CRN Exclusive: HPE Enterprise Boss Antonio Neri On The 'Significant Threat' To Cisco From The Arista Deal, Taking Away $1B In Business From Dell And The Software-Defined Future

Neri On The Record at HPE GPC

Antonio Neri, the hard-charging executive vice president of Hewlett Packard Enterprise’s Enterprise Group, spoke with CRN about the company's blockbuster pact to disrupt rival Cisco with an Arista Networks software-defined infrastructure strategic partnership and sales pact.

Neri also discussed sales gains HPE is seeing as a result of turmoil from Dell's acquisition of EMC, and HPE's all out drive to beat any and all comers in the software-defined infrastructure battle.

Neri spoke with CRN at HPE's Global Partner Conference after announcing the Arista partnership before a crowd of 1,300 partners at the Boston Convention Center. The deal puts HPE's technology, marketing and partner muscle behind Arista's highly respected software-defined network switching products and software.

Under the terms of the pact, Arista Networks will be HPE's "preferred networking partner" in data center networking as an infrastructure foundation for HPE's software-defined infrastructure offerings.

HPE, which already had a converged architecture agreement with Arista, is offering partners and customers the ability to buy the Arista network switching products directly from HPE starting Nov. 7.

How big a threat is HPE's Arista partnership to Cisco?

It's a huge threat. This will put significant pressure on Cisco. We already see what Arista is doing today. You can see the numbers for yourself. They have gained share for multiple quarters in a row. Now together we are going to accelerate the taking of share in the cloud. Customers need compute and storage with the right fabric.

For us it is an opportunity to grow in areas we have already invested in together with them for many years. This is definitely a significant threat for Cisco.

But ultimately, listen, we are doing this for customers. We are doing this for customers because customers are demanding it.

For partners this is about giving them access to the innovation they are looking for. We have been and will continue to be a partner-centric company. This is true innovation between Arista and HPE that nobody else can really go match in the market.

I am truly excited about it. I am excited for customers. I am excited for our partners. And I am excited for HPE and Arista. This is technology available today. We just need to go and execute together.

How much of a competitive advantage in cost and software-defined capabilities do customers get from HPE-Arista?

The efficiency of the Arista infrastructure is in the software-defined layer. It is a truly programmable fabric. What it means is you can manage that infrastructure simply through the APIs (Application Programming Interfaces) down to the fabric.

That is a massive cost savings. Today to change a network it takes days, weeks, months. Nobody wants to touch the topology. Now through the software-defined user interface you can define your cloud for specific workloads for different characteristics – some applications need more bandwidth, some need less bandwidth, some need more compute, some need more storage. Ultimately they can do that through the software-defined layer.

That is a tremendous cost savings, but more importantly it increases speed and agility. In this world you need to deploy applications services in minutes. There is an agility component. There is a massive cost takeout. And there is a modern aspect to the architecture for years to come. Cisco is taking the same approach [it always has].

How much is the cost-savings for customers with HPE-Arista versus Cisco?

We are seeing north of 50 percent cost-savings in some examples. This is big in financial services deployments which are accelerating toward agility and cloud deployments. We see this as big in telco. We see it also expanding into traditional enterprise workloads.

The opportunity here is for private cloud implementations where customers want a solution, not just another rack or core aggregation switch but the whole solution.

Working with our partners together– which is the theme of the event here – we can actually accelerate the adoption of this new technology which ultimately means better engagement with our customers. In the end it is more money for partners and faster growth.

Will HPE help Arista in its legal battle with Cisco?

I can't comment on the legal side.

How important could this deal be to the future of HPE?

It is a game-changer for both companies but most importantly for customers and partners. Because ultimately customers need help moving from where they are today and where they need to be with the right hybrid IT strategy. Services and the right software-defined infrastructure are key ingredients to deliver that promise. This is a true game-changer like it was a game-changer for us to acquire Aruba to take advantage of the edge opportunity. We are doubling down on that. We know a key ingredient in that data center for hybrid IT is the software-defined fabric, software-defined networking. This is a true game-changer because we have software-defined compute and software-defined storage, Now we get software-defined networking integrated together with them.

What is HPE's commitment to FlexFabric?

For traditional customers that want to do things the way they have been done because the workloads are not tuned for hybrid IT, FlexFabric is absolutely a wonderful set of products. We will continue to sell it. We are totally committed. This is the icing on the cake to deliver the full promise of hybrid IT.

What is the return on investment for customers and partners selling HPE-Arista?

You can't implement cloud unless you have a software-defined fabric. You cannot implement cloud with the rigidity you have today in the networking space. It is all about speed and agility and cost, and this improves that speed, agility and cost by multiples. Ultimately what customers are looking at is to deploy applications in minutes. Think about it. To change the network, it takes weeks. Now you can do it in minutes. That is a big deal. And there is a multiple X improvement on cost reduction. For the partner there is massive ROI on profitability because the software aspect is obviously always more profitable than the hardware side.

How big of an impact could this have on HPE networking sales growth?

Without giving you a specific number, this is a massive growth opportunity. This is a double-digit growth opportunity we are going to see over time. Ultimately we were not participating in certain segments because our portfolio did not allow us to go into those segments. Now we have an opportunity to go after it.

How much of a lead does this give you in the software-defined market?

It gives us a huge lead. It's a huge advantage. Arista has been working for nine-plus years on this solution. We could spend our own money doing these things. We have a great data center portfolio with FlexFabric but we needed software-defined. What we realized is we wanted to do it through a big partnership with the best of the best. We believe Arista is the best of the best. Arista has a huge advantage. You can see that in growth and market share.

HPE and Arista are the only two vendors gaining share in the market. Obviously at the edge with HPE-Aruba we are doing fantastic. Last quarter we grew 20 percent which is phenomenal. Now we have an awesome, awesome advantage with the best compute and storage you can buy in the market. This is a huge advantage for us and our partners because ultimately this is about partners making money.

What sales, development and channel muscle are you bringing to bear here to push the Arista solution into the market?

Partners will be able to start ordering the Arista products on Nov. 7. Partners can start building the pipeline today.

Obviously we bring our incredible engineering capabilities beyond networking. We are giving the customer the ability to monetize on top of this platform. Because there is a set of APIs, customers will be able to add their own services because this is a programmable infrastructure. For customers that are little bit more sophisticated and want to add their own services they will be able to access this infrastructure through the API and the stack.

What is HPE's channel reach with the HPE-Arista offering?

We are in 170 countries with massive channel reach, and ultimately our account management in large enterprises to midmarket and SMB which is also important. In the end, this is a massive, massive opportunity for our partners. They can buy one solution from HPE and Arista is part of it. They don't need to think about bringing it together and sticking it together. This is a big deal from that perspective.

If I am a channel partner, I would be all over this because I want to be known as a leader in cloud and hybrid IT infrastructure. Now HPE is giving me everything I need, top to bottom.

What kind of opportunity does the Arista partnership open up to HPE and its partners?

I think the opportunity in the cloud space having a portfolio truly software-defined in the data center space is a must. You can't implement cloud if you don’t have a software-defined fabric. Arista together with HPE brings that solution to market better than anybody else.

What is the opportunity for partners? It is to really capture the cloud opportunity by selling the joint solution of HPE and Arista, delivering that cloud with the cost and agility that customers are looking for. That is the opportunity. For partners, now they can procure it through the same HPE Partner Program, the same benefits, the same supply chain so they have consistency in that experience.

By the way, we are integrating their solutions with our solutions, which means seamlessly working up and down the stack in the infrastructure space.

What segment of the market is the HPE-Arista product targeted at?

This is targeted at the software-defined cloud market. We knew we had a gap there, and this is the best partnership we could drive. For the partners, ultimately we are giving them the innovation they want.

What are some of the core beliefs, including hybrid IT, that are driving the Enterprise Group strategy and the Arista partnership?

The new style of IT is hybrid IT. Everything will be software-defined. Arista is already the fabric that is software-defined. We have software-defined infrastructure with compute and storage and we have a software-defined stack that enables customers to implement cloud on premise with a multi-IaaS (infrastructure as a service) and multiPaaS (Platform as a Service) capability.

Arista, now together, with HPE can now accelerate the software-defined adoption in the data center with the economics and speed and agility customers are looking for.

How important is it that partners get into the Arista game with HPE?

First of all, with the software-defined stack you have to lay the foundation to provide that cloud experience. And that cloud experience starts with service-orchestrated workloads down into the software-defined infrastructure. The opportunity with Arista, because it is going to be integrated into our software-defined stack, is to really get a one-stop shop to get everything you need from the infrastructure to the stack to the cloud orchestration. And that is integrated with one common experience. That is why HPE OneView is super important. What partners need to do is to continue to seed HPE OneView as the management layer for the hybrid IT infrastructure. Because Arista will soon be completely integrated, they will see the same experience: compute managed through HPE OneView, storage managed through HPE OneView. And Arista will be integrated to the same management console -- one single pane of glass and one set of analytics to be able to manage your cloud infrastructure.

What is the call to action for partners with the Arista deal?

Partners need to take advantage of this opportunity. And by the way, we are making it simple. You have a SKU in the HPE portfolio for Arista. You procure it through the same system. You get the same certification and training. You get the same compensation benefits and ultimately you get the same experience.

Over the next six weeks, we are going to do intensive training so partners can get ready for this. They need to start talking to customers today about the portfolio they are going to be bringing to market together with HPE. Start building pipeline, get certified to sell and support these products. The opportunity is massive. Truly massive. Today they didn't have a lot of choices. They only had one choice. Tomorrow we are giving them the best choice. This is the best choice for them.

What kinds of gains are you making recruiting Dell-EMC partners in the midst of the turmoil from the acquisition?

We learned a lot from other changes in the industry. Let me go back to IBM's sale of its server business to Lenovo [in 2014]. When we saw the merger between Dell and EMC, we saw the same opportunity. What is their commitment to long-term innovation? What is their commitment to work with partners? None of that was clear.

We went back and continued doing what we do well: focus, focus and working with our partners. We launched our campaign which [says], "We are here to work with our partners and deliver the best solution with our customers."

Since then we have seen more than 100 displacements from Dell-EMC – partners that have come to HPE leveraging the best partner program from HPE.

We have created a lot of demand generation [against Dell-EMC] from our marketing campaigns. We have created more than 300 million impressions which generated a number of leads which ultimately translated into a $1.5 billion pipeline. That ultimately translated into $1 billion in business.

What is the opportunity for HPE partners to go after the Dell-EMC accounts?

The opportunity for our partners is to jump on that now. The deal has closed but nothing is closed. This [Dell-EMC] journey is going to last years. Talk about cultural differences. Bringing two cultures together is very, very tough. We don't believe this deal is good for customers. We believe this is maybe a good deal for the financial side of the house, but not for customers and partners.

What confusion are you are seeing in the field from the Dell-EMC transaction?

What we are doing is sending a clear message to our customers and partners for what they should be for their IT environment. Ultimately customers will vote with their dollars. I think our partners understand we are committed to the channel, and we are committed to long term innovation and I think our focus will pay off for them in the years to come. Stability is king. Predictability is king. We can give them stability and predictability.