HPE CEO ‘Very Skeptical’ About Dell Apex Numbers
‘When somebody shows up out of the blue and shows a number with nothing backing it up, it is a little bit hard to assess what it really is,’ said HPE CEO Antonio Neri.
Hewlett Packard Enterprise CEO Antonio Neri said he is “very skeptical” that Dell Technologies’ claim that its Apex as-a-service business has surpassed $1 billion in annual recurring revenue is a meaningful metric.
“When I look at some of the numbers being quoted, I would suggest you ask first of all the definition of it and the historical performance against that,” said Neri. “When somebody shows up out of the blue and shows a number with nothing backing it up, it is a little bit hard to assess what it really is. I will let you assess that. I am focused on what we are doing with our partners.”
Furthermore, Dell does not have the edge-to-cloud platform prowess or channel muscle to measure up to HPE GreenLake, Neri said.
“To be relevant in as a service is not easy because, in the end, you need a platform,” said Neri in an interview with CRN after HPE posted a quarterly annualized revenue run-rate (ARR) of $858 million for GreenLake, up 28 percent from the year ago quarter.
“You need a platform that has the capabilities, and that takes a long time to build. So I would be very skeptical of other people quoting numbers when they don’t have the capability to deliver with and through the channel and the experience that customers need.”
Neri’s challenge comes just one week after Dell Technologies broke out its Apex results for the first time and said the as-a-service business now has annual recurring revenue of over $1 billion.
Neri said he would like to see the precise definition Dell is using for the Apex as-a-service revenue that it is quoting in its latest quarterly financial results and the “historical performance” against that definition.
Dell declined to make an executive available for an interview. A spokesperson said Dell’s Apex recurring revenue represents recurring net revenue from Apex-branded subscription, as-a-Service, and usage-based offerings, noting that it excludes revenue from those offerings that is recognized up front as a result of sales-type leases.
HPE measures the strength of its GreenLake business using Annualized Revenue Run-Rate (ARR), a “financial metric used to assess the growth” of HPE’s consumption services offerings.
“ARR represents the annualized revenue of all net HPE GreenLake services revenue, related financial services revenue (which includes rental income from operating leases and interest income for capital leases), and software-as-a-service, software consumption revenue, and other as-a-Service offerings recognized during a quarter and multiplied by four,” the company said when it released its latest results.
HPE has been consistent in the way it measures GreenLake success, Neri said.
“When we came out with our as-a-service pivot, [HPE CFO] Tarek [Robbiati] and I planted a flag that this is how we are going to measure success with a clear formula of what ARR looks like, with all of the components that we normally show in our quarterly results,” said Neri. “You can see we have been consistent for 10 consecutive quarters reporting against that.”
HPE—which has been working with partners on as-a-service offerings in earnest for the last eight years—has moved its complete portfolio to an as-a-service GreenLake offering over the last three years. What’s more, HPE GreenLake total contract value has soared from $3.1 billion in 2019 to approximately $8 billion in 2022.
Dell—which first unveiled Apex in October 2020—said it grew Apex orders 78 percent year over year in the most recent quarter and added 200 new customers, including Federal Home Loan Bank and Montage Health, which are both using Apex private cloud.
Dell said it has seen a “lot of strength” in its Apex custom solutions, including Flex On Demand, which provides the ability to scale up infrastructure with buffer capacity. Dell says it has also seen momentum around its Apex data center utility offer to move all or part of a data center to a Dell managed pay-per-use model. Steven Burke
Neri, for his part, said the biggest difference between HPE GreenLake and Dell Apex is HPE’s robust partner ecosystem for its edge-to-cloud platform, which includes a growing number of ISVs and channel ecosystem partners.
“We have the most vibrant [as-a-service] partner ecosystem of any [company]—I would argue—not as a fulfillment engine, but as a value creator for our customers,” said Neri. “I think it starts by believing it, by being consistent and by having conviction with what you are going to do. I announced our pivot to as a service in 2019, but the reality is we were already doing as-a-service offerings before. That is something the partners should value in the sense that consistency matters, whether it is consistency in working with partners and true partners or consistency in believing in the strategy and sticking to it.”
An edited version of the conversation follows.