CRN Exclusive: HP's Veghte On HP Helion, Cisco Intercloud, Amazon And HP's Networking Gains

Veghte On HP Helion, Cisco Intercloud, Amazon And HP's Networking Gains

Hewlett-Packard Executive Vice President and General Manager Enterprise Group Bill Veghte, who has driven an infrastructure innovation renaissance at HP and is leading the charge on the hybrid cloud sales effort, spoke with CRN at HP Discover about the new Helion Network, how it stacks up against Amazon and Cisco Intercloud, and why HP Networking is gaining share. Here are excerpts from the conversation.

Talk about the Helion Network strategy.

It is a very different approach. It is not HP-owned. It is member governed. It is very much about an interoperable, open approach as opposed to 'you buy my gear and therefore you are part of the club.' It lets the service providers play to what they are truly great at. And it contrasts with some of the other public cloud models where you pay a huge premium for the bandwidth.

What's the Helion advantage for cloud service providers?

If you are AT&T Business Solutions and you are building out your NetBond [virtual private network cloud] offering, this is just such a natural complement to deliver a better capability to customers. The same thing is true with Hong Kong Telecom. For the broad channel, it means you can build off the rich ecosystem and you don't have to go try to 'DIY' it.

Compare HP's hybrid cloud strategy to the competitive offerings.

There are too many hard choices that you have to make with the others. Public cloud has a critical and important role, but it is only part of where customers are going to want self-service and multitenancy.

If you show up to a medium-size business and the only thing you have got is public cloud, that is useful but it is only useful for a portion of what customers need the cloud to do. But if you are taking the HP Helion path and strategy, you have the ability to deliver to that customer the full continuum.

What are the cloud economics for Helion vs. Cisco Intercloud?

It is just so different. Cisco Interercloud is 'buy our gear and therefore you get Intercloud' as opposed to thinking about the full continuum, hybrid, thinking about it an open way, thinking about it in an interoperable way. We give customers that flexibility and choice.

What are the Helion interoperability benefits for partners?

As a value-added reseller, because you bet on the Helion approach you get interoperability. For the partner, it means that if you are already reselling AT&T Business Solutions or they are a partner of yours, you can activate and plug in on that without having to set up a different practice.

How does the HP approach stack up against Amazon Web Services?

For the partner economics, it is you get to offer a complete solution to the customer. Cloud is hybrid and you need a strategy and approach that enables you to deliver across the full continuum. Partners can get a couple of points reselling Amazon, the same way you get a couple of points reselling on Amazon.com, but that does not a long-term profitable business make.

The reality is cloud is a way of delivering IT that is self-service, multitenancy, and outcome-based. Customers want that not just in a public cloud context, they want it inside the firewall as well as on-premise.

Talk about the margin opportunities for HP partners vs. Amazon.

If you partner with HP you have the ability to help customers build out their private cloud -- there is the hardware, the software and then the services piece of that. Each one of those has an associated margin. And then you have the ability to either build or resell in a managed or public cloud context.

You don't have to establish a different set of relationships. And you are able to have the conversation with the customer about what they really need, which is a hybrid cloud as opposed to 15 different conversations or play in only one portion of what the customer needs and wants.

Talk about HP Networking gains Vs. Cisco.

When you see us last quarter growing at 6.5 percent and Cisco down 3.5 percent, the reason for that is because customers want something that fundamentally offers great simplicity and lower TCO [total cost of ownership]. What we have been able to do is demonstrate to customers that they can migrate from Cisco with relatively low risk and come out the other side and get something that is simpler and offers lower TCO.

Look at Levi Strauss & Co. [which did an HP Networking testimonial at Discover], one of the things that is telling is they are getting higher performance and less outages.

What are you seeing from customers with regard to networking concerns?

The conversations I have with customers nonstop is that they can't continue on the current trajectory whether it be complexity, cost or scaling. One of our hidden gems that doesn't get talked about is the IRF [Intelligent Resilient Framework] protocol that is in our networking gear, which is much better adapted to virtualized workloads than what Cisco has. In some of the most technical POCs [proofs of concept) that we compete on in the marketplace it enables greater efficiency of a virtualized workload and then through our work on SDN it is just easier to provision and apply workloads and update them.

What is the HP partner networking opportunity?

We have some great networking partners, but there is a lot more growth to be had. The customer conversation I have had is customers are no longer satisfied with the proprietary nature of Cisco. They are certainly not satisfied with the gross margins Cisco switches and routers represent, given a very compelling HP alternative in the marketplace.

That is partner opportunity because it is not like customers are sitting there saying 'I don't need a lot more bandwidth in the next five years.' It is very interesting to watch. Customers are further ahead in their thinking about alternatives than I think the channel is.

Is HP Networking an underpenetrated partner opportunity?

I was on the East Coast three weeks ago and every customer is asking about HP Networking. Those are some of Cisco's biggest and best customers. When you have them open to that level of thinking and experimentation, that is a partner opportunity.

They want a simpler, lower TCO model for networking. Sometimes it is in the core data center. Sometimes it is on the campus or the edge. And they don't want a proprietary approach. Customers don't like vendor lock-in. If there is a compelling alternative that gives them greater choice and flexibility, they are going to choose that.

What are the issues for channel partners looking at HP Networking Vs. Cisco Networking?

The question for the channel partner is in the business bets that you make, do you want to bet on a vendor whose core strategy is predicated on vendor lock-in, complexity and a business that is shrinking quarter on quarter on quarter or do you want to bet on a vendor that is fundamentally about providing customers with greater choice and interoperability, has demonstrated a proven track record in the enterprise for decades and is making rapid share inroads both in the core and on the edge?

Has the market underestimated the importance of compute in the cloud era?

Periodically people have come out and said infrastructure doesn't matter in the new style of IT. But the reality is that the engine for all of those devices and users is still going to be compute. Cloud may change how it is delivered and consumed, but you have got to have the right compute for the right workload at the right economics every single time. And our announcements on high-performance computing, SAP HANA, and the work with FoxConn are examples of HP innovating to make sure our channel and our customers have the right compute at the right economics at the right time.

How important is it to have the right compute for the right workload?

In this new style of IT you need the new and the right foundation. To use a New England analogy, you need one foundation if you are building a stone house, you need another foundation if you are building a Hemlock-framed house, but you still need a foundation. What HP is doing is ensuring that customers have that right foundation for the new style of IT. And that right foundation has to reflect the fact that they also have an existing foundation. It is a foundation that is virtualizing today. And it needs to go to self-service tomorrow.