 Kirk Scalgan, who's also the VP and GM of different companies. Martin's with HP, and Kirk is with Intel, specifically the Intel data center group. So we're going to talk a little bit about VCS, what you guys are doing. You got some interesting developments going on. How you doing? Good to see you. Hi, Dave Vellante. Kirk, pleasure. Martin, good to see you. So welcome. HP Discover, big show. You guys excited? It's only day two, day one and a half. So we're still going strong, right? It's been a great show. It's a huge environment. It's great to see the energy. And everybody just going through and seeing all the technology that's out there across all of HP. So it's actually been just a tremendous show. Yeah, so give us an update, Martin. What's going on with VCS? We had a guest on earlier. We were talking about all kinds of things that are going on in the HP UX side. But what are you guys talking about these days? Well, so from a VCS perspective, what we like to talk about is the fact that last year we did a complete architectural re-innovation of the entire mission critical product line in what we call the mission critical converge infrastructure. And it was just incredibly well received by the marketplace. They love the new Superdome form factor. They love our new bladed form factor. And basically the response to that was we want more. And so what we announced here at the show is a number of new innovations to allow customers to scale their Superdome platform even further than they could before to 32 sockets or 128 cores. As I'm sure Kirk would love to tell you, as we get to the next generation itanium processors, we'll actually take that up to 256 cores. So just tremendous there. Customers actually, one of the things they love about HP, the integrity platform overall, is our virtualization technologies. Everything from electrically isolated heart partitions, virtual partitions, and HP virtual machines. And so they wanted more again. And they said, we want all of that technology across the product line. And so we delivered on that as well by extending our virtual partitions, merging that with our virtual machines and making that available across the product line. And so customers are just excited about that. So Kirk, you guys have an aligned face to the world. What's Intel's take on all this? Well, I think we're excited. Just last week we celebrated the 10th anniversary of itanium. So on May 29th. Congratulations. Yeah, so we're now. Still a baby. Yeah, I didn't have a kid either. But I guess in this industry 10 years is a long time. Yeah, but we've grown the product line now to a $4 billion a year hardware market, which makes it the second largest Unix shipping platform in the world over Spark now at $3 billion. So that was a huge milestone for us. Spark dead? You don't have to answer that. It's OK. Steve Mills answered that for you. He said, unequivocally dead, yeah. OK. Go ahead. No, but we're excited. $4 billion hardware market, 14,000 applications now on the architecture. So our commitment from Intel is basically every two years to double the performance of itanium. So we did it last year with something we called Tech Willa. We're showing here at the conference really the first working pulse and demonstration of an 8-core that'll double the performance again next year and soundtrack for a year. So double the performance every 24 months, which is about Moore's law? Yeah. On the Xeon side, we've done it every year. But in this mission critical space, customers take a lot longer to qual a stock exchange or an ATM infrastructure. So we've gone and at the customer's request, we've decided to do bigger jumps but do them every other year. Whereas on the Xeon line, we'll do it once a year. So that's the balancing act, Martin, that you have to manage in your business. You've got the functionality, which is the reason why people stick with the platform. And then you've got the pressure to maintain within reason the price performance curve. How do you manage that? It's a really tough balance. And I've actually had numerous, humorous conversations with customers where they'll start the conversation with, please don't change anything. My environment runs. And then they'll finish the sentence and can I have all the cool, new, latest things? And I tell them, do you realize what you just asked me? And they start to chuckle and say, yeah, I know. But you're right, that's the tough balance is we're dealing with a customer set here who on the one side needs to make sure they do manage that leading edge of technology. But they can't disrupt their environment at all. So downtime is measured in zeros. That's really where they want downtime to be. And so that's the tough act that we have to work with Intel and manage. And so we come up with the best we can trade-offs. Yeah, so you knew this. I used to run a bunch of businesses at IDC. And I was there, and nobody wanted the mainframe business. And I said, I'll take it. Because it was declining and downsizing. It was getting killed. But the reason that I was interested in it is because I figured those are all the smartest customers, the most demanding customers. And everything that they're doing today, they're going to want to do on open systems. Now, you guys at the time were quote unquote open systems. And now you've taken 10 years. And now you've sort of hardened those systems. They're very mainframe-like today, isn't it? Well, we like to believe that we deliver that mainframe class performance resiliency. But at a much, much more cost-effective price point. So from a total cost of ownership perspective, allow customers to move off of mainframes and get all of the benefits of the resiliency of a mainframe, but at a price point of open systems. Absolutely. So how do you deal, Martin, with the whole ISV thing? I mean, ISVs are all about optimizing their revenues. And they play games with licensing. Oh, we're going to do it by cores or whatever it is. Oh, virtual systems, great. We'll take advantage of that. And they're very good at that sort of increasing their, or at least maintaining their net contract value. And it puts a lot of pressure on you as the service supplier and the ways in which you license your operating system and so forth. Can you talk about that a little bit? What you're seeing in the market? How you're working with customers? And what you're advising them? In some ways, I actually view that as an industry challenge. Because you're right, we have some vendors who tend to license by a user. Microsoft, a good example of that. Others license by socket, others by core. And it is a real challenge for customers because they have to work with all of these different licensing models that the software vendors are providing. And so we have a number of tools on the software side, both with HP UX as well as our HP Software Portfolio, in order to help customers manage their licensing and their license obligations. Because part of the challenge that customers have beyond just the cost of it is compliance. And manage the compliance that they have in the rules and regulations, the regulatory bodies, and make sure that they remain in compliance. So there's no one easy cookie cutter answer because different ISVs have chosen to apply different business models and how they deliver their software. Others do it through subscriptions, through usage. And it's an area where vendors have chosen to innovate in their business models. And you don't really want to stop that innovation, but at the same time it is a real customer challenge to say, how do I leverage that innovation, maintain compliance, and understand what my licensing obligations and costs are. Yeah, so it's a tricky balancing act. So I wonder if we could switch gears a little bit, talk about the strategy and vision, Martin, from your perspective, and then Kirk, how Intel sees that and fits into lines with that. Sure. Bumper sticker it for us. How would you describe, in your words, the vision and strategy of your organization? So what we've done is we kind of have to raise the strategy up one level to across our enterprise storage servers networking. And so the top level vision and strategy is what we call the converged infrastructure. And basically bringing together server storage networking through to a common modular architecture. Then when you bring it down to the BCS level, we say, well, our job is to take that converged infrastructure and deliver not just a converged infrastructure, but what we call the mission critical converged infrastructure. So we essentially combine all of the servers, the storage, the networking, with the special secret sauce of firmware operating system and things like that in order to deliver a true mission critical environment. And itanium from Intel is a big part delivering on that vision. Yeah, for us, I think I can sum it up in one word and that's choice. At the end of the day, we think choice drives competition and when Intel entered delivering server chips back in the late 80s, the average price of a server was $58,000. Today it's less than $3,800. And what we're trying to do is deliver the most mission critical choice out there. So whether you're an HP UX, open VMS, a nonstop customer on itanium, HP is obviously our largest customer, but customers do have choice. They have bull, Hitachi, NEC, Insper, Huawei, and others that can choose itanium hardware from. And that gives customers confidence. On the Xeon side, if you're Windows or Linux, HP's scaling up the ProLiant line as well. And that just delivers choice and that's great for customers. So that was $58,000 you said in the 1980s. When did Intel enter the, like, a launcher? Well, we had 486DX2 with the original compact and then in Pentium Pro launched in 1995. So, we've really looked at, on the Xeon side, we're really excited about HP's converged infrastructure vision because the Xeon has turned from a server processor to a server storage and networking processor. So we'll now be in about 80% of the world's storage. A large part of 3PAR, for example, et cetera at HP. And now we're moving into switching and routing as well. So the fundamentals that drove Compact and HP over the last couple of decades to drive that cost out of servers, we see extending into storage and then into networking. You know, what amazes me today, which is why we're so excited about what we're doing on Etanium, is still 2% of the world's servers that are on power and Spark and on mainframe make up $15 billion IT spend. You know, so Intel and AMD have about 97% share of X86, but that remaining 2% is still $15 billion to spend. Our job is to basically deliver the best performance, best reliability, but at dramatically lower costs with companies like HP. Yeah, that's a pretty astounding metric. It's at $58,000 on a $3,500, I think, was the average price. What do you think would happen to oil companies if their price of their product dropped that much? We live in an amazing industry, gentlemen. It's good. So how about cloud? I mean, where does, you know, that's the big buzzword, right? You both get 1,000 points for not mentioning cloud in the first 15 minutes of the interview. But where does it fit? Does it fit? So basically, we have done the work to make sure that customers who have built their infrastructure on HP UX can leverage all of the capabilities of cloud system. So as part of converged infrastructure, having that common management paradigm and some of the demonstrations that were actually shown earlier through some of the keynotes is how HP UX and integrity is a full member of HP cloud system. And so if customers want to deploy a full cloud-based environment, but the database engine for that cloud element is running on HP UX, which is a very typical usage model, that's all integrated as part of our cloud system. So we see just tremendous opportunities there. And a lot of the scale and resiliency features that you normally associate with UNIX and HP UX fit extremely well with the cloud paradigm. Man, I wonder if you could talk about, doesn't really involve Intel, so I'm interested in the whole culture of what's going on in HP, particularly within ESSN. I got the sense that it used to be, I'm not even sure if it was ESSN before, but it used to be a very fragmented organization. Servers did its thing and you really didn't have a big networking business and storage was kind of doing its thing. It feels like it's really converged. I know it's a cliche, but it feels that way. From an insider's perspective, what's happening there? What's transformed in the last two years? What's it like working for Donatelli? Is he a crazy man? Is he, you know? So actually the fun part of this is I have to say, and I'll just give us a lot of credit, quite honestly, I'm just gonna pat ourselves collectively on the back because any internal fiefdoms that people might have perceived years ago, really none of them exist. Whether it's myself, Mark Potter, David Scott in Storage as an example, and Bethany now in Networking, we just completely work together and we work together in terms of how do we leverage each other's capabilities and technologies? And so as Kirk was mentioning, it's everything from how do I use servers in storage, how do I bring the storage into servers? In my case, it was all about how I completely reused our blade system technology to turn that into the mission critical converged infrastructure. And now we're building appliances and converged systems using all of the networking technology and with our virtual connect networking technology embedding that in all of the infrastructure. So from our perspective, there are really no walls. I mean, you have to segment the business in some way and you have to put leaders at the head of those, but I would be thrilled, absolutely thrilled if any of my peers had to go out and sell a Superdome, even though that's my product, I would be thrilled for any of them to go do that and I think the reverse would all be true. So it's a tremendous group of people and the partnership and collaboration is through the roof. So it's people, it's shared objectives, incentives and the like that have really changed. And then we at Intel have organized in a similar way. If you would have gone back two years ago, you would have dealt with three different divisions. The storage group that was in the embedded side is server group and then a networking group that was actually tied to our VPRO platform. We've tied all that together. So all the wired networking, storage and our computers in one organization. So we very much mimic the ESSN organization which helps the two companies innovate together. And the bottom line is I actually think it's a competitive advantage for us because at the end of the day, when you look at our product portfolio, whether it's mine or Mark's or they actually all fit together, they're all part of one common infrastructure. You go to my competitor like IBM, you want a mainframe, nothing in the mainframe looks anything like P-Series, looks anything like X-Series. Those, they don't mix, they don't match. You can't take pieces of one and put them into the other. In our case, an administrator who manages a two socket DL380 can actually use all of the same tools and capabilities to manage a super dome and a non-stop. It really gives us a competitive advantage. That common modular architecture that you guys have been pounding for a while, you're starting to now see the fruits of that labor. So Martin Fink and Kirk Scalgan of HP and Intel respectively, talking about BCS, the Itanium Roadmap, the Vision, Intel and HP's relationship, the 10 year anniversary of Itanium. Good luck with it. You fight a great fight in the marketplace and it's wonderful to watch. Thanks for coming inside theCUBE and sharing all your knowledge with us. Thank you so much. Thank you so much. All right.