 Live from the Fiat Barcelona Grand Via Compensator in Barcelona, Spain, it's The Cube at HP Discover Barcelona 2014 brought to you by headline sponsor HP. Here are your hosts, John Furrier and Dave Vellante. Hello everyone, welcome to day three of coverage of SiliconANGLE and Wikibon's The Cube, our flagship program. We go out to the events and they attract a signal from the noise. I'm John Furrier, the founder of SiliconANGLE. I'm John Furrier, my co-host Dave Vellante, co-founder of Wikibon.org and we are so excited to be a day three final day of live coverage in Barcelona, Spain, the European version of HP Discover 2014 and it's been a great show so far, HP making the turnaround, making the comeback again third year, Meg Whitman really putting the wood behind the arrow here Dave and it's been pretty awesome. We've got some great guests here on day three. We've got Martin Micoz, the new CEO or the new SVP, basically CEO of the HP Cloud Group which is the real catalyst for the transformation of HP, we're going to talk about that, his plans, what he's done with eucalyptus, how that's going into the cloud and ultimately what they're building for these building blocks for their customers. We also have Antonio Neary coming on who's the head executive of the infrastructure group and enterprise group at HP. We'll talk about the machine, their big kind of futuristic product, among other things converge systems but just great show overall and a lot of other great guests coming on throughout the day. Dave, I mean just a great lineup, we've got Paul Miller coming on who runs converge systems and a bunch of great other great folks from HP so big data, converge systems, you've got the machine which is the futuristic outlook and of course you've got HP software across the board and a lot of other great stuff here at HP and again we're digging deep and finding out all the data and really it's coming down to the fact that HP is focused and it's show time and I think you're seeing the beginnings of this turnaround, you're starting to see the playbook, you're starting to see the executives taking their seats on the bus and the folks that are on the bus going to this destination with a new style of IT is what they're talking about, this modern way of doing business, not 100% complete, a little critical on some of the social across the board, I think that's one spot I want to look for more today but overall the products are lining up, their messaging really hasn't changed over the past few years Dave but clearly the executives are taking their seats and I think there's some more rears to go on, talking to some folks in the hallway and after hours, starting to see making its way down into the trenches and that's going to be ultimately Dave, my opinion what's going to happen with HP is seeing how this translates, it's show time, the executives are in their seats, they got the products, they got the momentum, Meg Whitman is messaging heavily, innovation, customer, partners, three main focus areas and all the talking points, that's the focus, she's on stage, she's doing her part in laying down the framework, laying down the guiding principles, laying down the architecture of the new HP, the executives are taking their seats and now it's going to come down to the arms and legs of the organization, the people in the trenches, the people in the front lines, sales, marketing, engineering, R&D, if this all can come together, HP is going to be a very, very viable force, it looks pretty good, I'm really impressed, I think it could be sideways but I don't see it, I see people energized, Steve Dyche yesterday was very articulate about what's clear in his mind, other executives have their marching orders and ultimately it's going to come down to execution Dave. Well I think that, I've been thinking about this a lot John, to me it's a tale of two HPs soon to be a tale of four HPs, soon next November when HP splits apart into PCs and printers and then the enterprise group but if we look within the enterprise group which is really what we've been focusing mostly on at this event, I think I can say there's a tale of two cities and the one city is this big, large legacy install base that was created at the beginning by Carly Fiorino, he said, oh wow, the whole industry is consolidating, we have to consolidate and get big or die, I'm not sure that was true but anyway that was the call that was made and so now the enterprise group is this hugely complex collection of, you know, former compact and digital and EDS and all kinds of tuck-ins that came together to form this behemoth and what Heard did is Heard came in and said all right well I'm just going to cut cost, this is a no-brainer, I'm going to cut cost and grind people and it's going to throw off cash and Wall Street's going to love me and that's exactly what happened and you know the to the outside world HP kind of had its act together and I'm squeezing R&D and throwing off cash and it looked like everything was was working but in reality the pieces never really came together and that's the normity of the challenge that Meg Whitman has is to actually align all these pieces and that's why I think ultimately they decided look we got to split these two companies up 50 billion dollar PC printer entity and a 50 billion dollar enterprise entity give each of those firms those global 50 companies focus now what's happening is the other side of that coin you got the sort of legacy business you got hot products you got products like 3par you got products like Vertica you know parts of the converged infrastructure portfolio HP's always had you know a lot of hot x86 servers we even heard from the services guys the data center care service now went from really zero they announced I think that product that service on the cube down to a multi-billion dollar business so helping people convert to the cloud and then there's open stack so a lot of really promising areas where HP's pouring R&D money so what Meg is doing she's saying look I got a managed decline business these guys are essentially saying we don't want to move there's no business case to move off of our old tandem systems or old HP EVAs or whatever it is we just want to keep them so they're baselining they put some basic R&D in there to make them go a little bit faster run a little bit better maybe simplify things but they don't overdo it and then they pour the vast majority of their R&D into this new stuff and then they lay out this vision of the machine a new future of computing which is a which is a bold vision I'm really skeptical in the machine as you know but I still love it I love the fact that HP is saying we are going to change the world we have the the the cache a to do it you know I got a lot of questions about the cost structure and compatibility how you going to run software on it blah blah blah but all things that HP is thinking about no question about it but so to me what Meg Whitman is saying look we got to make some bets right and we got to play offense it's like Pat Gelsinger says you play offense or defense you got to play offense in this business so how do they play offense they play offense by doubling down on those areas that are going to give them big returns so that's what I see about the tail of two weeks and I think we're at that point now John where the the new stuff is finally more interesting and taking more hold than the story of the old yeah I mean Dave this is clearly a leadership issue from the top Meg Whitman is clearly pushing the envelope pushing the team again I mentioned that you know the executives underneath Meg first line direct reports as well as you know management team underneath those managers are in the seats are on the bus to quote you know you know good to grade get on the bus and then figure out the destination they kind of know the destination new style of IT is their poster poster slogan that's considered marketing for their destination which is really transformation Meg Whitman is really pushing cloud as a transformation agent for this company and I think that is obvious how cloud is dwarfing into this awesome organization and Martin Fink came in first our galates circle I set it up Martin Fink kind of took it to the next level now you got Martin Miko scaling it up and you're going to start to see sales and marketing fill in the gap you start to see more marketing see great social media action happening with that team in cloud and I think cloud is the enabler and I and that is ultimately and she says tip of the spear word we use a lot on the queue which is great to hear her say that and it's the catalyst it's a crisis it's an opportunity and age she's taking the reins and that's a good leadership skill I'm impressed by that I love I like to see her and the her executive saying Meg wants to move fast Meg is investing in innovation this this is not just lip service I really see that happening so from my standpoint you know I was looking at Meg Whitman looking at her leadership style trying to figure out okay is this just kind of puffery she's just you know puffing her chest out saying hey we're going to do this as a lip service is it is it going to really happen so it's very clear the marching orders and the leadership style is like okay cloud is our change agent we're going to transform this company and use cloud as the accelerant for change we're going to shake the management team that I think took probably a year longer than it should have in my opinion I think ultimately this spin out could take another year off the life of the turnaround don't know could maybe change it don't know all I know is is that those changes are being forced and she's moving fast and I think that's a good thing I think HP needs a flash point a need a moment of truth a moment of staring into the abyss and saying we have to go all in and the stakes are high they have huge huge cash reserves coming in that great cash flow great assets a lot of products on the tool chest bumping up the R&D is good and again the messaging hangs together focus on the innovation focus on the customer solving their problems and keeping the partners which is a lot of indirect sales happy and with product so to me it wraps together beautifully and again leadership styles critical using the cloud as an enabler is a brilliant move by Meg Whitman and the management team now they have to execute we want to see the teams executing and I'm going to look for are they doing social media properly are they engaging with customers in the channels that they want to be be be sold to and marketed to our engineers building new innovative products what's coming out of R&D I want to see that that is what I'm looking for right now that's going to be the meat on the bone that's where the action will be so I think that you know we do a lot of these events as you well know John when you go to these big company events like HP Discover the IBM events VM world some of the EMC events Oracle open world and so forth what I like to do is evaluate how well the soundbite crowd the senior executive sound bites that are fed by marketing connects to the stuff that matters in an organization and John you know very well that if you really want to know what's going on in organization you look at two places sales and engineering that's where you find the truth so how well our organizations connecting the sound bites from the main stage into R&D and sales motion well I mean ultimately it comes down a lip service you executive can only do one thing they only point to a direction say take that hill you know and that's ultimately what Meg Whitman has done and I think with cloud we've had a lot of conversations over the years at HP Discover where we've heard Sargalite we've heard all their executives that have not no longer the company and others coming in new new players it's the same it's the hill the new hills that new style of IT is again that the bumper sticker but that new hill is data center transformation so I'm going to find data center the cloud and big data and enabling developers to build the mobile apps this new architecture their customers are telling HP this is what we need and HP saying take that hill let's be competitive let's have great products and win on on on value and that's ultimately all an executive can do is point and say take the hill they don't take the hill yes or no so I the point I wanted to make was yes I agree with what you just said but I think there's more than executive can do and I'll point to executives like Gelsinger like Ellison even like Joe Tucci who are heavily involved in execution not from the standpoint of okay I'm going to go do it but in terms of having knowledge of what's actually going going on for example I mean Ellison essentially runs R&D at Oracle Gelsinger is like a mega CTO visionary Joe Tucci very much involved in understanding maybe not so much anymore but during his long tenure understanding the engineering roadmaps and understanding what's happening in sales for many many years the last you know five years or so I got a sense that the top management of HP was out of touch with those two critical important parts of the company certainly Apatekka was and it's taken mega long time what I'm saying is I'm starting to see those connections come together and what I'm evaluating John is the quality of the people underneath and and and how well they actually understand the direction that you just pointed out and how well that's turning into execution I'm starting to see real signs that it's happening again this other big bet of the machine is huge bet with a lot of risks associated with that that is a Hail Mary and we'll see how that turns out so Tim Crawford says a lot of discussion going on about HP split meaning splitting the companies of consumer in the enterprise which Leo Apatekka was trying to force that big board coup that happened that we cover years ago what does this mean for customers in the future strategy so you know Tim Tim brings up a good point to me it's very simple HP is based upon the conversations I've had and the research we've done is pretty clear I'm I'm for keeping it just so you know I'm you know how I feel about that we talk about the wrap-up on day one however it's just not in the cards and at some point the moment of truth is will this dog hunt and the answer is no and the reason why I'm looking at the data and talking to the folks here inside the company at the executive level down to the trenches is there's two separate companies right now anyway it's the culture has changed it's not the one HP it used to be when the Bill and Dave were here they had the compact acquisition they had the deck acquisition a lot of other acquisitions there's a lot of different systems they don't do the old HP planning that used to do all is the different five terms and I think you got to clean that up rain that in more importantly you got two separate companies and you got to decouple those and and in good programming design day when I got my CS degree in operating systems you have a CS degree I have a CS degree science degree in operating systems and it's on my LinkedIn profile and you actually do have a CS in operating systems what you do is you separate core functional things and you decouple them and make them highly cohesive okay and that's what HP is doing here so they already have two separate cultures just formalize it just create a new system that clears up the confusion of what the identity of the companies allows each one to be highly effective in what they want to focus on they can take two separate hills one can focus on Samsung one can focus on on the enterprise Samsung or Apple or be whatever they want to be and compete HP's got good products you know so they throw off a lot of cash so making that a very profitable business will still allow them to cross pollinate and create an Apple like experience possibly or like a Google Android like experience and that is going to be the key success decouple make them highly cohesive and to me that's positive because there's no other path they just couldn't make it work I think there is synergies in the channel the risks that I would look at that you point out as a supply chain leverage I always love channels having a great channel of distribution is a low way to get sales low cost of sales customer acquisition and you have new things that could come out of that asset so that's where they have to be careful you don't want to split the assets up too much with is not a lot of synergies but if they're already separated not working kind of dysfunctional anyway just kind of make it formalized so to me that's my take on that in general it's it is what it is so you know I can only stand by my my initial my initial thoughts Dave on keeping them together and I remember the old story I told us in the cube years ago when Billy Hewlett built that calculator fit in your pocket they had a distribution channel for that and that was the dealer college network dealer channels when the laser printer came out which is a rogue product wasn't even supposed to be funded Bill Dick Hack born funded the laser printer and it was a rogue project out of Boise Idaho and Canon did all the assembly and they needed to sell it and HP sales were said no we're not going to sell us they put it in there quote dealer channels selling calculators that exploded and transformed the company from eight billion dollars in revenue in 1988 to roughly 35 billion by 1995 so that one little tweak that one asset of the dealer channel saved HP from being a dying company like deck data general and these other many computer companies HP needs to identify their assets today that can transform them into today and put them into the future new style of IT whatever you want to call it and that's the concern I have with breaking up these companies said once you do that you might lose that opportunity so I think Meg's got to be mindful of that I would look at that very carefully and saying where is the leverage that they can actually take the new next laser jet moment and move it into a new opportunity so Dave that's it day three we're we're getting going day three of coverage let's get to it so we'll be right back with our first guest after the short break day three coverage live in Barcelona this is a cute lump John Furrier with Dave Vellante will be right back