 This is Dave Vellante from wikibond.org and this is theCUBE's Silicon Angles coverage of HP Discover, we're here live in Barcelona. Margaret Dawson is here, she's with HP's Cloud Services. Margaret, great to have you on theCUBE. Thanks, great to be back. So, Discover, Barcelona, this is a good show, a lot of good vibe, a lot of energy, what do you think? It has been fantastic, actually there is more energy here and I think we've actually as a company announced more exciting things and products across the entire spectrum than I've seen. Yeah, so the cloud picture's starting to come together, it's a little more in focus, why don't you take us, take us through what's happened since we last were on covering HP Discover six months ago in June and Las Vegas. In beautiful Las Vegas. Well, yeah, hotter, not as elegant and certainly not as much of a European flair unless you go to Paris, Paris, Paris, right? So, what's happened in the last six months in HP's Cloud? I think there's a few things. One is that six months ago we had already said we're committed to cloud, we're here for the long run, here are some of the things we're doing. I think what's changed over the past six months is organizationally, just internally, we've now organized ourselves where we are one cloud business unit. So, all of the cloud solutions, R&D, go-to-market, sales, is in a single team. And what that means for our customers is they have one place to go, whether they're looking just to figure out their cloud strategy with our services team all the way through implementing private cloud, public cloud, virtual private cloud, or any flavor of those. And the strategy that's behind that is really being delivered on. So, I mentioned that we've announced so many things. If you look at what we announced just this morning at Discover, seems like it was three days ago. We announced Next Generation Cloud System, which is our main private cloud solution for customers. We announced great progress on our public cloud, a new virtual private cloud portfolio, everything from a basic public cloud up to customized managed. So, literally, this hybrid vision that we talked about even a few months ago now is not only coming into fruition, but we are absolutely executing against it, as well as with the open stack. So, there's just been a huge momentum in terms of execution, our strategy, how we are going to market, and our ability to show that we are executing against this vision of open enterprise-grade hybrid cloud. And a lot of times you get the organization right, and all of a sudden good things start to happen, right? So, essentially you guys are, you know, you got to be committed to cloud in this day and age. So, you're a distribution channel for the enterprise group, right? I mean, you can buy their products if you so choose, and if they don't live up to the grade, you can go somewhere else, right? And that's an interesting point. You know, we hear a lot that cloud cannibalizes traditional infrastructure sales, and I think there's two things about that. What we have seen at HP, and I would say what I've seen in the market overall, is that cloud can actually pull infrastructure sales. So, you know, we are seeing a greater build-out of infrastructure to power cloud computing. I always call it, you know, cloud is the data center in disguise. So, massive infrastructure build-out. But it also drives next generation, right? It drives innovation, because we need higher efficiency. We can't do things in the same way. So, I think that those two things are actually working very well hand in hand. You know, that's a good point. I'd like to talk about that a little bit. Sort of, and I've been in this business a long time, and there's been many, many examples of, you know, markets that were going to be dead, because, you know, one is going to disrupt the other. And we have examples of that happening, but the thing about cloud is this notion that it's, okay, it's lower cost as a result that's going to eat out the core of sort of IT that's been bloated and over-inflated margins, et cetera. My experience has been, and I wonder if you could just comment, is the markets elastic? If you reduce the cost of compute and storage, and also importantly, reduce the labor cost around that, innovation occurs, and people end up buying more networking and computing storage. And so, okay, so you agree with that, now it's self-serving, but do you have evidence of that actually happening? No, absolutely. I mean, I think we can see that. And I think what is also a little bit misleading is that three, four years ago, when you asked people, why are you going to the cloud? Cost was always number one, right? And that was very public cloud focused, right? Or even SaaS, the application side. And now if you talk to you, especially large enterprises, but really companies anywhere, it cost maybe a factor of it more from a, what is my return on investment, or how is this going to impact my overall IT budget or business budget. But it's agility. It's time to market. It's innovation. It's really what's driving them using the cloud. It's how do I get this out to my customers or my employees in a better way, in a faster way, in a self-service way, right? And spin it up very, very quickly. So that agility has become the main thing, not the cost. And so in doing that, you're seeing a lot of people create private cloud, right? Which has that infrastructure piece and is not necessarily the lowest cost, but it fulfills all those other things that they need to do for the business. So it's not just public cloud. And that's why we've invested in this entire spectrum, because it's not happening. There was, you know, pundits that were saying five years ago, oh, everything's just going to go to the public cloud. The big switch. Right. It was neither realistic nor is it happening. Sorry, Nick. You got that wrong, too. Right. We love Nick Carr. Right, right. But it's just not happening. And the reason is, there's still a lot of investment in that legacy, so-called legacy IT, right? And the reality is also that some applications aren't ideal for cloud. And I think that's the learning we're having. And so how do you then bring this all together from traditional IT, where some applications are going to sit, mission-critical data is still going to sit. We're not going to throw that all over the place, right? That's very, very sensitive, compliance-wise. And the build out of private cloud is very, very strong and has become a huge market. John and I often talk. I mean, cloud's relatively new, but we're entering even yet a new phase, probably the fourth great phase of cloud. But at first, it was just sort of this development platform and web startups could use it. And then when the economy dipped down, you saw a rush to shift gap to OPEX, whether it was going to the public cloud or even trying to just be more efficient in the private cloud. And then coming out of the recession, you seem to have this big innovation cycle with so-called shadow IT. Right. Now, we see CIOs, many of them, still some people with their heads in the sand, but many CIOs really embracing this saying, look, this is the trend, it's happening. And I want my IT to run that way. So I wonder if you could comment on that and see what you're seeing. Yeah, so I think we need to be careful because shadow IT is absolutely a reality and it's happening. And the quote that's everyone's favorite is the CMO is going to have a bigger IT budget than the CIO, right? I don't think that's necessarily true, but I think that the CIO or the IT needs to embrace the business's need to perhaps go into some of these new cloud solutions, whether it's on their own, but they can't lose the governance of it. And I think what we're going to see in the coming year is IT actually saying, okay, you can go do that, but I still need to have some kind of control if for no other reason that they have lost control of their data, right? People are putting data everywhere and if something happens to that corporate data, there's one person that's to blame and that's the CIO, right? The CEO isn't going to go to the marketing guy, they go, oh, we just had a data breach, right? That's going to go back to the IT department. So there's this balancing act that I think really needs to happen in the next year, which is, first of all, do an audit and make sure you know where are all these clouds, because if you talk to most CIOs, a lot of them don't even know what's out there or where their data is. So first of all, just find out what you don't know. And then I think it's determining, okay, how are you going to govern this and allow the agility the business needs, but you have got to have some kind of compliance, governance, security controls around these cloud applications and around your data. And finding that balance, I think is going to be an interesting tension as we move through this year. And I do think that's the role of the CIO. I mean, we've saw this before with distributed computing. It's going to be hurting cats if everybody goes off and does their own cloud. So do you envision the CIO having essentially a cloud portfolio? And these clouds are certified for these types of workloads and these are. I think that's a good way to put it. I think there could be a certification role that they play and definitely maybe a vendor criteria. Or okay, you're going to go out and do this. Here's the three things we need or here's the security things that you need to have. And I could tie that back to our own cloud portfolio. We have a security officer and we are sought compliance and my public cloud, my website, my private cloud solutions, they all have to make sure we maintain that compliance because that is our promise to our enterprise customers. The same thing's going to happen if you're a PCI compliant industry, so retail or something like that, nothing you do can break that. And so it doesn't matter who is behind the budget in that cloud, the CIO's role has got to be maintaining that governance model so you're not breaking your promise to your customers or to your regulators. Okay, so how would you just summarize HP's cloud strategy? So we are a hybrid cloud strategy and it's the cloud enterprises rely on. So that's a little bit of a tagline, a little bit of marketing speak, but it really is what we're building. So there are three tenants to that. Open is one and that's about choice. That's about open source, literally. So we have committed to OpenStack as the technology foundation for our common cloud architecture and we will continue to build on that so that everything works together and customers have that confidence of a single common platform. What that also gives is that interoperability. So one of the biggest pain points that people have in cloud right now is I've got all this different stuff going on, whether it be on-premise or private or public or applications, you've got to have an open ecosystem and an open architecture to support that. And I think one of the things that I hope we're going to be pushing more is to drive APIs to more of an open yet standard-based structure. API complexity right now in proprietary APIs is causing a lot of pain in the market if you talk to even small businesses. And there's talk about, you know, should OpenStack work with some of the proprietary APIs? I would push it back to them and say, well, maybe some of those closed APIs should figure out how to interop with OpenStack. So open is a key thing. Well, that doesn't seem to be happening. Yeah, no, there's not a lot of that now but I think if the market starts demanding it, you've got to push and pull, right? It's true with any market that we've seen. But that concept of the, you know, everybody says Amazon turned the data center into an API. It's a very powerful concept. It is, but look back at Linux. Look back at open source, right? Did Microsoft want to play with Linux in a day? No, but then they were forced to. But essentially you're saying that's the right framework. It's the right thing to do for the customer. But it's got to be open. That's your argument. So at re-invent, we had Jerry Chen was on it. You have a great comment. He's coming back from the OpenStack conference in Hong Kong. And I said, how would you compare, you know, what Amazon's doing with OpenStack? He said, well, Amazon's trying to be one thing to everybody and OpenStack's trying to be all things to everybody. And I thought that was sort of a good summary. So then we started the discussion. Well, OpenStack needs some muscle. Is HP that muscle? Absolutely. Okay, so to me it's not necessarily a bad thing that OpenStack is trying to be. Maybe it's not all things, but a lot of things to a lot of people. That's essentially what HP is. Is it company? Correct. So what we're doing with OpenStack is we're saying we will make this enterprise great. So we will provide a hardened version of OpenStack for our enterprise customers. And we'll do that in a few different ways. But you know, if you were going to use OpenStack with HP, you will know that it will work with other products within our portfolio. So it'll be interoperable. That it will be secure. You'll guarantee that. I mean essentially. Right, it will be under the SLA that you expect, whether it be the four nines or five nines or whatever your SLA says, right? So there's an enterprise commitment that we are making to OpenStack. So we went back before talking about three tenants. So that open is one, enterprise great is another. So everything we do in cloud is something that an enterprise can rely on. And the third thing is hybrid. That we are going to build out this hybrid portfolio so that you can have this experience no matter what cloud or traditional IT you're using. What, let's talk about enterprise grade. Because that phrase gets thrown out there a lot. But let's unpack it a little bit. What does enterprise grade mean to you and to HP? So I would turn that and say, what does it mean to a customer? Because that's who cares about it, right? So one of them is security. So it means that everything they buy has the security that they need, whether it be that they are allowed the access control rules that they need, right? And that is consistent. The manageability so you know what's happening in it. Just the hardening, meaning the code has been tested. A lot of people forget that when we talk about IT security there's security at the very basic level of the code itself and how it's tested. Is it built with secure development processes? So that and much more is what we, that's one piece of the enterprise grade. Reliability, so it's the SLA. Sar made a joke this morning in his keynote that an SLA should be something that you know about that you get support with, that you have a live person letting you know something's going wrong. You shouldn't learn about it from a Twitter feed. So when we talk about enterprise grade it's about reliability and customer support that is real. There are some SLA's like hey we'll do our best if we don't send us an email and you know. We've seen a lot of issues with reliability in a lot of public clouds where things go down and you find out about it in the news media. Sure, but would you agree that for, even for HP public cloud you've got to have an SLA that reflects the massive potential for scale and it's okay to have an SLA in the public cloud that's less stringent than an SLA in a hybrid cloud. Absolutely, but the point is that when you publish that SLA and for the public cloud we have a published 99.95% SLA, that it means something. And if something does happen that you have live real people in support that you can call and talk to on the phone. That's enterprise grade. That's important, so that is a difference between your public cloud and the other public clouds out there. I mean we're talking about Amazon, we talk about the public cloud. They invented the concept and so I like to, I know you don't like to mention their name necessarily on camera, but it's good for customers. This is a conversation we have with customers all the time. So the difference between your SLA would be that you can actually talk to a live person. That is one of the differences, yes. Okay, talking about your public cloud SLA and obviously the private cloud's a whole different ball game. Right, but the point, so if you think about our hybrid strategy, we're taking oftentimes the economics or the self-service ability of public cloud and putting into other cloud models and taking that hand-holding or more premium service level that you get with private cloud to the public cloud, right? So it's bringing it together so it's that consistent experience, no matter what delivery model you're using, that's what we bring. So another question I have because in talking to customers I've found that a lot of times what they want is, we're talking about security. Everybody talks about how great our security is, everyone. So it's hard for a customer to kind of, it's hard for them to discern. The big difference seems to be, and correct me if I'm wrong, is you will do specials. If a customer says, this is what we need, you say, all right, we'll do that. And I think that's a really good point because going back to the enterprise and the enterprise grade, there is that ability to adapt to what the customer needs. I will tell you in past lives, I was building out a DR architecture and we were looking, do we build out a secondary data center or could we use the cloud for that? And the problem we had with using the public cloud is we could literally not create the architecture the same as we had it in our primary data center. So we couldn't actually do a warm or hot DR scenario. And that was because the way we wanted to architect failover and our load balancers, we could not repeat because they said, no, this is the box. This is how we architect this. Take it or leave it. So we left it, we couldn't do that. That was not our promise. So you see that a lot and there's times where they need a very customizable and sometimes even a managed experience for their cloud. So if you want a standard vanilla, you self-service it, you do it all, we've got that. If you want highly customized, configurable, managed, we've got that too and that's the promise. And that concept applies to the public cloud piece of the spectrum as well or not necessarily? So I mean most people that are wanting public cloud, they want it to be fairly standardized. I mean HP's public cloud. Right, so it's a fairly standardized based on OpenStack. There's still things we can do to be agile and flexible. We work with a lot of solution partners, that type of thing. But when you talk to people about more of that customizable experience, that tends to be more about the private cloud anyway. Or the hybrid. Or the hybrid experience. And I think one of the things is that overall, when I think about cloud, I tend to use the words extend and attach. And I think that that is a way, a lot of enterprises think about it, but it's not the way someone who their whole business is that, whatever, talk about cloud. But at the end of the day, for cloud to really be successful, for the enterprise to be successful with cloud, is that they're looking at it as an extension of what they're already doing. So if you've invested millions in an SAP installation, you're not going to flip that over and throw it in the public cloud. That would be ridiculous. And very hard, by the way, because SAP wouldn't really do that very agile-wise. But it's also probably not the best thing. So the question is, okay, well what if my SAP is working with some kind of data store and I want to extend or burst to that for excess capacity or for storage or test dev, or I'm going to build some apps on top of it or whatever it is. So the cloud can extend that, whether you do a private cloud, you do a VPC or a public cloud, you're enabling this ability for them to grow their IT infrastructure or grow their capacity in a very seamless way without investing millions of dollars again. So interoperability across your ecosystem with the OpenStack component is something that you are committed to? Absolutely. And I would say that, there's been some discussion in the media this week. We are also committed to interoperability with third-party clouds, especially when it comes from private cloud to public. So we support AWS bursting from our private cloud today. We just announced three additional public clouds. So Azure, ArcIS and SFR, ArcIS and SFR are two big European providers that we partner with that now cloud system, our private cloud solution can burst to those. And so I think that there's a couple different ways to look at interoperability, right? There's the OpenStack side and then there's times we have to work with other third parties out of what the customer wants to do. How about packaging applications in your cloud, bringing ISVs from your ecosystem in? I wonder if you could talk about that a little bit. So we're doing some of that today. Our public cloud actually has a very strong solution partner ecosystem. A lot of those come through the OpenStack community as well. But we are building out a very large solution partner ISV ecosystem across HP cloud. And I think there's lots of different ways that they can collaborate with us, whether it be repackaging reselling what we already have, selling their applications on our cloud. And then we also have what we call HP on HP. So you can assume over time that anything that we sell from a software application will be available across those different delivery models. So if you come to us and say, oh, I've got a big data and analytics problem, it's like, great, do you want that, Vertica in a hardened appliance? Do you want Vertica as a service on our public cloud? Do you want it deployed on your private cloud? How do you want to consume or deliver or build that? And so that's absolutely key part of the vision and strategy. So our research at Wikibon clearly shows, I mean, hybrid cloud is the dominant strategy. In fact, if you add up the people who say we're going hybrid or private, it's probably 80% of the customers, about 10% say, you know what, we're all public cloud and it's startups and it's small businesses and a number of people are going that direction. But the large enterprises clearly are going to hybrid. Even the guys are saying they're going hybrid. They're actually hybrid today, I think they do, yeah. Right, so I presume you see that as well. So what are you seeing with hybrid? What is it? How is it manifesting itself? Are you actually seeing federated applications? Do you expect to see that over time? We can talk about that a little bit. So I think that in the research that we've actually done with our customer base, it's interesting because a lot of people say, oh, we're hybrid. It's maybe about 40, 50%. But then when you say, do you have private cloud? They say yes. Is your company also doing anything with public cloud? Yes. And yet they didn't answer that they're hybrid. So there's some misunderstanding even, you know, within the community of what is hybrid, what is not hybrid. The majority of our customers have private and public today. Now it may not be under the purview of IT, but as a company, you know, they are already dealing with hybrid. And I think it goes back to what we were talking about before that, you know, the challenge for IT is somehow getting some kind of centralized governance and control and management of that. In terms of federation, I think, you know, the biggest issue around federation of anything is more around identity and access controls. Not whether that app can sit in five different places or in private and public. I think we'll see some of that. But when I talk about federated, it's always federated ID, you're federated security, you're federated access. And so I think that is actually the biggest issue from an IT perspective. Okay, but so we're coming full circle on the strategy. I mean, essentially your strategy is to, yeah, hybrid, however you define hybrid, public and private, all these different clouds, HP strategy is to essentially wrap them in a way that you can manage them consistently, govern them consistently. I mean, that's been your cloud vision all along. And we're executing on it. So talk about where you're knocking down wins. So, I mean, starting with private cloud, we're number one in the market. And that was just validated by a Forrester Wave that came out that said, we lead the pack in private cloud. Cloud system is our key solution there. So we're number one in private cloud, and that is our anchor. It was funny, Bill called it the Forrester Magic Cloud. He did indeed. I got a good chuckle out of that, I love it. We will work to make sure. We love Forrester and Gardner, they have different products. We love Wikibon too. You need to have your triangle or whatever you're going to call it. We just let the community vote. There you go, there you go. The customers can decide. So obviously, and we've seen huge growth with cloud system. While we don't release revenues, it's just been a hugely successful product. So that's really our anchor. And now we're able to, we obviously have public cloud. We launched that just over a year ago. Huge growth there, continue to expand our public cloud footprint. We just launched the latest version. So we're on trunk with OpenStack, which is going to be an ongoing thing. Currently OpenStack's on Havana. So we're on Grizzly moving to Havana. So you'll continue to see us do that. Lots of new capabilities there around larger instances, which the enterprise needs. So that's another enterprise grade capability. We then have our VPC portfolio. So virtual private cloud is another one that a lot of people talk about. So it's taking that multi-tenancy of a public cloud, but locking that down so you can control it in just your organization uses it. And you can get that, again, just standard self-service spin-up of VPC on our public cloud, or you can customize it and have it managed for you in another way. So it's literally that entire thing and we're executing on all those levels. I wonder if we can unpack your announcements a little bit. You said you had a next-generation cloud system, new public cloud, basically just laying out the hybrid vision. Start with the next-gen cloud system. Give us a little detail there. So a few things. One of the reasons it's called next-gen is we now support OpenStack. So I go back to what our vision and strategy was that OpenStack will serve as that technology foundation across our hybrid cloud portfolio. So OpenStack is now integrated with cloud system. We also added additional integration with new public clouds. We also now have added a ton of new features around the way you can configure things, a user experience that is very consumer-inspired. So what you'll see across all of our cloud solutions is much more of a consumer-widgey-widge type of UI that everyone is demanding. That whole smartphone and tablet mentality has been driven into the enterprise. So you'll see that kind of UI and consistent user experience across all of our cloud products. And this cloud system incorporates the latest version of our management platform, which was another announcement we made, which again is taking that common UI, common experience, and the ability to look for everything from traditional IT all the way through public cloud or VPC and be able to manage that holistically. Because what enterprise is one is that single view or that consistency of management. And for their users to say, oh, I'm in this cloud, I want to spin up an instance, or I want to go download this application, it's the same experience for them. It needs to be just very, very simple. Okay, so I think you're right. I think there was this sort of perception, okay, HP's all in on cloud, but six, nine months ago, there was a lot of marketing around cloud. Clearly a management commitment, but you just couldn't feel the, you could feel the enthusiasm, but you really couldn't touch it, you couldn't see it, so I'm sensing not only enthusiasm now, but real proof points. So let's look out a year from now. What kinds of things should we expect as outside observers? More features, more functions, more customers. So with that layer, I think your labs are gonna see continued innovation around feature functionality, ease of use, making hybrid simple or simpler to use to manage, to configure, to scale. But there's also gonna be just fundamentally some great new things happening, continued pushes on the management side, but on the open stack side specifically, I think you'll see some great announcements of how enterprises can get their hands on that a little bit more and start to deploy it more easily in whatever they want. So there's been a lot of push for us to allow enterprises to have their own open stack distribution that they don't deal with, that we make that easy for them. So we announced something quite a while ago called CloudOS, which is that technology foundation. You'll see a lot of progress around that and how we're using that across the company, as well as how enterprises can use it themselves. Awesome, we're really excited about the open stack initiatives. We'll be at the open stack summit. We were there last year. One of the best events that we did last year was in Portland. I hear it's going to be Atlanta this year, is that right? Yeah, so we're excited to be there as well. And I appreciate you coming on theCUBE. Margaret, it was great to see you. You too. Thanks for sharing your insights. Thank you. Everybody, John Furrier and I will be back with our next guest. This is theCUBE, we're live from Barcelona. We'll be right back.