 Live from Las Vegas, Nevada. It's theCUBE at HP Discover 2014, brought to you by HP. Okay, welcome back, everyone here live in Las Vegas for HP Discover 2014. This is theCUBE, our flagship program. We go out to the events and extract the signal from the noise. I'm John Furrier, the founder of SiliconANGLE. I'm with my co-host, Dave Vellante, co-founder, chief analyst at wikibond.org. Our next guest, Tom Joy, senior vice president, general manager of HP's Converged Systems Group, theCUBE alumni, welcome back. Thank you. So, Converged Systems is hot again. I want to ask you, because when we were speculating, when you first started getting into that group, when it started coming together, there was certainly the trend to Converged Systems, but it's really exploding. We're seeing, we're hearing amazing things out in the field, talking to the customers, and the news year announcing. So give us the update, what's the buzz right now? What's the action around your group? Okay, well I guess first the market, you know, I think if you go back two years, it was a conversation, but now it's, we think that maybe 20% of IT is demanding that they acquire the systems as Converged. So it's a real market now. I would say that, especially in the kind of Fortune 1000 class of customers, we're seeing customers go through making design-win choices. You know, they're baking us off against just a couple of competitors and making a decision that's kind of a long-term decision. How am I going to build out my next generation of the data center? The other thing I think that's interesting is there are a lot of things that you can do with Converged Systems. There are a lot of applications you can optimize, but there's the two that are taking off right now for us are number one, analytics, you know. So we're seeing demand for Converged System for SAP HANA. We're seeing demand for, we now have Converged Systems for SAP HANA, as well as HP Vertica, and also we'll just announce Microsoft Analytics. All of those things are taking off, because there's a huge demand for big data, and up until now it's been kind of a science project if you wanted to do big data, but that's taking off. The other one is I want to do IT as a service. I want to take virtualization to the next level. I want to use cloud tools on top of my virtual infrastructure, but I want to buy building blocks. I don't want to assemble everything myself. So those two things, kind of the analytics category, in particular, with those ISVs, and then kind of virtualization to cloud. So it's infrastructure for analytics, essentially analytics in a box and cloud in a box. Pretty much, yeah. And, you know, VDI used to be the big driver, but it was always so kind of nichey, right? So these are much more broad-based workloads, aren't they? Yeah, they are, they're very broad-based, and you know, I think the VDI situation is interesting, because we've been doing VDI solutions for quite a few years. When I was in the storage division, we spent a lot of time on it, and what we're seeing is that there's a need now for especially in kind of the mid-market, give me a simple way to do VDI, so it's not a big, long project. And we're also seeing customers say, look, I'm doing, I want to do an HP Converged System for my virtualization for a private cloud. What if I could just run my VDI software on that? So we just announced today, we can take a Converged System 700X running VMware. You can run Citrix on it. We call it an app map, so it basically runs right on it, fully optimized, to rather than do a dedicated appliance, say hey, you've got this virtual infrastructure, you've got IT as a service, it's just another app. And that's kind of the way we're approaching it. Where's the business coming from? Is it coming from existing HP customers that are evolving to a Converged Infrastructure? Is it new business, a little bit of both? I wonder if you could add some color to that. Yeah, so I think certainly a lot of the conversation is with HP customers. Because if you think about it, we have a very high proportion of, let's say the Fortune 1,000, or the commercial market that do business with HP in some form or fashion. So almost any customer you talk to is doing something with HP, and very frequently it's HP servers, or they're doing something with ES or HP services. So we have an entree almost anywhere you go there. And so we're very engaged with them. And every time we can have the discussion about it, Converged Systems versus just the component you happen to be using, it expands the relationship. But more and more, because so many customers are in this design-wind phase, whether it's an existing HP customer or not, we're getting baked off against VCE, V-blocks, when we see a couple of others out there. But that's probably the one that we see most frequently. And customers are going to make a decision which way they're going to go. And very few of them are going to pick both. It's not like a scenario you're going to have a mix of those. So sometimes it's their customers, sometimes it's ours. The important thing is that customers are trying to decide, what's the next wave of my data center going to look like? If it's going to look like Converged, I have to pick my partner. And that's a bake-off. What are you seeing for a repeat business? Another somebody puts one into the colony up six months later and ordering more? Well, the interesting thing is we only launched the Converged Systems in December. So it's only been six months. But we've already seen scenarios where we had a deal last week where we sold them six Converged Systems 700s, so our big system. And they're probably going to do 20 because it's that classic example of I'm building data centers and they're going to put two of those in each of the three big major geographies they've got and then they're going to expand that way. So it's definitely early, but we already see customers making plans for after they make that design wind decision, this is how they're going to do it going forward. So we're already seeing some of that. What do you make of IBM getting out of the x86 server business? What impact has that had, if any, on your business? Well, I think it's net positive for us. I do think that this market's hard. It's hard for every player, including HP, because it's changing, right? There's a rapid, high rate of change and the server business has gone through, it's going through a very significant long-term secular shift towards more commoditization. And if that's reality, and it is, then you got to figure out how you're going to continue to invest and where you're going to continue to invest. And I think IBM made a decision to exit, right? They exit parts of that business and we'll see what they do in other hardware business they have in the future. But they want to be a services company, they're very good at being a services company, so that's what they decided to go ahead and do. The same time, we've made a different decision, we've made a decision to build new servers, right? So a year ago, we announced the Moonshot server technology and that's now shipping. We're building converge systems using that. We also announced last week that we're building the Converged System 900 for SAP HANA, which is the very, very large systems, and that combines a new class of server that we built. And it is Superdome class, huge in-memory capability, 12 terabytes in a single pool, 80 terabytes scale out, so enormous server memory capability, new server. So I think that's the difference is we've decided that compute's important and that we're going to continue to invest in it and we're bringing out new technology. And if you're making a five-year decision of who's your partner, if you're making a 10-year decision, how am I going to build my data center? You probably want to be with somebody that's kind of committed, and that's us. Somebody asked me on Twitter earlier today when we told the audience that Tom Joyce is coming on and others, somebody tweeted me and said, hey, ask Tom if HP needs to have a hyper-converged system. And I said, well, what do you mean by hyper-converged? They said, you know, I said, isn't that what Shark says? And they said, well, with storage and server and networking all integrated, not in a rack, but in a single system. I said, isn't that what Shark says? Well, yes and no. So I wonder if you could comment on that. I'm not sure exactly what this individual meant. I think I'll try to give a short answer to it. I think the definitions are important, right? And I think the way most people describe hyper-converged right now, if you talk to some of the investors, customers, et cetera, is they want to see on the server itself, on the compute, running everything. The compute itself, the virtualization layer, and whatever interconnects required, and especially that storage. They want that storage stack running on the server, right? As a direct access device, pull. Right, pull on the server. Could you do that with Moonshot? We do it now with what we call a Converged System 300. So what we've taken is, and we can do it in the future with Moonshot, is we bring out new cartridges, new capabilities of Moonshot. So Converged System 300 is hyper-converged because it's got the compute, the virtualization, the management, and it has the storage stack on the server. So it's very dense and it's just a couple of nodes in a rack, in a very, very dense. And that competes very well with some of the startups that are out there. The difference is that we've been at this for a while. We run all the major applications of virtualization. We're not just special purpose, so that's a big deal. I would say, to be honest, that our big systems that are combining Blade System 3.0 Virtual Connect HP Networking doesn't meet that definition. It is converged. Everything's tightly engineered, but it's designed for the big environment, right? And that's where you need really well, extremely powerful compute, extremely powerful storage, powerful networking. It's not, yeah, I think hyper-converged today plays in that SMB space. Can't play at that enterprise level. Big insurance companies, big financial services. Yeah, like the one I just described, that's got three continents. And they want everything to run on a IP as a service, private cloud. Now in the future, I think there is opportunity for more hyper-converged moving up the stack and we're investing hard in that. Some of the things we're doing around open stack and healing and we'll pay off there. So we have decided that there is hyper-converged kind of for the entry space. Right now, we have modular converge systems using ProLiant DL class systems and our three-par systems. And then we've got the big Blade Superdome class, Virtual Connect HP Networking three-par. Multiple plays kind of, three classes of converge building blocks. Does that make sense? Yes, it does. Thank you for that clarification. And going hard after multi-hypervisor environments, open stack, you're not concerned about VMware's impression of you if you go hard after some of those competitors. Well, to be honest with you, you compete and you also work together. We just did our session and on stage with me in my session, I had VMware, I had Microsoft, I had SAP and I had Citrix. Now these guys don't always get along, but they're working in an environment that's converged and they all run on our system. Well, you were on the big screen at EMC World. I'm sitting there and then it was Pat during Pat Gelsinger's presentation, he ran a video and I said, that's Tom Joyce, talking about SAP and HP and VMware at EMC World. It just goes to show you, I think at the end of my session I just did, the customers gave a round of applause, mostly because we had all the partners there because they don't really care what our competitive squabbles are. They want the stuff to work together. I think Pat and VMware in general have been great partners. Certainly they work with EMC, they work with VCE, but they're helping us and we're helping them and it's a great relationship. I mean, we've sold more VMware on HP systems in the history of VMware and in the last year. So we have a great partnership, we have a lot of expertise and it's actually expanding, so that's a good story. The numbers don't lie, we always talked about VCE, they would criticize, Dave and I would talk about VCE success, that certainly telegraphs it, but that to us was always seen as high-end engineering systems and what we're seeing is a trend, you're teasing it out, I want to get your take on it, moving down into the mainstream, we're talking to Craig Nunez about three parts, all flash, there's a tsunami in the enterprise at the mid-range, I'm not saying mid-range, I don't mean like the huge black swan or the unicorn high-end use case. Well, I'll give you an example, so we have JetBlue Airways. Yeah, I know, I agree completely. JetBlue is actually a small data center, right? They use Microsoft applications, Microsoft management and so we just sold them a converged system for Microsoft analytics, SQL and Hadoop. It costs like $150,000, it's a relatively small system and they come in less than that, so we're seeing, many times, and I think the last few years, the focus has been on the high end of the enterprise and certainly there's opportunity there, but we've decided to kind of take a lot of that and drive it down and that's where some of the hyperconverge, that's where the moonshot plays. And it's a channel play too, right? Yeah, absolutely, absolutely right and the channel partners are going through a journey of their own, how do we find new ways to, how do we find new ways to involve our businesses? Are you, when it comes to the channel, are you emphasizing guys with workload expertise, whether it's Microsoft or SAP or Oracle or specific virtualization? Yeah, I think so, yeah, and we're actually trying to help our channel partners who maybe haven't done SAP historically, to say how can I get a piece of this HANA action, right, because we've got 47,000 SAP customers, a lot of them are small and that's a great opportunity for channel partners. Pan is a real deal, you think? Yeah, absolutely right. So Ashley, we got to go on time, thanks for coming on the queue, but I want to ask you one final question, share with the folks out there, this modern era we always talk about, you guys, you seem to be in the wheelhouse for that with this converge systems, basically ground up engineering, why is it so important, why are people flocking to it like crazy, what's going on, why? Tell us why, real quick. Clearly they want to collapse the cost of managing infrastructure, they want to roll in new systems more quickly because they have to compete with the cloud in many cases, right? So that's definitely something you need to do. Most important, the converge systems are really a software decision. What's that stack I'm going to run? And then how am I going to manage it? And that's where HP OneView gives them the ability to in software automate a lot of things that were manual. So it's really consolidation and collapsing costs, as it always has been in IT, it's not new. Tom Joy, Senior Vice President of Converged Systems, starting to show some numbers on the board, we had a little bit of a grace period there, congratulations, starting to see some good numbers being posted, can continue success. Thanks for coming on the queue. Thank you very much. We'll be right back after this short break. This is theCUBE, live in Las Vegas for HP Discover.