 Live from the Sands Convention Center, Las Vegas, Nevada, extracting the signal from the noise. It's theCUBE, covering HP Discover 2015. Brought to you by HP. And now your hosts, Dave Vellante and Jeff Frick. Everybody, this is Dave Vellante with Jeff Frick and this is theCUBE. This is our day three of HP Discover 2015. Jeff, we've been covering HP Discover since 2010. We've also done three HP Discoverers in Europe, one in Frankfurt, two in Barcelona. This year, HP Discover in Europe is in London. What HP does generally is they've got, not generally, specifically, they do HP Discover as a big customer meeting in June and then they bring that to Europe in the December timeframe. Like I said, they've done Frankfurt, Barcelona the last two years, this year is going to be in London. And in fact, I think the European show is actually a bit bigger than the US show. I'd say there's what, seven to 10,000 people here, maybe? No, here I think there's more. I think it's closer to 10 or even more than 10. So, I don't know, you were in Barcelona the last year? Yeah, it's around there, maybe a little bit higher. Maybe it just feels that way because it's kind of a zoo over there. But the big news this year, Jeff, has been sort of the new messaging and positioning that Meg Whitman put forth on day one. In particular, first thing is she talked about splitting the company in two. HP Inc, which is going to sell Inc, as well as printers, INC was going to sell INK, which is printers and INC and personal devices, personal computers, and that is a high cash flow business. They're both going to be Fortune 50 companies. The second one is HP Enterprise, and HP Enterprise is just that. It's the servers, the storage, the networking, the services associated with enterprise technology. So, the splitting those companies up, they're both Fortune 50 companies. HP Enterprise, ostensibly, is the growth company. Now parts of HP Enterprise are growing. The enterprise group, 65% of the HP's business, really, their enterprise business, is growing at about 5% in constant currency, which is pretty good. The big challenge, really, Jeff, is they got to split these companies in two. That's a massive, massive undertaking. It's going to be expensive. They're about $400 to $500 million in dis synergies from splitting those companies apart. We heard in a discussion yesterday the scope of this, in terms of 50,000 servers, 17,000 application interfaces. 1700 applications have been moved to the new cloud-based sort of infrastructure that they're talking about here. So essentially, they're splitting IT, they're splitting legal, they're splitting marketing, they're splitting the P&Ls, they're splitting the company. Meg Whitman will be the non-executive chairman of HP, Inc., and she'll be the CEO and chairman of the board for HP Enterprise. So massive, massive undertaking. Some big risks there. Now, they plan to go live, I believe it's in November. November. And their IT, we heard yesterday, is going to be ready by August 1st, I believe, was the target. That is massive. I mean, I've seen, over the years, companies who have tried to move off of certain systems and migrated. I remember when DG did it, they moved off their Amdahl mainframe and they took a blip. I remember Sun did the same thing. Sun moved to an all-Sun environment and they took a big hit. That's decades ago. I think IT planning is much more solid these days, but nonetheless, there's big risks there that HP has to manage. But it's interesting, Dave. One of your quotes, and you've said it time and time again, is HP has to shrink to grow. Clearly, this is, the big thing is shrinking by splitting, how does this fit into your thought process of shrinking to grow? Because the other thing here is a lot of talk of business outcomes, user experience. And I was looking through the sheet today of breakfast of all of these different sessions that are going on while we're here at theCUBE. They're all enterprise. They're healing in cloud, they're big data. I didn't see anything that had to do with printers. I didn't see anything that had to do with medical devices. I walked the floor. It's an amazing amount of assortment of products that HP has. And they talked before that it was really more of a product-centric organization. Now we're shifting to business incomes. So how does this split, kind of support, validate, make you feel about your statement that HP needs to shrink to grow? Well, this is definitely not Bill and Dave's HP. No question about it. I mean, Carly Fiorina, who's now making a run, is kind of rewriting history. She said basically under my watch, HP grew, of course it grew because she acquired compacts. And of course HP subsequently acquired EDS. Those are two massive ingestions of people and technology and companies and systems. So that was not organic growth. Unfortunately, even the compact business, the compact business comprised the Digital Equipment Corporation, which at its peak was a $13 billion company and clearly is much smaller today than it was back then. And so the challenge was HP inherited a lot of cool stuff that allowed it to grow because it's had huge heft. But it also inherited a lot of legacy products that are now shrinking. And so my feeling is that the split is inevitable. There are two different businesses, two different gross margin businesses. One's higher margin, one's super low margin. You can't go from selling ink one minute and then the same sentence, you're selling superdoms and high end systems and Apollo's. They're just different business models, different channels of distribution and fundamentally require different management approaches and go to market models and R&D approaches. So the split is inevitable, but it will be disruptive. It's impossible for it not to be disruptive. But I think to answer your question, the outcome will be very clearly more focused and it'll be a lot easier to follow HP, to track HP for investors to understand HP. The investor who wants dividends and steady sort of cash flow can go to HP Inc. And the investor who's betting on growth and upside can go to HP Enterprise. And I think there is a lot of upside in HP Enterprise. Yeah, I can imagine the financial models that the financial analysts try to put together to figure out what the price of HP should be. It's very, very complicated. So that will be simplified significantly. Well, I think they keep it at a pretty high level and that's the best they can do. But it's, you know, you're on the conference calls and they're asking about PCs on one hand and they're asking about the enterprise business on the other hand. And it's just, it's hard even for an analyst an analyst specializes maybe in mobile devices and the same analyst is being asked to cover HP. It's very complicated. Unlike IBM, IBM, big business is very complicated but it's clean, it's an enterprise business. And so in many respects, HP is sort of mimicking from a structure what IBM has done. The difference is IBM sold off those PC division. It's sold off, it's low end commodity pieces, HP's keeping that and sprinting it out as a separate Fortune 50 company which I don't really have a problem with. I think from an investor standpoint, that's not a bad thing to do. I mean, what's Meg's job? Meg's job is to, she always talks about the customer, sure, but her real job is to increase shareholder value and she's done that to a decent extent. I think there's a lot more upside there. HP still trades at 60 cents on the revenue dollar. Same problem that Dell had, by the way. That's why Michael Dell took Dell private because he couldn't, the public markets didn't have the patience and all he did is spend his time explaining his strategy to people who didn't really give a crap about his strategy. They just want to make money. So, I think, again, I see some similarities there. Difference, again, being HP's going to stay in the public eye. I think the big question, I've talked to John Furrier about this this morning. He had to leave his daughters, graduating from Palo Alto High School today, but so we were talking about the messaging that we heard on day one, which wasn't a bunch of product messaging. It was more high level, the idea economy, invoking Uber as a poster child. I know Quentin Hardy wrote a piece in the New York Times on the blog, kind of criticizing the vision. John Furrier said, yesterday in the cube in the morning before he left, it's kind of like nailing Jell-O to a wall. Sort of hard to get my hands around exactly what this vision is all about. I, on the other hand, feel like at least they're putting their foot forward in this digital economy, and I'd love to get your take. But here's the bottom line, sort of the conclusion that I'm having here is, you've got the old and you've got the new. And the problem is that we hear it all the time. People can't just rip and replace and go from point A to point B, they need a bridge. So what is that bridge? If you over rotate to the Uber style of doing business, you're going to not do enough business. So you have to care and feed those existing customers. So OpenStack, for example, is the future. And HP's put a lot of emphasis on OpenStack, but they're not making a ton of money out of OpenStack today. So what do you do? OpenSource is the future, but HP's not making money out of OpenSource. So what do you do? Well, you have to have those bridges. That's what Helion is all about. Helion is really in the early days, though, kind of just getting started. And I want to come back and talk about that. But so, you know, various point I think was, look, if you put fourth Uber and Airbnb as the new style of business, but you can't deliver that new style of business today, and that's not where you're making money. You run the risk of over rotating to that new style of business. So my takeaway from that, and I kind of agree with John, my takeaway from that is I do want to hear about products because this is a product company, and they need hot products. This is why I like 3Par. The storage guys will talk about 3Par. They talk about what you can buy today, and they can drive revenue from 3Par. I think the same thing is true with the server guys. And so you can buy a Gen 9 today. Those are good products. Those are leading products, best of breed products in their class. Put those forward. Okay, so let me hold you right there, because another one of your great quotes that you use over and over again, which is terrific, is that, you know, 3Par's the gift that keeps on giving. And it's interesting here, now that the new big acquisition, and as you've said before, HP wasn't in an acquisition mode for a while. They were kind of getting things buttoned up, but now they've purchased Aruba. So Aruba's got the wireless thing in Levi's, which is an interesting case study. Obviously, Levi's Stadium, right in the backyard of Silicon Valley, really a lot of press about it's going to be the optimum kind of user experience inside of any outdoor stadium in the world. And the word kind of in the trenches on the streets was that all the traditional kind of big names that you'd expect to get that wireless deal ran away. So whether they didn't think they could make any money, the challenge was too hard, you know, high density wireless is really, really hard if everybody wants to watch that replay immediately. And here Aruba gets that deal. It's a great experience. And I think you maybe said it, you know, is Aruba on the networking side, what three par was on the storage side, right? Cause it's store, compute and networking. Aruba's the new shiny acquisition. The Levi's story is pretty powerful. And I was really impressed by the story from yesterday about how wireless, the way we use wireless today has nothing to do with what wireless was originally developed to do. And in the use case of, you know, you're talking on your phone, you drive home, you park in the garage, you go upstairs, you connect on the network. So do you think Aruba is the three par? And is that another really big leg on the networking side that they haven't had in investment of energy, technology, et cetera? I think, well, I think Aruba could be the next three par. I said it's HP's attempt to make a judo move against Cisco. I think Cisco's good, right? Cisco's not going to stand still. Cisco's making its own acquisitions of wireless and Cisco will flood the market with messaging and its own sort of wireless product portfolio. And so that's not, Cisco's not standing still and HP's got to do a better job in networking. But I would come back to the product piece. Compare HP to IBM. Name a product that IBM has that is the best product. You know, you could debate it, IBM would, you know, the engineers would be all over me, but the one product you can point to in IBM's portfolio is the mainframe. Now, compare that to HP. They're number one in printers. They got the best storage array in three par. They got, you know, Gen 9 is the best server out there. So they have best of B products. That's the piece that, I don't think HP should be shy about putting products forward. I think it needs to do that. It's kind of the Steve Jobs, you know, pitching a product, Larry Ellison pitching products. And I think HP should not apologize for doing that. So, okay, that's good. This is a day three. We got a lot of good stuff coming on. We're going to be talking storage. We're going to be talking servers today. We got converged infrastructure. The cloud guys are coming back on. We got some customers coming on today. Calvin Zito is going to be on wrapping things up. So keep it right there, buddy. Jeff Frick and I will be back with our next guest right after this word.