 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, John Furrier and Dave Vellante. Okay, welcome back everyone. You're watching SiliconANGLE and Wikibon's theCUBE. This is our flagship program. We go out to the events, extract the signal from the noise. I'm John Furrier with my host, Coase Dave Vellante for our sixth year live in Las Vegas at HP Discover. We've done HP Discover Barcelona, HP Discover, we've done all the HP. We're going to HP Discover London coming up next. So this is our ninth Discover, right? Six in the U.S. We did in Frankfurt, and we did two in Barcelona. Yeah, so we're on the ground. We've been embedded with HP. We've been watching the story unfold and watching HP transform as they say they're transforming. So this is our opening segments, our editorial analysis of HP. Dave, let's go, let's drill down. We're going to have talk to all the HP folks here about the backstage past. theCUBE is like the backstage past. We have all kinds of interactive and engaging experiences. Obviously, you can watch the video. You go to our new site, hpdiscover.social. The new digital experience for all the social, it's ungated content or it's free. See the trending hashtags, find influencers, go to crowdchat.net. There's a ton of crowdchats going on. You got the influencers. HP does a great job with influence, and they're all in rooms getting briefed. But they're sharing that on Twitter and we're capturing that as there as well. But Dave, HP, big story. Meg Whitman is going to give her keynote later today. There's some things that we expect to see. There's some things we've heard through the grapevine. Bottom line is HP's got this transformation message, hybrid infrastructure, digital enterprise, data-driven, workplace productivity experience, all perfect messaging. I got to give props to Jim Jackson, Jason Newton, did a great job on that. Now this idea economy, they have to execute. I mean, that's all great, but everyone wants to talk about the split. Meg Whitman will address the split from what we hear. HP kind of cringes when you talk about the split. It's like people can hear, kind of just want to get over it, kind of like get on with business. The enterprise group is solid and the split is going to give them focus. So there's a lot of people trashing the split. A lot of people saying it's not good, it's good. And so there's mixed balance on that, Dave. So what's your thoughts? I mean, the split, HP, their financial performance, they're not the stellar Wall Street shining star of success at this point in terms of their financial. Well, although they've been on a slow and steady progression over the last couple of years, so the turnaround is happening. I think it relates to the split, John. The split is inevitable. Anytime you have to transition with a company like that and split, it's disruptive, but it had to happen. I mean, in the one hand, you got HP selling personal systems and printers and ink, and then they turn around and sell superdoms. I mean, it's just the synergies in those businesses are not extensive. The split is necessary and inevitable. It has to happen. They gave me the college try. They're two different models, and you know, this whole notion, and Dell talks about this a lot, is Dell will say, we're now the only end-to-end company. I don't know if people really care. I really don't think they do. I think it's more important to have focus, in my opinion, because that's where you find winners in these markets. So the split makes a lot of sense to me. They're different business models, different gross margin models. I see HP ink, John, as the company with steady cash flow. It's kind of the dividend play. I see HP enterprises being positioned as the growth play. Now, the challenge for HP has been, the company, I've said this many, many times, as you know, the company has to shrink to grow, and it's been shrinking, and there are certain aspects of the company that are growing. The big challenge that HP now has, like everybody else, is currency headwinds, right? Because the appreciated dollar, and HP gets a double whammy because its big competitors in printing are in Japan. So not only is HP transferring revenue back into its appreciated currency, but their main competitors in Japan in printing are selling at a lower price. Other products don't have that challenge. So that's a double whammy for HP, but they'll get through that. I think if you look at the businesses, my feeling, John, is HP's, first of all, its server business is doing great because ISS had a huge quarter. It grew about 17% in constant currency. The storage business is kind of flat to down in constant currency. I'm not really thrilled about that. Software is the big thing to me, John. HP's software business has to grow faster. They've got a shiny, bright toy and Vertica, but they need more of those. And the challenge HP has right now is the old stuff is not growing, the new stuff is not growing fast enough to offset the decline in the old stuff, and eventually that will change. Now, there's a lot of signs of encouragement. I always say three par is the gift that keeps on giving. And if you look at what HP has done with three par with all flash arrays, I'm very excited about that. It's the first example, certainly in storage, that I can say where HP has organically innovated. They basically said, okay, we're going to invest and create this all flash array and we're going to come out with a leading product and they've done that. So that's a good example. I'd like to see more of that. You know, we're going to hear more about the machine. Martin thinks always talking about the machine. That's really futures. I'd like to see more of that. You certainly see that with Gen 9 and servers. I want to see more in software. I want to hear more about Haven. We have Cal Mahoney coming on. But so that's my sort of high level assessment, John. I'd be interested in what your take is. You're in Silicon Valley. You used to work at HP. What do you think? Man, I've been a cover in HP for a long time. I've been closed HP since 1988. I mean, I've seen everything. I know all about, I mean, I know everything about HP there is to know in terms of strategies they've been through, products that they have, in terms of the analysts out there, probably the closest perspective than others out there. And I was critical of HP, Dave. You remember the cube, I'd go back with, we have the archives, you can't hide the archives. You go back five years. I was on the cube saying, Meg, do not split into two. At that time it was a much different opportunity. Well, at the time you were saying don't spin off, don't sell the personal systems division. This is different. No, no, no, hold on. But it's in essence, it's the, it's kind of a diverse flying from the asset. That's not what they're doing. I know, but still, I want to make a point here. My point is at that time, Android was barely getting off the ground. Apple was in its massive ramp up growth. HP is a lot like Apple. It's more of a kind of a mellower version, but everyone's loyal to HP. HP's got great loyalty. They've got great loyal customers. They don't have the fan base that say Apple has because it's more of a consumer product, but HP had the elements at that time to execute what I call the big bang theory, pull it all together, a be like Apple, put it all together, have the value chains and the supply chains work together. So I think that ship has sailed. So I think over the, and the market has changed. So I think the split is good for HP like before all the reasons you outlined. Okay, I'm for the split and the enterprise business is competitive because the cloud changes the game. So back in my argument for keeping them together, Android and mobile was just building. So I would say, okay, that's that. Okay, that's not going to happen. You're not going to see that kind of trajectory, a splits happening. They still own the assets. Again, you got the cash cow in the printer business, different kind of management style. And then you got the high end cloud business. I believe that the cloud business is going to be absolutely massive. I believe that the customers are not buying the cloud today. As much as people say, they're buying Hadoop and the cloud and these kinds of new technologies. We know from our research, Dave, that they're not buying, they're waiting, things are developing. It's early, early days. It's the first inning, top of the first inning in that transformation. So HP at this point has time to execute. One, two, Amazon has shown with their cloud billions of dollars in revenue and storage as well, that it's an integrated world. So you heard Jason Newton talking about this idea economy that Meg's going to talk about. And I think HP is building a platform in a whole new way. And having a platform means they have to enable people to be successful. And this idea economy is about enablement. So I think the strategy is good. It's going to come down to execution. So to me, what I'm looking for is, can they go into new markets with their powerful channel partners? The channel is a weapon for them. If they can get that right with this platformizing, replatforming HP, then it's not a storage decision and a server decision or a application monitoring system decision or a security decision. It's an HP decision with the option to have a little bit of Dell in there or somebody else multi-vendor. So to me, that platform is critical. Software will drive it. That's the hybrid, the messaging hangs together. And the workplace productivity point is about, hey, APIs, notifications. We now live in a world where apps are driving the show. Apps are driving the bus, Dave. That's the world we live in. So if HP's messaging translates to focusing on workflows in the enterprise, what the consumer is doing in the enterprise with the apps as the focus, application-centric and then building around that, that's a platform. I like that. Well, so I think, and I like the messaging talking more about so-called business outcomes than just products. Jason Newton said in previous years, you'd have folks stand up at HP Discovery to be a product-centric pitch. And so I much prefer to talk about business outcomes, digital transformation, things like that. But having said that, at the end of the day, HP's still a product company and they need hot products and they've got a number of hot products. I want to hear more. You mentioned cloud. I want to hear more about Helion. The latest quarterly conference call barely got to mention Vertica. Not only did they got to mention. Converged infrastructure is a huge opportunity for HP. While HP was sort of first in naming, coining that phrase, converged infrastructure, it's a little bit behind. My guess, John, is it's converged infrastructure business is probably, I don't know, 300 million. That's a multi-billion dollar business opportunity that HP can go for. And you mentioned the channel. It's got to align the channel there. I think, you mentioned Flash. Moonshot, didn't hear much about Moonshot. We were at the original Moonshot announcement. I want to hear more about those types of products. So these hot products ultimately are going to power HP's profits. I've been saying, I'm encouraged about HP because it still throws off cash. It's making more acquisitions. It announced an acquisition of Aruba, a big wireless play, and some other acquisitions. So that's good. They're starting to be acquisitive again where they couldn't post the autonomy acquisition. Now they can. I want to see, once they split, you've got to deal with the disenergies. There's probably four or $500 million of disenergies. When companies merge, they always talk about synergies. Well, HP's splitting, so there's going to be disenergies there. So by 2017, they got to get back to making that a creative. They also still have to take cost out of this business. I think Meg's got to take two or three billion more out of this business in the next two or three years. So they've got some challenges there, but they are funding R&D more so than in the past under the Herd era. So I want to see that R&D come out with productive products. That's key, and I want to see the company throw off more cash and be more profitable. It throws off a lot of cash. I mean, probably did $760 million free cash flow in the quarter, but that's a company about one quarter the size of EMC and it's throwing off about the same amount of cash. So HP has the potential to throw off much, much more cash than that, John, and I think it will over time. So Dave, I got to ask you your perspective because I read an article that's been trending in the echo chamber of the Twitter sphere, criticizing HP, who's an analyst, basically saying all analysts think HP's a train wreck and they're basically saying Meg's no Michael Dell, Meg is no Steve Jobs. Basically comparing Meg Whitman to Michael Dell and basically trashing HP. What's your take on that? I mean, would you- You talk about the Rob Enderley article? Rob Enderley article, was it Sour Grapes? Was that like, I mean, it was really a negative tone and he kind of made his statements and most other animal might peers agree, HP is beyond repair. What's your take on that? Yeah, he was basically, I wouldn't want you to read the article. I don't agree with it. I don't agree at all. I mean, I think that, you know, I think the analysis that you give is right on. It comes down to the customer. I talked to a lot of HP customers. HP customers like HP. And if your customers like you and want you to win, they're going to stick by you, they're going to be loyal. Why are HP customers loyal? Because, you know, HP's an honorable company. They're honest, they do what they say they're going to do. They deliver. Now, from a company performance standpoint, it's easy. It's easy to criticize HP. So I think a lot of that, kind of Sour Grapes or not, Rob Enderley chose not to come here. I don't see how you can say, well, I've decided not to come here. And then it was to be so critical. So I'd like to see Rob have a little bit more of an open mind. As I said, John, this is a company that has had to grow to shrink. They made, you know, Carly's acquisition of Compaq or the acquisition of EDS, the acquisition of Autonomy. The cars that Meg was dealt, you know, were challenging. And I think you've said that she kind of took one for the Silicon Valley team. And so what would one expect to do? Meg has said it's going to be a five year turnaround. It's going to take some time. This split, I think is the right thing to do. And look at the stock price. You know, since Meg's taken over, the stock price has done pretty well. And that's to me, the ultimate measure. I like Meg Whitman. I got to say, she, as Marz on concern, I like her style. Do I agree with all of her moves? No, not all of them. If I was running the show, I'd be doing this a little differently, but I'm not the CEO of HP. I have to drive in every day and be on conference calls around the world and deal with all the hassles. But HP's got to move faster, John. No, no, here's my point on the angrily article. I think that was just sour grapes on his part. But you can't compare Meg Whitman to Michael Dell. They're different people, okay? You can't compare Steve Jobs. Steve Jobs came in with a clean sheet of paper and the company was almost bankrupt. HP is a good business. I mean, what's the cash numbers they're throwing off? Yeah, they'll throw a three and a half to four billion in free cash flow this year. And so, to say they're doomed. I'd like to see more, but that's pretty good. To say they're doomed is ridiculous. No, it's an absurd statement. You're right about that. HP is not doomed, but that's absurd. I mean, the guy, I mean, he basically probably doesn't do any business with HP and he wanted to throw a hay maker out there. That doesn't fly on the social web anymore. You know, and so we call you out and we'll go toe to toe on a debate. Happy to do that anytime, anywhere. But that's not the point. My point is, what's the reality? And the reality is, they have a management team. They got to add more talent. I do agree with people when they say, you need more domain expertise. I think Meg hasn't found her team yet. I think this, we see it in the clouds. So it's a movement there. You see some solid management team. Antonia Neary, a great in the enterprise group. Solid as a rock, has the bedrock of the old HP. It's a massive turnaround. So you can't compare styles of management. With Michael Dell and Meg Whitman. First of all, two different people. Michael Dell Starr is the founder of Dell. He was a majority shareholder. He took it private. If Meg had that, I'm sure that we'd be a whole different world. But- So break it down. So why HP? So you think about a lot, very competitive, why HP? Global company, strong services organization, solid products, great reputation and delivers on its promises. And if it makes a mistake, it'll correct those mistakes. So that's why customers are loyal to HP. Would you rather buy a single best of breed product from take, for instance, pure storage? Let's say they got a great, great product. Or if you have a huge, you know, $100 million project you're putting in SAP, you're upgrading, you're doing HANA, you're doing all this big data stuff. Do you want a single throat to choke? Or do you want to be the integrator? A lot of customers want a single point of contact with an HP or an IBM, you know, or an Oracle or increasingly like EMC Federation. Those companies have advantages, John. And I have said it, the rich keep getting richer in this business. And if you look at what Oracle's doing, you look at what IBM's doing, HP's smart to go down that same kind of path, which is stay the course, they have muscle. Business outcomes. And they have muscle, right? So HP has leverage advantage. They have a channel that's the largest in the world. Okay? Oracle has strengths. They've played with those strengths. So HP is a big company. Huge inertia of silos to break down. I mean, it's not, you can't just transform that overnight. No, they're not without challenges. They're losing the supply chain leverage when they split up like that. They've got dis synergies they've got to deal with. There's, you know, there's issues. But generally speaking, as we said at the top of the segment, it's the right thing to do. I'm bullish on HP. I've always been a big fan of HP because I know what they have in the arsenal. They have feet on the street. They're a lot like IBM. Great culture, okay? A little bit sideways over the years from the transformation. And again, the autonomy was a big, big thing to choke down and digest. I mean, they got to get that out of their system. They've now integrated autonomy across as we pointed out in the queue a couple of years ago that that is almost complete. You almost see that sunsetting from the brand. But in terms of like integration, you see in big data messaging, the digital enterprise, the storage piece, the converged infrastructure. I mean, they got everything kind of teed up. I think the UX piece with workplace productivity, that's a question mark for me. I don't know what they got there. I'm going to look for that. This is an undervalued company. The future for HP is to deliver higher value to shareholders. There's no question in my mind about that. I mean, they're a company that's basically trading at 60 cents, 50 cents on the revenue dollar, right? And so there's a lot of upside there. Yeah, I want to see solidarity amongst the management team of HP. This is my KPI's for key performance in the case of HP. Meg Whitman staying on course and not being agitated by the haters. And certainly there's a lot of people who want to see or come down a competition and some, as we see analysts, stay the course. Get the management team solid, unified, unified, what's our phrase Dave? Unify, integrate and grow. That is HP's core philosophy right now. If I see them doing that, I'm bullish on HP. They have the tech, they got HP labs. They have assets. Play to the assets, put a team on the field. Let's see some execution performance. I'm not worried about the cloud piece. A lot of people are like cloud list, cloud that. Cloud is early game and HP's got tech they could bring to the market. I think that's a product market fit thing that they have to get right. Well they'll get their fair share of cloud is really the point there. But they are late, John. You got to admit they're late to cloud. Well no, we'll have Bobby Patzen. I've talked to every 20 in the cloud group. Here's the deal. HP doesn't want to compete head to head with Amazon but they want to compete head to head with Amazon. That's the problem. That is the problem. That's the problem. However, you start looking at segmentation. How does HP stop Amazon? You could Amazon say they're a $10 billion business unit. That's about a $2 to $3 billion storage business. Hello, HP, I mean, so everyone's recognizing Amazon. So HP has to decide, do they say we're not Amazon or they recognize the fact that Amazon's going to roll into their territory? Well the new style of IT is services. It's infrastructure is a service. But HP has to have a competitive strategy and I think that's why the cloud group is kind of circulating. They haven't found their formula yet and I think they will. Well, I think they will too, as I said. I think HP will get its fair share of cloud but it's late to the game but the game is still early. Okay, Dave, we got a wrap here. What do you look for here at HP? Discover a quick sound by what's your early indications from the vibe here and we'll do a wrap obviously every day. I think three things. One is Meg is going to talk about the new organization. She's got to get that out of the way and she's got to convince customers here that all is good and this is a good thing. Two is this sort of new messaging around solutions, around business outcomes, around those four pillars. And then three is it's still a product company. They got to tout some cool products and those are the three things I'm looking for. I'm looking for innovation. I'm looking for the channel partner leverage. I'm looking for those under the covers, under the hood details to the four pillars. They're four pillars, good messaging. I want to look under the hood. I want to see what the engine of innovation looks like and then see the team that will execute it. And we'll be doing that all week here live on theCUBE in Las Vegas again. HP Discover 2015. Three days of wall-to-wall coverage. Tuesday, Wednesday, Thursday. Stay with us at theCUBE. Then all interviews coming in today. Stay, we'll be right back after this short break.