 types of networking, new types of storage. So yesterday was probably our most significant storage announcement in more than a decade. And what we really did is greatly simplified storage for customers by going to a single architecture, in this case an upgrade to three-par, that now starts at about a $25,000 price point, introduce a new mid-tier category of three-par, which is a four-board mid-tier array. So really high-end features at a mid-tier price starts at $40,000, then on up through the stack. In addition to that, we introduced a new architecture called Store All. Store All is an architecture for archival. And with that Store All archival, we introduced new technology from HP Labs. It allows you to search literally hundreds of times, thousands of times faster than any other search engine out before. And then finally, the third piece of the announcement was for backup, our Store Once technology, which was also developed in HP Labs. We bought more of our higher-end features down to the mid-tier product line. So very comprehensive announcement. As much about the architectural simplicity, going to a single architecture across all these different dimensions, as it is about the actual products we ship. So, David, you guys have been pounding the converged infrastructure theme for a while now, several years. So that's obviously one of the big drivers of your business. What do you see as the other big drivers? One infrastructure where we really see three major strategies that we're driving that we think are really going to be changed in the marketplace. First is converged infrastructure, as you mentioned. HP started that trend about three years ago. We'll make name-converged infrastructure and been working on that. Second one is cloud in all its forms, whether it's a private cloud or public cloud or people who are building their own clouds. And the third one is the software-defined data center. So those are the three across them. That's where we have focused all our R&D effort. And we believe we're at the cutting edge on all three of those trends. Yeah, so the software-defined piece is getting a lot of action. So my partner John Furrier has called you guys the triple threat there. Talk about what that software-defined means for each of the different segments of your business and how you intend to really demonstrate your leadership there. Okay, yeah, so what's really interesting about software-defined is we have products out in all three segments today. So if you start at networking, we've announced our software-defined networking products already. We have a controller out for software-defined networking. We've already shipped 15 million ports that are enabled with OpenFlow for our software-defined networking. In storage, you might have recalled Left Hand, which was a company we bought many years ago, was actually the first software-defined storage product out there. And we have over 150 software-only licensed Left Hand products out there today. 150,000. 1,000, sorry about that, 150,000, more than 150,000, 150,000. And then in servers, you're probably aware of a technology we announced called Moonshot. And Moonshot is really a whole new class of server. So if you think about it, there was mainframes and there were many computers, Unix computers. HP invented x86 servers. Now we've invented servers based on arm and atom chips. And how that ties into software-defined data centers is it's really a software-defined server. Meaning these servers, which we call cartridges, little smaller than a piece of paper, can be customized per application. We can vary the amount of processing speed, the amount of networking on the chip, the amount of memory on the chip to really optimize it around any specific application. So if you think of the world of big data or you think of the world of clouds, these are fewer applications that are going to scale up very big, and what you really want to do is optimize that server for them. So the benefits we see is really, it is a new class where we're going to have servers specifically designed with the right mix of processing, memory, networking, for that particular app, scaled out in very large volumes. Amazingly dense, right? I mean, you're talking about thousands in Iraq. Thousands per standard rack. Now they're 32-bit today, correct? So 64-bit is a big catalyst for this. Do you see that as what's going to drive the uptake? Well, I think two things. If you look at the Atom world, Atom has x86 compatibility, so it makes it very, very easy for people to move today. If you look at the arm side of the world, I think there's several catalysts there. First is 64-bit, which as you know, is coming in calendar year 13. And the second thing about that, it's going to be the first time in our industry's history that we have unified the supply chain from the cell phone, from the handheld device, all the way up through the server. And as we know, there's far many more handheld devices being sold in today's world than there are PCs or servers. So if you look what that means for costs going forward, you know, riding that supply chain curve is going to be great for end users. We already predict for equal compute performance compared to our x86 servers, out of the gate you're going to save 50% for equal compute power. Over time, because smartphones are going to continue to grow, riding that curve down is going to greatly accelerate cost savings for customers in the infrastructure. Dave, one of the things we've been talking about is software-led infrastructure. Wikibon just put out the first groundbreaking research on this whole area of convergence that we call modernized convergence, where you start adding in new things that just come on around the corner, like flash, like big data. So big data is obviously highlighted a lot of the analytics side of the business, which is driving some business benefits. But on the infrastructure side, the business models are changing within your customer base you mentioned, software-defined data center. So could you talk about how you view the products that's going forward? In my post yesterday, I was talking more about it's software, not the hardware, but I was talking in terms of the margins and some of the focus areas. Mainly in that, I'd like to hear your opinion on what's changing in the customer environment because we need more compute for the big data. We need more compute from mobile. So it's not that hardware's going away per se. It's just that you've got more cores, you've got more capability on the hardware side, but yet software becomes much more of a predominant role, which is kind of an interesting dynamic going on right now because on the consumer side of the business, on the internet, it's kind of a bust right now. The bubble's kind of popping, people are talking about, but on the enterprise side, there's really a boom going on. So we've been covering that in depth. I want to get your opinion on what you're seeing in the marketplace and how that relates to your product portfolio around software at the infrastructure level. Sure, at the infrastructure level, software has always been the big driver of it. If you look at networking, it's really an operating system. It's delivered through hardware, but its operating system code is what draws the value. Same in storage. It's an operating system, it's not just hardware. If you look at our cloud product lines, our cloud system, which is our private cloud, which grew, you know, last quarter grew more than 100% year over year, so really fast growth. The heart of that is custom-made software. So even, and I consider this a win-win if you look at the business model, for customers, their prices keep going down, their agility goes up. For us, as we incorporate more software and have more of our own IP, our margins go up, not down. So it's great for customers because their costs go down, it's great for us because by adding unique value, it's good for our business as well. Dave and I were talking over dinner last night about HP's depth in the HP labs, and HP labs has always been kind of an academic focus, but then we kind of talked about applied research, and we kind of think of HP having all these little L's in the back room, kind of developing all this cool new technology. And so the question I have for you is, if you can dial up some guys in HP labs to work on stuff right now, what are you dialing up right now in terms of the focus area? Like obviously they're doing all the research on the academic side, and that's all cool, Shantra Khan's been on the queue before, but right now there's some serious tech that needs to be developed around some of the science side and on an applied basis. What are you dialing up right now in HP labs? Yeah, I'd say two things. First of all, it's important to know that we actually ship a lot of products from HP labs. So if you look yesterday, we talked about the Express query, which is the ability to query all these archived information, that's direct work from HP labs. Store once, which has really been next generation de-duplicated backup, that's from HP labs. So real products in the market today. Going forward, I think probably the most strategic change that's going to happen to infrastructure is going to be the expansion of solid-state memory, in all its forms, right? There's all kinds of different types of memory, but the way you want to think about it is non-volatile memory. And what non-volatile memory is going to do is for the first time in probably three decades, change the relationship on how servers are built and how storage interacts with that and even how networks interact with that. And what's so fascinating about being at HP is since we have all three elements that we design. We design server, we design storage, we design networking. By taking labs and putting large, non-volatile memory in the center of that, you're going to see the hierarchy of these architectures change. That's something we're driving in labs today. Customers will start to see the hints of this and products actually shipping next year, but then it will really progress in the coming years. But that brings up the whole software piece, and I know HP's got an entire division dedicated to software, which you don't run, but you do have a real important software focus within that context. Could you explain that piece of it? Cause that's not well understood in the marketplace. Well, in our case, if you look at us, right, in, you know, we have thousands of engineers just working in the enterprise group. More than 80% of them just design software. So as I mentioned, you know, the thing I think is important for people to understand, hardware is our delivery vehicle of our software value. It's not just hardware for the sake of hardware. And so the majority of our engineers do that software today. And that's why I was, you know, the whole margin thing, I think. I mean, I'm just so excited by software because it is an operating system and that the data center is going through a change. How does that vision apply to you in terms of how you look at managing the business? I mean, obviously, where are we in the bottom of the second inning, third inning? Where are we in that life cycle of a changeover? You mentioned transformation. Where are we in that transformation within that kind of operating center of the data? Operating environment. Well, that's a great question. Here's the way I look at it. I believe that on infrastructure as it relates to the data center, we're in the third major shift that at least I've seen in my lifetime. So the first one was mainframe. And by my definition, business computing started with the mainframe in the 1960s, early 1960s. That was the prevalent infrastructure up until the 80s. In the 80s, we started with client server, in this case, the later 1980s, which morphed into best of breed. And that is still, as we know, the majority of what people buy today is still best of breed. Three years ago, we started on convergence. But hopefully you see the idea that these trends play out over years, decades in many cases. So to use the baseball analogy you use, we're going into the top of the second inning as it relates to this trend. And it's being adopted quickly, but this trend we'll be talking about for the next decade. Do you see pricing models changing? I mean, we talked about how much emphasis you guys are putting on software. All your investment is in software. Still, a lot of, yourselves, a lot of companies mark up commodity hardware. Now you're abstracting the software and actually starting to sell that. How should customers start to think about the way in which they're going to pay for value over time? Well, I think, you know, I think David, pricing models have always evolved in the industry. And there's been all kinds of different ways to price. I think the main thing that customers are asking us to do is reduce their complexity and we're doing that through design. At the same time, increase their agility, which we also do through design. And the third thing is take the cost out. And how we actually get to that end price will vary. Sometimes it'll be more of a software license, sometimes more on the hardware side. But what we have to show them, and what we're proud to show them, is that by moving to the newer technologies, they will save money. You know, in storage, the announcement when we made yesterday, we guarantee people they can store their existing data in half the space or we give them storage for free. We tell them they can run twice the virtual machines or we give them storage for free. That's value, they'll pay for value. And that's value. However they pay for it. Yeah, exactly. The models will vary a little bit, but the idea is can I get more value for less money going forward? The answer's yes. You have an interesting business and it's sort of bifurcated. You got some older legacy products that are flat or in decline. You're sort of managing that. And you got some really hot products. You've converged infrastructure apache. You mentioned your cloud is growing at triple digits. The three-par is now the, I think the largest storage device in your portfolio. That's been growing at high double digits, even triple digits in some cases. So how do you see that all shaking out? I mean, you guys have made some big bets either acquiring companies or initiatives internally that are paying off. Do you feel as though you've got enough of a lead that you can leapfrog the competition and actually regain that leadership mantle? Yes, I do. And I think one of the things that probably is least understood about HP but will be understood more based on the way we're going to report data going forward is that if you look at the enterprise group today, we are 25% of the company's revenue, but 41% of the company's profit. Right. Okay, so we just announced that publicly for the first time in October and that's the way we're going to report the business going forward. And that's not including services or with services? The enterprise group is the service on our products. Yes. And the products. But not the outsourcing piece, that's different. Not the outsourcing piece. Got it, good. Okay, so just enterprise products. So I think that really surprises people about how big we are in the enterprise. And in terms of your question, if you look at the areas we've concentrated on, networking, we're number two, we grew significantly faster than everybody else in the marketplace this year. Look at this last quarter, we grew 11%, Cisco shrunk two. And so we're the number two market share, we continue to gain share there. Three par last year grew at 75% year over year. And the new products we announced just yesterday addressed an $11 billion market opportunity. So we think that only accelerates the growth of three par going forward. And again, big market opportunity for us there. And servers, as you know, we've been number one in share for years. So we feel really good about where we are, both in terms of how we're performing, but more importantly, where the market is going. Software defined data centers, where the market's going. We have technology in every segment today. No one else we compete with can say that. What do you think Meg emphasizes that you're generating cash, like $10 billion, 10 plus billion in last year? What's the plan to get the- You get better, I mean, it's this upside there. Okay, software defined data center, that's a huge. My final question is, what are you guys going to do to get the word out? I mean, it's going to be more of a humble approach. There's a lot of thought out there. Other vendors are groping for solutions. Some have a little bit here, nothing here. They're building fast. Obviously, we're seeing everything from VMware and virtualization, all the way up to startups coming out of the woodwork. And you know, solid state is playing into that as well, but on the cloud side, on the infrastructure. What is your plans to kind of get the word out? Is it going to be more of, you're going to invest heavily in the messaging? Is it more product development? What's your plans there? Well, I think our top priority is always going to be product development, but you know, because you have to have the products. Yeah, you can't sell the products. Some people have the hype. We prefer to have the products. And then at the same time, we are investing more significantly in our go-to-market and in our marketing so that people know and understand all the technologies we have. Well, I appreciate you coming on theCUBE. I personally think you guys are in the top position with software-defined blank. I mean, you got networking storage yesterday and you got servers. You got the whole package coming together in the data center and you got software, not only within your group, but within HP. So the big data demo was interesting. Congratulations. Thanks for coming on theCUBE. Really appreciate it and see you next time. Great to see you guys. Pleasure seeing you. David Donatelli, EVP at HP, leading the charge and profitable division that he runs, the shining star within HP. We'll be right back with our next guest after this short break.