CRN Exclusive: HPE's Whitman On New Products, Dell EMC's 'Old Technology' Bet, Cisco's UCS-VCE Data Center Dilemma And Her Future Plans

Whitman On The Record

Hewlett Packard Enterprise CEO Meg Whitman, who has recast the company as a hybrid IT and intelligent edge technology leader, spoke with CRN about the new wave of innovation from HPE being showcased at HPE Discover 2017 in Las Vegas, how HPE's strategy compares with Dell EMC and Cisco, HPE's acquisition strategy and just how committed she is to continuing to run the company.

For Whitman – who has completely reimagined and reinvented HPE since its official split from HP's PC and printer business 17 months ago – the future belongs to the fleet of foot. "It is going to belong to the partners who are fast," she says. "It is going to belong to the distys who are fast and it is going to belong to the vendors who are fast."

The HPE of today is moving at a pace more akin to a Silicon Valley startup – even if it is still a $30 billion company – than a legacy infrastructure technology provider. It's a long way from the $127 billion Silicon Valley dinosaur with 325,000 employees and $12.5 billion in debt that Whitman took the helm of in September 2011.

Among the biggest HPE breakthroughs at Discover are new Gen10 servers with a silicon-based security solution that HPE says makes them the world's most secure industry standard servers, improvements to HPE's highly acclaimed Synergy composable infrastructure and new Aruba innovation.

What sort of innovation will be seen at HPE Discover and what's the pace of innovation?

It is definitely faster. Innovation in the enterprise is actually a bit of a long term play. A lot of the innovation that we reignited four years ago is actually now coming to the market.

I was a consumer gal (former CEO of eBay) as you know. The pace of consumer innovation is much faster. This takes some time. I remember when I first came to HP I said to the server team I want to be able to build servers that we can advertise with confidence that will withstand scrutiny that we offer the world's most secure server. And with Gen10 we are going to be able to do that. I think that is a bit of a game changer for what people think of as sort of a commodity offering. If you can legitimately say – which we can – that we offer the world's most secure server that is a differentiator that I think people will pay for because security, as you well know, is at the top of everyone's concerns.

What are some of the other innovating offerings that will be at Discover?

The next generation of the ArubaOS is very innovative. 3Par has another release with their new OS.

I am also excited about Pointnext. A lot of partners of course resell our services and there is a lot going on there. It is great for the partners to make sure that services are going to be more important – support services as well as their ability to help customers plot their own transformation journey. We are pretty excited about the innovation engine.

Pathfinder (HPE's venture arm making investments in leading technology companies) is another part of our innovation strategy.

What kind of sales pickup do you see with Synergy?

Synergy is taking off. It took longer than I would have liked. This is obviously a very good thing for partners. The easiest way to sell Synergy is as blades but only better. Partners should go back to their HPE installed base of blades and say: "It is your lucky day – we have the greatest new blade architecture that has a whole lot more than blades."

How much more disruptive is the product portfolio of today versus a year ago?

We have engineered quite an evolution in our product portfolio. We have a much higher mix of fast growing products versus products that are under some pressure because of the public cloud and things like that. It is a disruptive portfolio. It is an innovative portfolio. It is a portfolio that is targeting the areas of growth in the infrastructure business. The rap on the infrastructure business is that it is just all declining. It is actually not true. There are some parts of the business that are declining but other parts that are growing like crazy.

High performance compute is growing at 6 to 8 percent a year off a $12 billion base. That is actually real meaningful growth every year and that is going to accelerate because of the explosion of data. Our whole high performance compute offering – Apollo, SGI – -is in the sweet spot for public sector, for universities, for oil and natural gas, for manufacturing. Anyone that has to crunch lots of data we are perfectly positioned for.

What is the strategy of getting smaller to get bigger?

I think the thing that is most important to partners is what is happening in the market and I have never seen a market move this fast.

We concluded three-and-a-half to four years ago that we had to be much more nimble, much more agile, much more forward looking. We ultimately decided that we had to get smaller to go faster.

My very strong view is the future belongs to the fast. It is going to belong to the partners who are fast. It is going to belong to the distys who are fast and it is going to belong to the vendors who are fast.

So the genesis of the separation (of Hewlett Packard) is not that much more complicated than that. I will tell you it is much easier, simpler, faster to run the company today than it was when I came five-and-a-half years ago.

What is the difference between running the company today versus five-and-a-half years ago?

Accountability is clearer, the number of people who can say 'no' is fewer, the ability to innovate, to do the right capital allocation, to embrace the right R&D and to do the right acquisitions. When we were such a big company the printing guys wanted to buy something, the PC guys wanted to buy something, services wanted to buy something and we didn't have the capital.

Now all our capital goes to the three pillars of the strategy: make hybrid IT simple, we power the intelligent edge and we have the services to make it happen.

What is the future acquisition model going forward?

We have a very tight filter because you almost know immediately what acquisitions fit the strategy and what does not. So we don't waste a lot of time chasing companies that don't fit. So we will deploy capital against companies that strengthen our portfolio and that are good for partners to sell.

Partners are super excited about SimpliVity. They are excited about Synergy and we are going to do more acquisitions like the ones that have been successful for us: 3Com, 3Par, Aruba, SimpliVity, Nimble, Niara for Aruba, and Cloud Cruiser. So we'll do more. We have got a lot of dry powder and this is a good time to have I think some of the dry powder ready and available.

How much growth can HPE drive through the new acquisitions like SimpliVity and Nimble?

Almost by definition these acquisitions are in growth markets. So for example if you take hyper-converged that is a $5 billion market growing at 25 percent annually, high performance compute is an $11 billion to $12 billion market growing at 6 to 8 percent, all-flash is still growing very fast and the fastest growing segment of all-flash storage array is at the entry level price point and capabilities. That is where Nimble is focused – entry level to early mid tier.

Wireless networking is growing like mad. Aruba grew 44 percent year over year in Q1 in Europe and it is in the 30s in the United States. Can you imagine? So we are targeting with these acquisitions those markets that are growing which happen to be software defined and at the edge.

What partners should feel very confident about is we are acquiring assets in markets that are big and fast growing. So that we'll grow, but we only grow when they grow. So they ought to be able to sell SimpliVity into the hyper-converged market. They ought to be able to sell Nimble into the entry level all flash. Hyper-converged leads obviously to (Synergy) composable.

How fast is HPE moving with regard to acquisitions compared with the past?

We are moving much faster. We are not sacrificing due diligence or the vetting of these companies. Because we are smaller and more nimble we can do these things faster.

With [our] Pathfinder [venture investment group] we are making investments in companies like Chef, Docker and others. We now have a reputation in the Valley among the VC community of being the best partner for these enterprise companies. We can do these investments of $5 million to $10 million investments in weeks – not years.

We definitely have a reputation for "Wow, these guys know what they want, they get it, they do the due diligence and then add value to the company."

How does HPE compare to the eBays and the other companies you have run?

Every situation is different. I am a big believer in situational leadership. You have to work your leadership style to the situation in which you find yourself. This, as you know, has been a turnaround and turnaround are really hard.

What is really fun is we are seeing that acceleration out of the turnaround. We are accelerating around the corner. I can feel it. It is just smarter, easier, simpler. You can not underestimate the accountability. There is no where left to hide at this company. I see a perfect place. There is no where left for partners to hide. There is no place for HPE employees to hide. It just makes things far easier and frankly more fun because you can get stuff done faster.

What is the call to action for partners at Discover?

Lean into Hewlett Packard Enterprise because we have the best traditional data center products, the best software-defined data center products in the growth areas so they can grow. And then we have got a whole new growth area for them called the intelligent edge. Whether that is Aruba or IoT oferings. The data center is under pressure, but the campus and branch are not. So we have got the best opportunity for them to help them grow their data center business and then we have a whole new playing field for them to play on called campus and branch.

What is the the HPE strategy versus Dell EMC?

For many years Dell followed HPE's strategy. Now each of the companies are on quite a different strategy. We are getting smaller, and more focused and nimbler and faster. They are getting bigger. We are de-leveraging the company. We have $11 billion of net cash on the operating company. They have got about $50 billion of net debt on Dell Technologies. We are leaning in hard to new technologies to the growth areas where partners can make money and grow their business. They are doubling down on old technology in a cost takeout play. We are investing more in R&D and marketing and digital marketing to generate demand for partners. It is not clear to me they are doing that. It is an entirely different strategy.

Given the pace of change in this market I like being the PT boat that can maneuver and make the right acquisitions, do the right R&D. So it is a very, very different strategy. I like our hand and it feels like we are winning in the marketplace.

How does the Cisco strategy compare to the HPE strategy?

I thought for a while Cisco was going to broaden their footprint in the data center beyond networking. It is pretty clear that they are not doing that anymore. UCS really is losing a lot of share. We are crushing them with our new blade infrastructure. VCE I don't actually think is going anywhere. I think VCE is kind of dead. I was worried about UCS and VCE five years ago. So I think they are basically saying, 'We are going to stay in the data center only in networking.'

I think they have network security as a strategy but with this AppDynamics acquisition, it is not immediately clear to me what they are trying to do here. I think you see a transition of leadership. They are grappling with the same market challenges that we are but they are not headed in my view to the software-defined data center like we are. We see them in the campus and branch. We see them with Meraki all the time, but we win most of those battles. Interestingly they have been talking about IoT for a long time. Our IoT strategy is more real than theirs.

Do you see Cisco giving up on UCS?

That's what we see. We used to see UCS everywhere in the blade infrastructure. We would compete against them all the time. I haven't seen UCS show up in a while. I call all the deals where we have a close call. I never see that anymore. I think UCS is not going anywhere. And as I said VCE – converged infrastructure- with Cisco, VMware and EMC – I think that may have fallen by the wayside in the context of the Dell Technologies change.

How much bigger can HPE get now that you have the capital infrastructure to go after this market?

We should as a company return to growth but at a very minimum we are driving these pockets of growth; high performance compute, composable infrastructure, campus , branch and edge, IoT, blades, high performance compute. These are growth areas and we are driving them hard. At the same time, we want to make sure that we don't lose sight of the volume business and the core because that is still 70 percent of the market. There are still plenty of people that call partners and want to buy 500 servers, and we need to have the very best offering that we can there for them.

How important was the sales restructuring under Chief Sales Officer Peter Ryan?

It was pretty important. We needed to have a much more cohesive, consistent strategy across the globe because many partners are now operating in multiple countries. We wouldn't have different programs in Europe than we did in the United States. Peter Ryan is a 35-year veteran of this industry. He is a sales professional. I think he is going to take the sales force to places that we never dreamed it would go.

We are also trying to move the sales force more to hunting new accounts and hunting new business on behalf of partners.

Partners can catch, some partners can hunt, but we have to help hunt. I think we have been more farmers than hunters. Now we have to farm but we also have to hunt.

You talked about redoubling your efforts with partners. How is that going?

It is going well. We are proving ourselves. Partners are skeptics. When we pivoted hard back to the channel I think they wanted to believe, but we are now rounding the bend into the sixth year of this. So I think seeing is believing. We just continue to grow our partner network, invest in the partners, invest in the distys. So it feels pretty good.

Are you committed to staying the course and continuing to run HPE?

I am committed. I have to say this has been quite a journey. But now it is starting to get really fun. I am excited about it. I may be the only Fortune 500 CEO who likes to run something smaller than something bigger. Maybe that is because of my eBay experience. It is just more fun to run something that is fast and nimble as opposed to a super tanker.