 We're back live here at HP Discover. This is day three of HP Discover, and this is theCUBE, SiliconANGLE's flagship telecast. We go out to the events and we ask the questions, get the knowledge, share that with you, put the data out on the network, and provide some chances for people to talk and share their opinions and their knowledge, extracting the signal from the noise. But also we want to do some analysis. Dave Vellante, co-host Dave in this segment. We're going to do some analysis and give a perspective of what we see here at HP Discover. First I'll just start it off by saying that HP Discover, now that we're in day three, is really a different event than I've seen in the past. And I would say that on a scale of one to 10, 10 being a total home run, I'd give this a really good seven and a half. Seven and a half mainly because Meg Whitman delivered a really good presentation. She's very consistent, conservative, which is great for the company, but she's rallying the troops and it's pretty clear that a couple things are happening. The employees and the partners here have a different vibe than last year. They're positive, they're upbeat. You really see some good energy. They got a spring in there step, as we were saying yesterday. But also you can see that the messaging around autonomy and big data are really absolutely not just fluff. One of the things that I was watching for this week was that aspect of it. So overall, very positive show. I'd give it a seven and a half. What would you rate this show? Yeah, I would say somewhere in the seven, seven and a half range. I definitely don't think it's a 10 for the following reasons. I don't think the audience is as energized as I would like to see. I'd like to see some more energy in the audience, number one, number two, is I don't think by its very nature that HP is leading vision in the industry. And I think actually that's a good thing. Because last year, Leo Apatek had tried to make an attempt to be a visionary leader. It fell flat in its face because that's really not what HP is all about. So Meg, I think it was much more credible, resonating with the core HP audience. Let's do some analysis on Meg Whitman because I think the audience should understand from Mark. So we've been pretty close to the HP over the years and let's unpack that a little bit. So Meg Whitman, honestly, getting a lot of heat. She took over and inherited a ton of baggage. We talked to Scott McNeely, who was really bit supporting her. It speaks very highly of her. She had a great reputation in the industry, great person and executive. And honestly, she ran for governor in California although it didn't get elected. I think that might have been a good thing. California is a mess at many levels. But I think I'm impressed with her. I think that you're right. If she tried to go way too much with the vision, that really is not the priority. I think I see her doing a really, really strong job of one thing that's really important. She's really sequencing the execution of a turnaround. I don't like the word turnaround because it makes HP look really like they're more screwed up than they really are, in my opinion. But at the top of the company, that's where the leadership was needing some change in direction. She's not trying to overstep herself. She's really getting the house in order first. They still have some good messaging with the cloud. It's a little bit over the place, but still, like I said yesterday, you can see that core message coming out of that. It still needs some work. But I think that's a little bit the carpet for the horses. I think the reason for the word turnaround is because of the stock price. I mean, I think it's that simple. The stock price needs to go up. It's been decimated. The value of HP has just been sucked out. HP's lost more value in the last year and a half than it is worth today. And I think a lot of that goes on Apatec, or the question I have, I'd be wondering what you think about this, is how much of that is heard? I mean, heard gets a lot of the credit and heard did a good job for Wall Street, but the criticism is he cut to the bone. Now HP's paying the price. What's your take on that? Well, we spent a lot of time with HP over the past five years as an analyst and watching the company at many levels. And I've written a lot of blog posts and go back in the history and see some things we talked about. But I think here's what happened. Heard was a really, really strong executive. He was a really good operator. And after Carly Farina, he took HP and turned it around and delivered real value to shareholders. At the expense of maybe grinding a little bit too hard to the bone at HP, obviously the R&D investment was well documented that he didn't really invest that much. So that had an effect. And for a while you cut, cut, cut, you kind of get a diminishing return on that point. So I think he had some vision, but not a lot. And I think that really hurt the company. And obviously the scandal that he was surrounded in was really just unfortunate and events that forced him to go out. But I think that was the turning point. Leo tried to come in and do his thing on HP. And that was really a fatal move because HP is a huge battleship. You can't just turn it around like that. And I think if Meg Whitman had taken over for Herd, I don't think that they would have had that mess. And I don't think that they probably would have bought autonomy. I kind of stand on that. I was critical of the autonomy acquisition, but I got to say, I'm looking at this now and saying HP is truly integrating it in. It's not just lip service. So Meg inherited a lot of the Leo baggage. That carried over from Herd. But I will say that if Meg was the CEO after Herd, this probably would not have happened. She's just too savvy of an executive in person to let that kind of obvious people management problem be mismanaged at Leo. Obviously mismanaged that. Now the other thing that Meg Whitman said in her keynote was that we are not trying to become a software company. And okay, that's cool. I'm not trying to become a software company. I'm not trying to transform ourselves into a software company. That's fine. However, I think HP absolutely has to get its software house in order. It's got to be a much larger contributor to the software industry. And software has to be a bigger contributor to its revenues and its bottom line. So I agree with you on autonomy. I think there's a real valuable asset there. My concern is they could have had those assets two or three years ago. That's really the information management group. We know, John, they could have picked that up for probably three or four billion at the time. And so that's a lost opportunity. You can't cry over spilled milk. But I think that HP really has to focus on getting its software act together. Yeah, and I think, obviously, we would like to have Meg Whitman on theCUBE. So Meg, if you're watching, we'd like to have you on theCUBE and have these candid conversations. We won't go after you hard like the other press do. But I think here's my take on HP. Although she's on record saying that she's not going to spin off the printer division or the personal computer division. I'm hearing sources that there's some tire kicking going around the printers and PC division being spun out. And I think that's a bad move for the following reasons. HP spun out Agilent. And I don't think that went well. It was a good bump for the stock prices in here and there, but at long term, Agilent kind of didn't have a good path. Second thing is that going back into HP's history, and I commented on the laser jet portion yesterday, that the HP would not be around today, in my opinion, if it wasn't for the laser jet. So in the late 80s, they came out of the recession and all the mini computer companies were booming. And all of a sudden, the market started changing. And what happened was is that all those guys, data general, digital equipment corporation, ended up kind of dying. So I don't think HP would have been the company. But what happened in the 80s was the laser jet was born. The laser jet spawned a channel of distribution that created a lot of wealth. And my story anecdotally is that HP had that calculator division, Dave, the story about the calculators. That was not making any money, but it had huge brand recognition, huge presence. And they had what they called the dealer channel. And when the laser jet was born, Dick Hackborn who invented it, was not allowed to sell it direct because it wasn't a core business. So what he did was because of the, quote, break-even calculator division, because that was still in existence, they pumped the laser jet in the channel of distribution. And what happened there is because that channel was there, the laser jet changed the company. It became a legend. So my thesis is if HP keeps the printer and PC division, even though it's not a huge moneymaker, it does produce a lot of revenue, has brand value and it has a channel. I think that can be leveraged. And the supply chain. And the supply chain. I think that is something that as the market turns with big data, I think that the product configurations of HP will radically change in a different direction. And they have all that important beach head position with the customers, the brand and the channels. And I think yesterday the laser jet group was here and they're talking cloud and managed services. So to me, that is a great opportunity for HP so I would not sell the printers in the PC division. And I think that would be a very, very bad move from Meg to do. In particular in the printing and imaging division, my feeling is that HP's got to cut its costs, it's got to start generating free cash flow. And here's why. Here we were talking to Nina about acquisition versus organic growth. Clearly HP's got to get back to its roots of invent, but it has become a game of acquisitions. You cannot compete as a big whale in this industry without being good at acquisitions. Oracle, IBM, EMC, VMware, they are showing the importance of acquisitions. Even HP with three com, three par left hand, in a poly serve autonomy we'll see, HP's got to be able to show that. And so it's got to be able to generate free cash flow. The printing business prints money. Let's wrap this segment up by just talking about what Meg should do in the company. And so my opinion is don't spin out the printers in the PC division, keep that. It's very, very important because it's an element that will allow you to pivot in the right direction on the product side as the market changes in this massive thermal growth of big data. And big data is an inflection point that rivals the PC revolution and client service. So don't spin that out. I think it's really important. I think you might want to get back in the mobile game down the road. So that's going to be a nice little placeholder for Meg. The other thing is, you're right, they need to essentially turn up the heat on corporate development to get the right acquisitions in place, to get that leadership position. And third, I would say that Meg really has to get her messaging out around the purpose of the company. And that's going to be like just the vision statement around the overall direction. And they can keep the consumer business. I think that's important. And like Jeremy Burton at EMC, cloud means big data. It's a very simple marketing positioning, but it tells you what EMC is doing. So I think that's what Meg should do. And they are not done in storage. They're not done in networking. They're not done in software. They've got to make some acquisitions. They're storage. For all flash array and networking, they've got to really keep pushing at Cisco and beefing up behind it in software. They've really got to build out that portfolio. And my focus on software would absolutely, John, I agree, would be big data. Okay, so that's kind of our analysis of Meg Whitman's challenges and HP Discover. Great energy here. Great first step. I'm really impressed with that. And we'll be right back with more analysis right after this break.