under your group. Right. What were you guys announcing today? The show, and then we can jump into it. Yeah, yeah, we, we announced Haven, which stands for our number one big data platform in the industry. That is, we have more than a billion dollars worth of software alone around, around that big data platform, which puts us in the leadership position in that market that is becoming a very critical market in our industry. So we have integrated our capabilities within ATAMI and Vertica and ArcSight, and added to it support for Hadoop. And we have a very, you know, a leading position in that space. And we're also launching new types of applications. The end in Haven stands for NApps, which is a new style of IT applications where you take advantage, not just of kind of traditional relational technology, but more importantly, you take advantage of columnar technology. You take advantage of log management technology. You take advantage of idle, which is human information. And suddenly you're changing the way applications are written. And we do intend to change the way applications are written. So N, again, stands for? N number of apps. N number of apps, right? Like a variable of infinite apps. Hunter apps. Yes, hopefully. Lots and lots of apps. Yes. Okay, guys. So let's talk about the business. Obviously, the business has changed. HP software, we've always been banging on the software drum, and HP has never really been a really software company in the past. They're DNAs, most have been hardware, but a lot of firmware, a lot of software goes in the hardware. But now with the renewed focus, big data puts software in the center stage, software that infrastructure is helping to find networking. You now have that other part of the business that's integrating in. We just had Bethany Mayer on talking about fabrics, right? So this new style of IT would be based on fabrics. So you got cloud, that's holistic, and then networking underneath, and everything in between is the software. How do you evolve in the strategy of HP? What is the core strategy for HP software? Share with the folks your vision for the software. Because now you have to traverse both classical software, developer environment, DevOps, and the cloud to integrating into the fabrics. Right, yeah, it is a great question, John. And really the mission of HP software is to enable the new style of IT. And the new style of IT, if you think about it, this is the first time in my career over the last 33 years where there's a massive technology shift, not caused by one technology, but by three. I'm calling it the triple store, which is you've got mobility, cloud, and big data hitting the IT organization and the IT landscape simultaneously. And then wrapped around it is the whole concept of security and the concerns of our security, because the three hits are creating massive complexities and needs for a security framework that makes things work right. So what we've done at HP software is defined our mission to basically drive or enable this new style of IT based on cloud mobility, security, and big data. And what you see us in each one of our offerings is stressing those elements. So we're taking our IT management suite, which basically covered kind of the web apps domain and moving it to mobile applications. And how do we develop mobile applications? How distribute mobile applications? How do we test them? And how do we monitor them and match them? So that's why we announced HP Anywhere, which is basically this new class of applications. Similarly for big data, we've taken all our engines and now we have connectors, we have the engines, and now we have the n-apps, the applications on top of it to enable that ecosystem. Similarly for cloud, we have our cloud service automation software and all the software and all the situation around it to enable basically cloud systems. Well, I was really excited to meet with you on Sunday just randomly at my son's graduation event that you were there and socializing. But more importantly, when I looked at your bio, you worked at Silver Lakes with us and they have a history of doing private equity and doing all kinds of, you know, going private. You've also been an entrepreneur and you're at the big company at HP. And so I always get a chuckle when people say, well, HP is really not a software company. But, well, who is a software? Is Microsoft a software company? Well, that's kind of going to the cloud now. So software's being redefined, right? You're seeing it across the board. You just talked about it at the edge of the network. You can put software there and you can go into the network fabric. What, how has software changed fundamentally now to capture those opportunities that you're going after? What is the terms in the old way? I don't know, pick on Microsoft, but you know, box software, shrinkwrap software, download it, install it to make. Yeah, well, two dimensions. The first one is we're, you know, the days of shrinkwrap software, you know, these days are gone. These are, this is old. This is kind of classic. And really what's starting instead is, one is software is being embedded in everything. You know, if you look at the car today, there are 10 million lines of code in the car today. You know, now we're having issues about security. People are worried that, you know, if a car is connected through a GPS situation, network, or through a cellular network, that someone can actually log in and hack in into a car and drive it for you. So everything, you know, even consumer goods, even, you know, areas where, you know, you never imagined that it would be software in it. Everything is becoming, so software is becoming embedded, is the first one in every piece of equipment you have there, not just computers. And every piece of equipment is becoming a computer. And the second piece is, software has changed form. You know, it used to be shipped as a box. Now you can access it as a service anywhere. And you can access it as a small app on your smartphone, all the way to going on a website and basically downloading it, or literally using it on a subscription basis or on a one-off basis. So it's becoming amorphous. And you got to open source, and open source on top of that. Look at open stacks done in the past year, just alone is disrupted and, you know, impacted HP. Exactly, right. Actually, open source to us is a huge opportunity, a positive opportunity for us. We've always been at HP committed to open standards and committed to heterogeneity and to ensure that our customers, our customers are worried about vendor locking, about making a decision and suddenly that decision is a closed architecture decision and then the vendor comes back and asks for money. HP is different. HP is committed to open open centers, you know, open source that's part of it. And really what open source is all about is about freedom, giving people the freedom to take code and to basically deal with it and manage it in a way that is helpful for what they're trying. David and I were just talking about that open source is now the new standards bodies in the old days, you know, I should believe or some standard advisors that we're going to agree on a spec and that was the check off, not a mark. Now it's the communities. You're totally right. Communities now make standards. Yeah, and your point about freedom is right on. It's not just free of charge. It's free to do what you can do and be creative. Yeah, it's freedom. Yeah, I want to unpack your software business a little bit. So it's roughly four billion, right? And you've got a killer security roadmap. I think you guys got one of the best security stories out there. You've got an IT service management business that's transitioning to SaaS, if I'm hearing you correctly. And you've got a couple of gems in Vertica and the autonomy. So like a lot of HP businesses, you've got the old, which is declining and the new that you got to throw gasoline in the fire and make it grow faster, right? So talk about that strategy. How fast you can affect that transition? How fast you can ignite that growth? Yeah, great question, David, that is, this is any business, any software business of the scale of HP software is going exactly through the same transition. Because basically the reason we got to four billion dollars is we've been able to accumulate that revenue from the last several years and do it. And then now with these shifts, you know, the pricing is changing, the dynamics are changing and the customers demand on us are changing. And so literally we're going through a portfolio approach. And a portfolio approach, what you do is you try to take the businesses that are growing and basically give them more fuel. Then you're taking to the businesses that are not growing and the first question you ask is why aren't they growing? And what, you know, but our perspective, our strategy is not to say, okay, if it's not growing, then let's cut the oxygen. No, that's actually the wrong way to do it. Our strategy is very simple. If it's not growing, what kind of innovation can we do to make them grow again? And we demoed today, for example, two products in my keynote on stage, you know, where the first product was classic monitoring. The classic monitoring space, you know, is mature. So what we've done instead with Innovator and created what we're calling operations analytics, where suddenly, you know, we were able actually, as Christoff in the demo showed, we were able to actually move back in time. With machine data, looking back in time, a little time machine. Exactly right. So red, red, red, oh, it's green, what happened? Yeah, exactly. And then he goes, well, the guy called George K, actually, who made the change on Friday night. It's always the case that Paul screws things up. Exactly right. That's John, he does it all the time. So that's an instance where we take, that's an instance where we take, okay, if it's not growing, you know, it's not a question, well, let's not cash cow it. I think that's the wrong way to say it in technology or to work on it. Instead, let's apply innovation to kind of keep growing even the at-scale businesses. Okay, now the other question I have is followed. I asked Meg at the analyst meeting about acquisitions. She said, I'm not acquiring any companies until I pay down the debt. And I talked to her privately after, she said, that might do some tuck-ins, but really that's our priority. And then I followed up, you know, I asked her, I said, okay, George, you got to do more than four billion, right? You want to really, this is a huge opportunity for HP. Yeah, 100 billion plus dollar company. So how do you want to do that without being able to acquire it? Now, once that debt's paid down, I think you're going to be in a dangerous position in front of it, and I know you can't comment on that. But talk about, talk about between now and then. Well, talk about generically sort of the M&A strategy. You're a little bit handcuffed right now because you make saying priorities to pay down the debt. But I wonder if you could talk about that a little bit in terms of your growth strategy. Yeah, well first, if you look at our results like Q1 and Q2 and the cash flow we generated, they were very, you know, very good quarters and the organization as a whole has executed perfectly. Yeah, we're talking 5.5 billion through the first half of the year, right? Right, right. Which is a substantial percentage of the total that you've promised the street for the year. Exactly right. And that gives us basically the freedom to enable our business on the broader level where the balance sheet is looking at a very good change. Definitely getting much better. Right. Philosophically, I want to grow organically as much as possible. Yeah, there are some tuck-ins occasionally we need to do here and there. But I'm not looking to grow the business, to go and do massive, multi-billion dollar acquisitions. The markets are smart enough to realize where the value is created. And usually when you do these large acquisitions, you're paying full value. And look at Salesforce, they just made an acquisition, a two and a half billion dollar acquisition with exact target. Exactly, yeah. And the stock price went down, what, 7% that day? The market basically told them, you know, that's not the creative. Biting off more than they can chew, yeah. Right, that's not the creative. So we need to be very careful. My belief is if we get our current product lines to grow between five to 50% depending on the markets and the products, it would be great. That is, I want to grow at two to three times GDP. But I want to push on that a little bit because I want to take Vertica as an example. You paid, what, three, I think 340 for Vertica? Is that what you said? Less than that, a little bit. Okay, so let's say roughly 300 million for Vertica. Picked up an asset, that's Vertica, 300 million. Oh yeah. And you keep saying, throw gasoline in the fire, that is a diamond right there. So to me, that's the kind of acquisition that makes a lot of sense. You know, it's been multi-billions. Right, but when we acquired Vertica, unless it's a game changer. When we acquired Vertica, their revenues were in the single digits. Yeah, yeah. Right, so you're paying a big premium. You've understood you're paying a big premium, but the value that you can create for shareholders long-term with that acquisition is enormous. I agree. And that's what you're calling tuck-ins. Yeah, exactly. That's what we're calling tuck-ins, David. And frankly, if there's another Vertica, we'll do it today. That's not, that's not the... Yeah, that's a product strategy for us. I mean, that's software. So that's a product strategy. I mean, that's to me, that's more of a... Single digit revenue is irrelevant. It's a lever that you can... But we don't want to buy revenue, I think. That's the message. Right, it makes sense, right. So that's not the strategy to grow, is buy revenue. It's to product tuck-ins so you can then explode into the HP... Again, we haven't fully articulated that strategy yet, that this mag is clearly underwrite here in terms of let's get our balance for the order. Well, you get the security. I mean, security is a big agenda. So you have a lot. I mean, your strategy right now is pretty full. Plate's full, you've got security. That's a big one right there. You've got a good story there, too. Yeah, we do. Art has the best security wrap I've heard, I would say. I've heard them all. Yeah. And his is the most articulate. No, we've got ArcSight has been in the Gartner Magic Quadrants 10 years in a row on the leadership position. And it's a growing business and we want to even grow it more. So let's talk about the classification of the world. Obviously, that's the software model that's obviously everyone's going to. You got the war going on with infrastructure as a service, the platform as a service, that's the cloud game. And you guys have, we just talked to all your guys this morning on that. Now, but the software piece about the application developers. So that you got Rails developers, you got Python developers, you got all kinds of different developers. How do you see that market evolving? Because obviously SaaS is the platform that customers want to roll out. The economics are great, deployment's great, agile. And that's great fits with mobile. So how do you see that market evolving? From your standpoint, looking at the growth, you get the two to 3% growth of GDP. That's great for consistency, but you got to, if someone's open down the end zone, you can throw the ball down the field. It's going to come from maybe a market force. Where do you see that potential edge? The person gets open, runs in the end zone. Is it going to be from the big data piece or any market force? Well, there are, you know, there's more than just one player. There's the first one is on the big data side. To give you an example, you take relational technology in the early 90s. When the relationship technology became mainstream, it created $200 billion of revenue from companies like SAP, like Oracle, like PeopleSoft, like Siebel, like, you know, PTC, like everyone in that, all these guys kind of grew out of relational technology because we were able to put data on in rows and columns, literally. And manage that. Disruptive enabler, right. So now with big data, with Haven, think about Haven as kind of the new wave of information. It's still a relational technology. Relational technology captures about 10% of total information. With Haven, we capture 100%. So we have a 10x factor in information capture. Then the growth, relational technology, information growth might be growing at maybe five, 10%. Well, the growth of non-relational or non-structured data is growing at 10 times faster. So you go and you say, I have 10x in growth, 10x in size. That's a 100 times opportunity that we've just created with Haven. And now imagine the applications we're going to build around it. To me, that's 100 billion to more than 500 trillion dollars of opportunity. And actually, I'll share our forecast that we keep on forecasting. We actually have a premise that it's going to be self-fulfilling and that you drive relational growth as well. Correct. Because you're going to be bringing non-structured and structured data to get analytic data into your transaction database and driving new value. So that's- I mean, the darts at the dartboard, I mean, they're all in order of magnitude massive, right? Don't even, it's okay, it's some big number. Yes, exactly. And the tan is just enormous. Yeah, the tan is huge. Right, and we're creating it, you know? So I want to ask you more philosophical questions. So sit back, put your M&A hat on as you're in Silver Lake or your VC or your entrepreneur opportunity recognition kind of mode. So we are living in an era, we've set on Silicon Angle and Wikibon in the modern era of business, first-time effort, unprecedented opportunity for a business to fully instrument their operation end-to-end. With mobile, with connected instruments, you get big data, a company now can reconstruct their value chains and measure everything. Everything, I mean, every aspect of your business. Talking about NSA and surveillance, I mean, companies can basically do that themselves. How are you looking at that? Because that's a real conversation people are having and it's kind of mind-blowing for someone to say, wow, I can measure hiring, firing, supply, chain, manufacturing, customer support. Every piece of data is available and captureable and measurable in real time. So that is just intoxicating just to kind of think about. How do you straighten that out and how do you talk about that customer? Again, huge opportunity. Everything we do today has what we call a digital footprint to it. I'm breathing right now, if I'm wearing one of these devices, it tells me the amount of information that basically we can capture on a human level and clearly in the enterprise, kind of like, okay, I wake up and if I can go and take a coffee at work, I can measure it right now and I can put it in the database. So these digital footprints allow a tremendous new way of managing enterprise. And what, if you think, and we're going to create this new style of IT, is going to create what we call a new style of business. And the new style of business is going to be very different. These new businesses are going to be very different from the current businesses today. Current businesses today, you know, focus on scale, focus on cost reduction, focus on EPS and what Wall Street tells them to do and try to be monopolies so that they can have pricing power. Well, the new kind of business is very different. The new kind of business, they're going to focus on growth instead of cost reduction, but their value proposition, because they can measure everything, their value proposition is a customer experience. If they can get that customer experience back into none. And there are a lot of companies that actually can capture that customer experience. They don't need to be a monopoly. They just need to capture that management experience and then everything else flows through it. I'll give you a couple of examples. I'll give you this as an example, okay? They don't have the monopoly of entertainment by far. They don't. But what they do is if you see the effort and they measure everything and they do it, they're a large customer actually with HP software. If you see what they do to capture that customer experience, it's unbelievable. And what they're going to do now in this next generation experience with these magic bands, is literally know exactly where you are, when you are, what you're trying to do, and be there at your service so that you'll have an experience second to none. You look at Starbucks, I can actually do coffee at home in the morning. I can go and do it personally, but I don't. Instead of spending $0 to do it at home, I can go and spend five bucks at Starbucks because I like that experience, correct? And they don't have a monopoly on coffee, but it's that customer experience that's going to define this new business model. Exactly. I think, you know, perfect storm, big data, mobile cloud, all hating at once. The internet of things is right around the corner. You have new way of doing business, instrumentation, big data. So big data will become just kind of like invisible. If you're just going to be just normal. You see that happening as well, right? Exactly right. Okay, George, well we got to wrap it up. Great to have you on theCUBE. Thank you. And we certainly want you to come back and share your perspective next time in Barcelona or our next year. This is theCUBE, this is Kadeeva EBP, and General Manager of HP Software and the Executive Council of HP. He's on the core team changing this company and software will be a big part of it, but it's the new software. It's the new era, the modern era. Thanks for coming on theCUBE. We'll be right back with our next guest after this short break. Thank you.