 who's the executive in charge, break down really what this all means for the industry for HP and for their customers. But here in this segment, SiliconANGLE, myself and Dave Vellante, Wikibon, we're going to break down our analysis, a breaking analysis of the moonshot. Dave, we're back with theCUBE in New York City for a special presentation. I want to ask you first, what did you think of the webcast? Obviously the announcement went out early this morning, Bloomberg carried it, Donna Telley was at CNBC, New York Times, we have a post out there, all the bloggers are starting to pick it up and people are just trying to digest what this means. Well, John, I think that a lot of people just sort of overlook servers as basic infrastructure, but I think that HP was trying to emphasize that this is a huge change. You pointed out to me during the webcast that these guys are all in. This is a serious move for those guys, it's a big investment. HP is the leader in the server, the server infrastructure market is a $40 billion market and these guys are trying to change it. So they're in the front, they're leading and yet they're announcing infrastructure that is essentially going to eat their young. So that to me, John, is a good sign. I mean, they understand, they're not complacent, they understand that there's risks, that there's changes, and they're trying to get out ahead of that. And that will do two things for them. I think in one hand it will allow them to maintain and or ideally gain share in the traditional market. And the second is they're trying to open up new markets, specifically the hyper scale market, which is something that you and I and SiliconANGLE and Wikibon have been covering in quite some depth. Yeah, Dave, my take on this is pretty clear. I mean, I was just in Boston last week for the Thomson Reuters private equity hedge fund VC conference that they put on with all the big money, all the smart money actually funding all the different asset classes in private equity to venture, et cetera. And I was giving a talk around the most disruptive technologies in the next five years and I talked about infrastructure and flash memory as enabling things like big data technology where we are living in an era of a revolution or transformation from a computing standpoint. And the computing industry is not that old. You go back to IBM, Tom Watson generation, post typewriters, you've got the main frame, as Donna Telly pointed out in the webcast. It really has been just a one generation of computing. And now I think what we're hearing from HP is what I've always seen as a shift to a major inflection point change over to a modern era, which is going to change the dynamics across the board. It's going to change the value chains of companies in commerce, et cetera. We're already seeing examples of that with Facebook, Twitter, we're seeing big data with Cloudera, Hortonworks, open source. And I think the thing that no one really is getting at this point that I think is this points to is the world is shifting on how people are buying technology, computing power in particular to power these new generation of applications. We call it hyperscale or scale out open source. And those two things right there are changing the dynamics of the marketplace. And I think this moonshot product really talks to that specific changeover. And that's affecting a lot of people, software developers, people programming what they call a lamb stack to specialize software developers who are used to programming on the main frame, all the way down to the plumbing under the hood to things like chipsets to hearing about arm versus x86 is essentially inspecting the power, the circuitry up to the stack, the cloud provides all this is going through radical transformation really, really fast, Dave. And I got to say, the analysts out there like Goldman Sachs who are looking at this as Windows 8 this and PC shipments and servers really aren't focusing on the right analysis. They're in essence rearranging the deck chairs from their knowledge, which is really kind of off base where the market's going. So not only not where the puck is going to be, Dave, they're actually at the wrong analysis. So things like Goldman Sachs are giving really, really bad advice. So this to me is an inflection point. So we'll see if HP can pull it off. Yeah, so I think it's probably worthwhile going back to the November 2011 launch of moonshot where HP was really almost exclusively, John, as you know, because we were there covering it, focused on the hyperscale space and the low power space with Calzada. And really it's kind of implying that's where this moonshot was going to go. And I think it surprised a lot of people to see that the first instantiation of a shipping product of moonshot was really atom based from Intel. So essentially what HP has announced is sort of this umbrella moonshot project. And then underneath it, they've got the infrastructure. So they've announced a chassis and they've announced the ProLiant moonshot server, which is, as I say, based on atom, based on Intel processor. So that is essentially compatible with today's x86 infrastructure. And then, of course, there's a whole ecosystem around it. Now HP is announcing that it will have future versions of its platform that will accommodate things like Calzada, ARM based processors, Texas Instruments is part of this announcement. And they're using this sort of a page out of the Facebook open compute platform using this notion of cartridges, where you can have a multi-personality server, essentially, and slot in different personalities, different processor types within that moonshot platform. And what this will enable the customers to do is to customize the platform to their specific workload and their specific environment. So it's a whole new take on how you deploy servers, how you manufacture servers, how do you go to market. And I think that ultimately this initially anyway is positioned at that portion of the traditional enterprise, John, that wants to be hyperscale like. I mean, I don't see this necessarily certainly out of the first instantiation as a pure hyperscale play. But I do think it sets that up. Dave, break down hyperscale out there for the folks. I mean, hyperscale is something that we know about. It's basically the high end, the Pinterest, the Facebook, it's the big large banks running huge infrastructure, huge data. Tell about the dynamics of how we got to where we are today with hyperscale and kind of where that's going. I think it started with Google, really. And you mentioned Facebook and certainly Twitter and all these giant web companies that they basically their philosophy is to scale out versus the traditional enterprise, which as you know, John, is more of a scale up. And the other thing about hyperscale is they are highly, highly automated to the point where they just don't want humans involved. So they build, we always talk about software led infrastructure or software defined. The hyperscale folks really started that trend. They develop software that runs on commodity hardware. And when things break, they just kind of ignore it and the software takes care of it. And then eventually when all the components of the rack break, they throw it into the woodchipper. That's totally different from the traditional enterprise, which is trying to squeeze as much out of that asset as possible. And they'll have humans go in, replace failed components and the like. They'll try to automate a lot of that management if they can, but it's not nearly as automated as the hyperscale world. So they're two completely different environments. Now, John, as you well know, a lot of that hyperscale mentality is bleeding into the traditional enterprise, especially with large financial institutions and many others. But it will stop at a certain point. And so companies like HP are going to pick that up and deliver those solutions to market. You know, I was talking with an engineer over at a company called Hortonworks in Palo Alto right near our office. And we were talking about big data. They basically provided the open source software for Hadoop. And all the major deployments rolling out on a production level around Hadoop or around using big data. And they talk about a scale out environment, Dave, where performance really is needed, but it's also kind of a variable performance. They don't have utilization issues of the service. So they're blending high performance capabilities, which they need. When the fact is their infrastructure isn't set up for 100% utilization because of the way it's distributed. And that brings us to the point, in my opinion, of what's the key thing here. I was talking with Alex Lewis on Twitter, my friend, we're kind of thread talking about this, is the trend is towards custom infrastructure. What I mean by that is that this notion of general purpose computing is pretty much going away. And I think we'll ask Donna Telly that question around general purpose computing where you build a computer and you kind of have these use cases. The market's moving to specific custom based solutions. And that is not so much just a hardware thing, Dave. It's software. So software led infrastructure is there. So, you know, custom, is that a trend? We always been kind of, you know, talking about Oracle as purpose built. Are they mutually exclusive? I said on Twitter, they weren't. What's your take on this? Well, so I think that you're absolutely right, is the customer wants to be able to essentially program tune their infrastructure. You know, you talk about programmable infrastructure, this is sort of the hardware version of that, so that I can have an infrastructure that is specific for a workload. Now, what we've been doing for years is purpose building that out of, let's say, you know, traditional Xeon processors. I think this notion of modular components is really coming to the fore and one that HP's pushing. I think the other thing I wanted to point out, John, is that HP was very careful in its November announcement of Moonshot. We were talking about they focused on the hyperscale market and they clearly didn't want to stall sales of their existing product. But now the sort of covers are off. You know, I see this as definitely, you know, eating blades and eating a lot of the traditional marketplaces. But I think this is confused people a little bit, John. I mean, you've got a good radar on this stuff. What are your dashboards saying? What's the sentiment out there on HP generally and specifically this announcement? Well, yeah, we monitor the public markets pretty aggressively, although we're not Wall Street analysts. We do look at the impact to technologies to the street, specifically, you know, in terms of the long term play of it, although we're not trading anything. But my advice is HP's a buy and hold. I definitely disagree 100% with Goldman Sachs and some of the other analysts from Cowan, for example, who I think are giving bad advice to their clients. And hopefully they can understand the shift that's actually going on that's disruptively enabling software developers, for example, and ultimately companies is going to be the key. So I think the real sentiment right now at HP is really not that positive. Given the history of the CEO problems, obviously, that's a hangover that that afterglow of, you know, the debacle with layout, etc. is certainly painting the picture. Wall Street is not being kind to HP because mainly two reasons. One, historically, they had some problems with their leadership, but that was just in the ivory tower at the top of the pyramid of HP. That's now fixed. Meg Whitman is clearly moving fast. She's making fast moves. She's writing down the debt as fast as she can. She's licking the wounds of HP, some not inflicted by her, but by the previous CEOs. But they have a solid, solid business. And yeah, they've got to work through those challenges. So that's one negative sentiment that everyone's talking about. That's pretty obvious. What the other center that no one's really talking about is that HP actually has always been a multi-vendor solution for enterprises, and it's been general purpose in industry standards. And this announcement in particular is very, very relevant amongst some of the key elite thought leaders around what's going on in the software market. So although Wall Street Journal painted a pretty negative story last night about HP, which I think was, you know, completely off base, if you want to go read that story, I tweeted it, but it's called still no ray of sunshine for HP. I completely think the Roth Winkler, the author, was really kind of just, he's wet on that whole story. And this was in part based on the Goldman scenario. Yeah, it just talks about, okay, Gartner says this about Windows 8. You know, essentially he's parroting back some of the sentiment. So the press is kind of doing HP an injustice by parroting back the obvious sentiment, which is not relevant to what's happening in real time. And what's happening in real time is that the software business is changing. And the same publication in Wall Street Journal, which I like, by the way, Mark Andreessen wrote an article, so it said software's eating the world. And if you look at what the investments are, and this is what I talked about at the Thompson Reuters event, software is driving everything. And how software is written specifically is changing the world. We talked to Fusion I.O., we talked to companies like Violin, and they'll tell you that Linux is here to stay and is a key part of this open software. So the operating system model of how wealth was created in the past with Microsoft and other operating systems is no longer the case. None of the technologies are bound to these OSs. That's a key, key thing about how to do the analysis. That being said, the coders who are writing the code are taking a new mindset, and that new mindset is about real time, it's about the hyperscale. So I think the sentiment of HP in those kind of elite circles is very positive. And kind of the mainstream is kind of like, are they relevant? There's some little bit of an afterglow, but I think ultimately I'm really positive on HP from that point. Yeah, they're HP, they've got an execution, they go a little slow because they're a huge company. But I think overall, negative on the street, positive on the direction. Well, I think a lot of the negative sentiment is of course, as with Dell, is there's such a huge exposure in the PC business, and as we enter the post-PC era, you know, it's easy to sort of pile on. I think the thing that people often miss is, well, first of all, HP has been touting, and so maybe people aren't missing this, but they had been, is sort of the cash flow that HP generates, and it's substantial. So HP will be able to pay down its debt. As you know, John, I talked to Meg Whitman about this a few weeks ago in Boston at the analyst meeting, and she and I were having a private conversation about how dogmatic she will be to pay down that debt, and she said, pretty dogmatic. I mean, we'll do some tuck-ins in the meantime, but she's really focused on paying down the debt. Why? Because she knows that they've got to start acquiring again, and so they're throwing off enough cash to do that. So that's sort of point number one. Point number two is a lot of people sort of ignore the power that HP has in the enterprise group, specifically under Donatelli. The storage business has been struggling to replace the old stuff with the new, but three-par, as we know, has been growing like crazy. So eventually you can just sort of draw the curves and see that when HP prunes all the dead wood, if you will, it's really going to start throwing off huge amounts of cash, even more than it does now. And then you also see, a lot of people say that it should break up the company. I think the Wall Street Journal article referenced that as well, but you've pointed out many times that the leverage in the supply chain and the distribution channel of having that PC business is enormous, especially in the post-PC era. Yeah, I'm a couple of things, Dave. One, the PC thing, this whole spin that off, I think that's a big mistake, I'll tell you why. We're living in a world where the entire paradigm is flipping around the other way. PCs and hardware will be bundled into the software-driven marketplace. And I'll tell you, when you look at the analysis of all these big companies, one of the things I always look to is, what is the company saying, what's the rhetoric coming out of the executives and the products? And then what is that map to the current trends? What megatrends that are real megatrends happening and has that company connected to those trends? And here's what's going for HP. Mobile computing is defining the underlying question. I asked Pat Gelsing, who is now the CEO of VMware on theCUBE, two years ago, who leaves infrastructure or applications in the edge. He said infrastructure normally does that. But I think what we're seeing now is, the mobile has changed the game and these data centers that are powering all these apps are kind of behind the times. That's where the action is. The other thing that's going on in the Wall Street Journal article, I'm looking at it right now, that was written last night, the negative one on HP, it says arrivals like VMware and Amazon are undercutting prices. Well, with this moonshot, Amazon would be a customer as well as all the other cloud providers. And then it says VMware sells software to enable its clients to run at higher capacity and availability. That's actually not the case. I mean, you don't actually need VMware when you have a scale-out open source environment. And so in effect, the benefit of VMware goes away. So that's kind of an incorrect fact on the Wall Street Journal side. So they're missing that. So with mobile happening at a massive rate, the complete data center market, which is essentially looking at it going, we're now have to move over. So the beginning of a change over for the average large enterprise and I think HP's position. Well, I think you're making a great point there. I mean, you go into the big, you know, hyperscale installations, they're not using VMware, you know, no way. I mean, if anything, there might be, you know, doing some virtualization with Zen, some of the cloud service providers, but generally speaking, these large web-scale companies, they're developing their own software to run on that infrastructure. And so, and that's why, frankly, I think that's why VMware announced its own version of the hybrid cloud because it wants to drive homogeneity. Well, VMware needs to get in the cloud to compete with VMware, Amazon. But Dave, you know, you talk to CIOs and IT pros all the time and so do I. And you go talk to the very large, you know, IT shops that have billion-dollar budgets. They'll still tell you they got generations of stacks and racks software and servers, meaning their infrastructure is basically circa previous generations. They still got massive scale of what they call bare metal racks of servers. And what this moonshot thing basically says is, the energy savings alone justifies the buy. 90% savings on energy. Every conversation I go into with CIOs about IT is about power and cooling and energy. And this moonshot is significant just on that merit alone that changes the game. The second thing that I'm really like is the software-led component of it because now a software market that's booming and exploding power and mobile needs this kind of environment. They don't want general-purpose computing. So HP's shifting away from general purpose to more relevant architecture. So I think the interesting thing is going to be, you know, how far this platform actually can go into hyperscale. Clearly, HP believes it can. You know, we'll see. I think that, again, initially its first instantiation is really a blade replacement in my view. And I think that over time, we'll see that trickle into the hyperscale space. And HP's going to have to really be aggressive about that. And then to your other point about, we were talking about VMware, it's clear to me that the innovators in this world are coming from the consumer side and from the hyperscale side, not the traditional IT. Traditional IT is trying to solve problems of heterogeneity and it's kind of stuck in a budget morass. And so to the extent that HP can penetrate that hyperscale market, I think it's a big advantage for them from a standpoint of innovation going forward. Well, we're getting down on the time about one minute left. But there's a tweet from Jay Livings on Twitter. He says, HP's service really about selling huge volumes of mainstream stuff, economies of scale and such, how long until Moonshot gets there? So I guess I'll just say as kind of a closing comment, I really am high on this Moonshot thing. And I think we're going to ask everyone today as we drill into the action here, what's it going to take? So we're going to ask them that direct question, but I think it's going to be the ecosystem that's going to be there. But here's the issue, right? The scale is significant and general purpose servers aren't going to work. So if you move to a scale out open source environment, which will be the standard, cloud-based and on-premise, you need to have a lot of servers everywhere, storage distributed, variable power, that's kind of a framework that Moonshot really is representative of that preferred architecture. But the key is going to be software. And an ecosystem that can support it will be critical. So my take is you're going to see some nipples here, you're going to see obvious suspect step up, like guys who are doing a lot of plant and facility work on data centers, pick this up immediately where there's all the buys on the table, the hyperscale, and some cloud guys. But ultimately the mainstream enterprise will be the second wave of adoption. Dave, comment on that. Yeah, I want to make one quick point of clarification because it faked me out as well. The initial instantiation of Moonshot is atom-based, which will provide compatibility with x86. So you will not have to rewrite applications to run on HP Moonshot. Now once ARM-based and Calzada-based processors come to the market, it will require rewrites. But initially, that is sort of an interesting play that HP made, and I think it's smart because they're going to be able to gain share faster. Well, 32-bit ARM will work well with LAMStack developers, so anyone who's doing some Mongo stuff or any PHP stuff will do well there. So I don't think that rewrites the issue because I think rewrites are going to be either encapsulated apps and or full rewrites anyway. I mean, look at Facebook, they couldn't even get HTML5 right, and so I think the developer market is still early on in flux. So I think really the developer's the key here. Obviously the innovation in the hardware. Jay, thanks for the question. Okay, that's our breaking analysis. John Furrier with Dave Vellante, we're here inside theCUBE in New York City for a special live all-day broadcast talking to all the people here at the event to extract the signal from the noise. We'll be right back with our next guest, Dave Donatelli, right at this break.