 Flagship program, we go out to the advanced extract of Sydney from the noise. I'm John Furrier, the founder of SiliconANGLE. I'm John Michael, the co-founder of wikibon.org. Our next guest is the esteemed Jim Gontier, global vice president of HP, marketing for HP servers, and all things servers and networking and storage and convergence. You have your fingers and all that, but mainly the servers. Cube alumni, we're a big fan of your work. You've been on the Cube. I don't know how many times you've been on the Cube. I've lost count. Welcome back. Good to see you. Nice to see you, Jim. By the way, isn't this like our spot for the inaugural event? Yes, this is our inaugural Cube event. Our first ever Cube HP Discover was here in Barcelona. Jim, you were on. We're all the top guys. Our first European Cube. First European Cube. We had a little power problem. Remember, Dave, oh, we didn't bring the right adapters. But we'll fix that now. SD cards that I left at the restaurant. We had to go back and get. You remember that? TMI, TMI. We're about continuous improvement. And that's what it's all about. The Cube now is full operation. You were there when, Jim? I was there when the Cube was born in EMEA. Now the Cube is big thanks to all the support and the content. But it's about the tech athletes like yourself. And again, to us, we love talking to you because you're a tech athlete. You're working hard every day. You're working hard. You're making things happen. And you have know all the facts and all the numbers. So let's get right into it. So give us a quick update on what's going on in your world. Servers, you guys are big business. We had Antonio Nereon, the new CEO and president run on the organization. What's new? Give us some of the latest facts, figures, inside the numbers, market share, data. Give us what's new. Sure. So a couple of things are going on with us. Needless to say that when it comes to HP servers, we're still basically taking the tactic of our mission in life is real simple. We're going to go deliver the right compute for the right workload at the right economics every single time. So when our engineers and marketeers wake up every day, they're focused on our customers' biggest problems. And as you probably heard Meg talk about, there's this massive new change going on in the industry driven by the four mega trends. Pick your favorite, social, mobile, cloud, big data. So what ends up happening is if you look at the exponential growth that's going to occur in order to keep up with that, fundamentally things have to change. Present course and speed no longer sustainable. So as a result of that, the folks have come up with a huge list of innovations. When I say innovations, not just the next spin of the server, but things that are really changing the density, the cost, the energy, the admin efficiency in fundamentally unique differentiated and sustainable ways. As you can probably tell by all the energy here, and you guys are probably what 50 or 60 feet away from the petting zoom, probably a 75 feet away from the pod, we're full. I mean, it has literally been like cheek to cheek, elbow to elbow. The customers are interested. They're highly interested and the reason why they're interested is because we're helping them solve some of their biggest issues. I mean, one of the things that's really nice about mine and Antonio's job is we probably get to talk to 100, 200 CIOs a year. And the good news is we keep hearing the same things. I'm being told I have to do more with less. My budgets are going down. My SLAs are getting harder. Oh, and by the way, I've got all of these new things that are starting to pop up. I've got big data. I've got BYOD. Let me read to you the trending items from our social media command center at a silken angle. Number one, HP Discover, these are hashtags. Now these are actual conversation groups. HP Discover, HP, no problem. Here we go. Personalization, marketing, HP Moonshot, big data cloud security, HP Convergence, the cube app transformation. So let's take a few of those out. Personalization, HP Moonshot, really the top product trending. So Meg mentioned in her keynote. She's a big fan of Moonshot. Why is everyone up in arms about Moonshot? What's the big deal? Up in arms? No, in love, yeah, in love with. For a couple of reasons. One is that when you look at what we've been able to do with Moonshot, right? Everybody normally does the next turn of the server. Yeah, every 14 to 18 months, we'll add more memory, more IO, and we'll have the next silver box. What the team decided to do, because as I mentioned before, present course and speed is unsustainable, we took a step back and said that if we were going to, instead of say, here's a general purpose server that we put something on, what if we were to define, and it's one of Bill Vecti's top priorities, a software-defined server. Don't start with here's the hardware, let's go add software on top. Go understand the software, go understand the workload, and then design the perfect amount of compute, spindles, IO, mem, and everything else for it. And when you do that, you get a dramatically different set of business results. So when you look at Moonshot, right? 89% less energy. When you look at the density levels, it's great because one rack of Moonshot is equal to eight to nine racks of standard servers. Now, just think about that for a second. How much less footprint? How much less energy? How much less admin time? How much less updates? All of that are reasons why folks are loving Moonshot and why the Moonshot guru bar, or as we call it, the launch pad, has got folks all over the place. So I got to ask the question that everyone talks about not directly, but indirectly through some of the trends. What's the difference between a server? Hell, I'm just going to buy open compute, I'm going to buy off the shelf because what I want to do is I want to scale out on commodity hardware. And now we've used the term industry standard hardware. And you guys have been specific. No, no, it's industry standard, not commodity. Kind of nuanced thing, the difference between commodity being like really low end parts, industry standard being made by HP. Okay, I get that. So talk about the differentiation of HP, okay? Because you supply chain solid, manufacturing solid. I'm the customer. Hey, I've been buying servers. Do I really need to go with HP? I've got all this other stuff. I can buy all this stuff. Everyone's building their own. So you know what? I'm just going to look for the cheaper alternative price and open compute. So great question, John. But here's the only problem with the folks who go down that path. Commodity servers give you commodity results. So when you asked about what's the nuance between what we do and what others do, for me it's really simple. We like to innovate on top of industry standards. And that gives us two or three things that separate HP from the pack. The first one is we have the world's largest supply chain. So we buy, I won't give you the number, but let's just say double digit billion dollars worth of components. It's north of 50 billion, I've said in theCUBE. Okay, fair enough. So you said it, I didn't. I didn't want to give away something from our supply chain. But the net is that we've got that economy's a scale, but we don't just stop there. What we do is we actually take that size, scale, and speed, and we innovate on top of it on behalf of our customers. We innovate with things such as see-of sensors. Okay, great, nice technology, but what that really translates into from a business result is that we're helping our customers reduce the biggest capex and op-ex issue problem they have in the data center. Power and cooling, which is why we've got the pod. We innovate on top of that when it comes to things such as our integrated lights out. Admins spend way too much time doing maintenance and upgrades as opposed to spending their time on innovation and helping to drive better business results. So what we like to do, back to your nuance question is- I'll just write that using open source software. Okay, great. When you do that, you'll have the same thing as everybody else. Folks are not looking for everybody else to answer this answer. They're looking for things that will give him that much more incremental improvement because you bought up the, and I'll use the words hyperscale or service provider class customer. For that particular class of customer, inches matter, watts matter, small details matter because when you're at that size of scale, the smallest number that you can save turns into multi-million dollars worth of savings. So, to answer your point, yes, we are formerly known as the Industry Standard Server Group, but whether you ask myself or even the folks at Intel, we innovate on top. I wanted to get that out there because you're very articulate about some of these very specific questions and that is kind of the broad, not specific conflict, no one's saying that about HP, but I can see the vibe and scale out open source is a big trend. Okay, so the next question I got to ask, you're qualified to answer, is moonshot, oh my God, why would they build that? That's a different, it's going to cannibalize their server business and that's going to reduce their margins and it's go, oh my God, it's going to kill, so don't ship the product. So where are you going to capture the margin? Software, I mean, so explain to folks, isn't that a dangerous product? No, and the reason why it's not dangerous is, again, we take the tactic of, look, you know, frankly, we invented the x86 server market back in 1989. We were the first ones to do rack based servers. It is the role of an industry leader to advance to the next level. So instead of us being afraid of moonshot, we're actually embracing it. Now, when I talk about embracing it, it's not just us. If you look at what we refer to internally as HP on HP and there's actually a booth over here, HP.com is running right now on a couple of moonshot platforms. You're not afraid, you're not afraid. You're bringing it on. Absolutely not. No, it is our job as the leaders to help point to where the industry is going and help do that transformation. So square this circle. So you've got this huge portfolio, right? Yep. Now, when you have that huge portfolio, you're going to have overlap. Now you'd rather have overlap than gaps, but you're still going to manage the overlap. You've got to figure out the segmentation. You've got to price it right. So I wonder if you could talk a little bit about that and how, as market forces change, as you mentioned, cloud, mobile, social, big data, as those things change and affect new dynamics in the marketplace, how do you rationalize some of that segmentation and some of that overlaps? It's got to be a complex problem. It is a quasi-complex problem, but the good news is that we've got a very clear point of view on how we're going to go address that. So as you well know, we have multiple product families. We have rack, we have tower, we have blades, we have density optimized, and we've got moonshot, which is taking off really well. And then on top of that is we have multiple market segments. So what we do for the SMB customer, AKA the microserver, is something that is built particularly for that class of market, that class of workload, because frankly, doctor, lawyer, dentist, real estate agents, they're going to be interested in things such as customer management and payroll. For the next class, which is enterprise, where we're starting to see workloads such as virtualization, such as big data, and then even IT modernization, which cuts across, we have multiple products that allows to do that. And then for service provider, that's where we have what I'll refer to as particular classes of product like our SL2500, our SL6500, something you guys helped us which, which was the SL4500 series, lovingly known as Argos, when we first announced it, and that's another product that is rapidly taking off because we look at product class, we look at type of customer, we look at market segment, and then we design particular product based on those workloads and those particular segments. Now, I want to ask you another question on storage. So one of the sub-level disruptions in the marketplace is flash. For 15 years, we saw storage function move out of the server, and of course took revenue with it to the external, saying it was for good reason, right? You had to share, you had to protect it, back it up, everything else. It seems to be moving back now. You got this persistent device, this persistent medium called flash, now coming back into the server. What kind of opportunities does that create, both in the standpoint of customers, supporting customers, new applications, et cetera, and how does it affect your market opportunity? So you brought up a really good point, and a lot of this is back to the whole convergence piece, because you're right, at one point, everything had basically split off, and now we're starting to bring them back. It actually gives us opportunity in two spots. The first one is that with flash, customers can get dramatic improvements in performance for a certain amount of, I guess we'll call it, incremental price. And again, back to your great segmentation question, if I'm a financial services customer, millisecond sequel millions, they're willing to pay for that kind in class. If I'm a particular type of pub sec customer, I'm willing to do that. So what flash allows us to do is that by actually having the memory closer to the processor, closer to the actual IO complex, the bottom line is you get to do things much faster, higher levels of performance, and when performance matters, that allows us to basically deliver. But the other fun part is, and if you take a look over at the storage area, is you're now starting to see not just the flash move back into servers, but the servers move into flash slash storage. One of the things that's really nice is that if you take a look over in the storage area, you'll actually see a combination of ProLiance that now have VSA, or basically the virtual SAN appliance. What that allows our team, which would be the server team and our HP storage team to do, is that now only we can uniquely offer a 50% reduction in cost. We can actually help them get maybe a 70 to 80% reduction in terms of from a TCO perspective, because we're now putting virtualized storage appliances built into every ProLiant that we're going to be shipping. So the bottom line is you see flash coming back to us, and you see us actually moving over to storage. So that's another case to me anyway, Jim, of let the market decide. If the market wants to go that way, fine. If the market wants its storage inside servers, we got that covered too. So let's look forward a little bit. It seems to me that you hear a lot of us talk about memrister, extensions of memory with non-volatile RAM. You could, there are those talking about maybe flash. You guys are obviously saying memrister is the way to go. But nonetheless, you've got this again, this persistent resource that creates this larger pool of main memory changes the way that which application developers think. And it creates a challenge and an opportunity. Both being that now I want to connect across servers. Okay, so I used to go out to the sand to do that. Of course, it's spinning disk, it's slow. If I can do that over some high speed interconnect. So what do you see as that opportunity? I mean, it seems to be a software problem, a globally distributed, you know, non-volatile memory sharing pool. Really exciting concept. Who's working on it? I know you guys are working on it. I'm sure you're the best people. How do you see that changing? And what's the opportunity? And we're talking, you know, five years, 10 years out. Interesting stuff going on the lab. No, no, no, no, great part. When I say we're working on it, we're working on it in conjunction with our HP Storage Division team. We're also working on it with our networking team. So let me answer that and I'll call it three striations. I'll give you a short term, I'll give you a medium term, and then I'll give you what we believe is the ultimate endpoint. So short term, I mean, a simple scenario is something that we talked about here at the show. It's called Project Kraken. You and I both know that if I've got a large database, and by the way, this is an example of the HP partnership ecosystem, us helping to accelerate the industry. But if I've got a partnership with SAP, they were clearly on stage talking about how by taking memory and large pools of it, now instead of having to have a request made for the data, the data extracted, the data manipulated, the data put back, and then you can actually read reports. By putting that all in memory, dramatically faster time, dramatically less cost, and it also frees up or makes the admin's lives a little bit, or I should say a lot bit, I guess we'll call it easier. That's an example of short term, medium term. And it reduces some of your database licenses. I wasn't going to touch that one, but I'm going to stay away from that crypto night. From a medium term perspective, what we can also do, and you started to see us go down this path, is we already have flash. We've already got things such as faster IO. One perfect example of that is, you can now have a scenario where you've got solutions, and within those solutions, if I've got the server and the storage construct, and I've got them tied to virtual connect, now instead of having about an extra $150,000 to $180,000 worth of stuff, I basically have four wires. So that's another HP unique advantage, and then ultimately you gave the vision that Martin Fink's been painting, and maybe it's about three to four years from now. When I've got non-volatile memory, when I'm using light instead of copper to do the transmission, when I've got a management construct, like one view that's looking at my server, my storage, my networking, and my services, and I can dynamically manage all of those, the life of a CIO or every member of their staff becomes a really good place to be. Well, the apps change too, right? I mean, the applications now go so much faster and can deal with an order of magnitude more data. Correct, which, by the way, benefits them because that now becomes a unique business advantage that they can turn around to help in their business results, be it revenue, gross margin, or OPEX. Jim, I got to talk about the numbers. Sure. You know I love talking about market share. So let's talk about performance. How are you guys doing on the business side? How's the business performance? You know, I always, Dave knows this market share stuff. He used to work at IDC. I don't get the segmentation. So are you guys number one? Which market? Is it global? Is it U.S.? Native America? I mean, there's always different versions. It seems like IDC seems to make slides for every single. Everyone seems to be number one at something. If you narrow the market small enough, you can always be number one at something. Jack Welch, can you keep Jack Welch? Get that. The queue is number one at live event broadcasting. There's no competition. Okay, seriously though, what is the status of the market share? I'm happy to share that. I'm happy to share that. So as you probably well know, not that I want to talk about all the methodologies. IDC just came out with their numbers on December 4th. The answer is very simple. We're number one globally. We're number one globally in terms of all of x86. This is server shipments. This is server shipments through 3Q calendar, 3Q of this year. Now, the reason why you see the big smile on my face is because somebody else said they were going to be number one and we've taken a lot of, I guess we'll call it pleasure in making sure that we deny them that every single quarter. But kidding aside, a couple of things made us really happy. Obviously we've kept our number one for the last 70 some odd quarters position. But what was really good- That's worldwide number. That is a worldwide number. You haven't shifted to like a North America or you've been worldwide. We do have that, but again if I'm- But the 77 number of consecutive quarters. 70, yes. 70, who's number one in Nebraska? No, no, it is a global number x86 shipments period. 70 consecutive quarters. You're saying 70 consecutive quarters of worldwide global number one market. As long as IDC has had a tracker in place, we have led the industry. And by the way, I'm not saying that as a bragging scenario. I'm saying- No, it's clarification. It's an indicator of what customers value and who they're rewarding. Now, I'll double click one step down. You asked about form factors, right? In blades we continue to be number one and we have more share than the next three combined. And I won't cite who their names are, but you can guess. But what really put a smile on our face is the fact that we got number one in the density optimized area and we took that away from the other Texas server team. Okay, so we know who that is. So I want to follow up on that. So the other thing, I don't know if it's in this report, but I know IDC just released its report on ODMs. It started to track ODMs. They started to track. And it was a relatively large number. I mean, I want to say 15% maybe. No, actually it's about 11. Okay, maybe revenue-wise is lower, right? Maybe I'm thinking units. You might be thinking units, but then again, that impacts AUPs. Right, absolutely. So just when you thought, okay, consolidation, we figured out how to compete in this consolidated world. Now you got this ODM piece. A lot of people thought that they were just going to go away. They don't seem to be going away. No, no, no. So what do you see is the impact of ODMs and how is HP addressing that market segment? So we take all competition seriously, but the impact of the ODMs has been that there's a small group of them. And by the way, when we say ODMs, it's not a group. It's seven or eight. So when you make the comparison, it's us versus seven or eight others. But having said that, there are some ODMs that have decided that they would like to sell direct and they normally sell to direct, large hyperscale companies. And they do that with a particular type and particular build. There are others who basically go down the open compute path. The beauty is we do that also. So the net is if you like an open compute path or an open compute partnership type system, we have that. We'll make that available to you. But the difference though is that when you do do that, back to your very salient point, you get the same thing that everybody else has got. We don't believe that giving you what everybody else has got. We want to help you with the biggest issues that you've got. And that's where the HP innovation, the HP intellectual property, pulls us away from the pack. So some of your customers, let's take an example, large financial services, like the biggest, biggest, biggest financial services organizations have started to talk a little bit to us about, we're thinking about maybe going direct to the ODMs. When you have that, Jim, we're thinking about doing that. Why shouldn't we do that? First couple of reasons. The first of all is if you do go down that path, what you'll get are standard answers. If I happen to be a high-frequency trading company, that is not the answer I'm going to be looking for. If I, well, no, because again, yeah. So that's one example. I was surprised by that conversation. If you want to say you want to do something as simple as your front-end website, yeah, sure, you can go get the off-the-shelf ODM things that you get from anybody in Taipei, or you can get Moonshot, and dramatically lower your costs, your density, or improve your densities, and get rid of a lot of the complexity in the system. Or then last but not least, just to stay on the financial services one, if I want to have a whole bunch of traders with remote or hosted desktops, I could go and get everybody, individual ones, tied to servers, and get the typical virtualized desktop, or I could get the new Converged System 100, which we just announced with that team, and not only can I give you 6x the frame rate, but I can do it at a 44% lower TCO. So yes, if they want to go down that path, commodity product will give you a commodity answer. Let's talk TCO for a minute, you mentioned that. I'm just going to quickly get this in for the segment ends. Sure. At our CrowdChat, we had CrowdChat.net slash Gardner DC around Gardner Data Conference. The top vote getter, the crowd captain, was Dan Tertian from ServiceNow, on a comment and said, Cloud and consumerization fundamentally change ITSM, IT service management, IT's new role enabler of cloud compelling technology experience, no longer traffic cop, legacy tools are obsolete because role is obsolete. So, you guys are adding new technology and automation, service management, software, manageability has always been a big part of HP. What is the new role of service management in a bigger picture? As people look at the consumerization, service cataloging, the big trend in IT, what's going on with your group around that innovation? Is there anything new you can share? Yes, matter of fact, let's see, probably about a month ago, we came out with something called HP OneView. And if you look at HP OneView, HP OneView is basically simple, it's fast, and it's extremely efficient. We all know that the world is going to end up going to either a software defined data center, or absolutely a conversion infrastructure. But what you don't want, or both, yeah, as a matter of fact, I remember the arguments, let's see, with people last year, public, private, or hybrid? The answer is hybrid every single time, so yes, agree with you. So the bottom line is when you look at something like HP OneView, you should demand the capability of being able to dynamically move things back and forth within a resource pool. You should have the capability of having your teams collaborate, because ultimately, yes, he's right, a CIO has moved from a service provider to actually being a partner to the line of business owner. They're actually helping now drive business results, and they're being told like everybody else. To make this seamless, if I buy a server, I know it's a unique device in my data center, it's one of a big part of other servers. When I go to the cloud, it's just one of the bigger pool. Correct, so it has to be seamless. Do you guys provide that? Yeah, actually, we do. So we provide it in two sorts of fashions. One is, is you can buy that offering in cloud system, and you probably saw the celebratory report. We've now had thousands of, or we've crossed the thousands of customer mark on cloud system. Again, the reason for that is because of the seamless, easy integration between the server, the storage, the networking, and to some extent, even the services. Yeah, if I want to now move something over, I just basically tag it, I drag and drop, and then ultimately I can go. It's simple, it's easy, and it gives you a business result and differentiator. I want to get one more question in, because I just, you know, all the hard questions, all the knock-offs you knock down, and you give some great snippets as well. I love what I do. We get some good tweet, but we got, John, we got milliseconds equals millions, we got commodity surface yield, commodity results. I mean, it's weird. It's a tweet machine. So we're trying to get another one out of here. So, you said, we take all competitors seriously, and I believe that. One of the competitors that is a little different, a little different animal, of course, is Amazon, right? So you got a company that's going to do, what, three and a half to $4 billion this year in compute, storage, and networking, and a bunch of other stuff. It's a new animal, and it's taking away market share. It's growing, you know, at whatever, 50, 60% a year where the market's sort of bumping along at single digit growth, or maybe it's flat. So how do you compete against that? So this is one where the power of HP is how you compete against that, or as we call it, one HP. The server team in and of itself couldn't pull that off, but if you combine the collective firepower of the server team, the storage team, the networking team, and some great work coming out of Saar Galeel's shop, who is responsible for all of our cloud capabilities, we're the only team on the planet that can actually offer but converge clouds. So here's one of the downfalls. I'm sure that company in Seattle probably does really wonderful things, but the problem is that if you put your assets there, they're there. With us, along with a couple of other innovations we're putting in place, we have a converge cloud. If you want to have a hybrid cloud, you want to have some things back on your private side, or you want to put some things out there, we let you see all of those assets simultaneously. You can still kind of operate as a quasi resource pool, and the other beauty is that if you run out of capacity through certain partners, we can allow you to burst and actually get additional capabilities. So it's not a, I have infrastructure, I'm going to go try to monetize or amortize as much as I can. Ours is a real strategy that takes the collective power and the collective intellectual property of HP and helps CIOs deliver in a much better business results oriented manner. That's a great answer. You do have some rock stars. We had Saar Galei on yesterday in the queue. He's unbelievable. So you've heard the story. He's building. And you know John, for a while we talked about it. And early on it was like HP cloud, yeah they're committed to cloud, but what have they got? And you guys like Saar came in and really built that out. Saar turned it around, he's awesome. Let's just say that when he decides to go do something, stuff gets done. He's got a strong personality, that's what you're doing. Look, we got a break here. Jim, thanks so much for coming on the queue. Oh no, my pleasure. We really appreciate you. Your energy, it's like dynamic, it's very engaging. Getting great comments on Twitter already. Thanks so much. And again, thanks for all your support. You've been on so many times. You bring your A game every time. I got to say, you bring it, you help us, and you share knowledge with the audience. We really appreciate it. You guys do a great job. So I'll give you the final word. Put the bumper sticker on this show as the car is leaving Barcelona. What does it say? Let's see, bumper sticker on the car leaving Barcelona. HP is back with a vengeance and out to help customers in ways that none of our competitors can. That's awesome, that's an SUV actually, bumper sticker. Come from Texas, and I do drive a Suburban. That's beautiful. Okay, Jim Godfrey. What did our parents do without Suburban? That's what I want to know. Jim Godfrey live here inside the queue, global vice president of HP servers, great CUBE alum. I'm John Furrier with Dave Vellante. We'll be right back with more guests here. Day three of wall-to-wall coverage, exclusive coverage, HP Discover. This is the CUBE, we'll be right back. Thanks guys. Hey, thanks.