CRN Exclusive: HP's Top New Execs Talk Dell Buyout, Moonshot And New Partner Opportunities

HP Talking The Talk

Bill Veghte (pictured left), Hewlett-Packard's former COO who took a new job as enterprise group executive vice president and cloud business just last week, and Dion Weisler (pictured right), a former HP Asia Pacific and Japan senior executive who two months ago took over as executive vice president of HP's Printing and Personal Systems Group, addressed partners for the first time during the company's quarterly partner webcast. The two executives spoke about the intensely competitive landscape including the battle with Dell and new partner opportunities. HP CEO Meg Whitman, HP Software Executive Vice President George Kadifa and HP Senior Vice President PPS Jos Brenkel also took questions. Here are excerpts from the partner webcast.

Talk about the blade server market landscape and HP's Gen8 servers.

It's a tough competitive market, and we are in a dog fight with Cisco. But, the adoption of our Gen8 product line is growing fast, really fast -- about 17 percent ahead of previous product line transitions. The thing that I am particularly excited about is that is with higher average unit price, which translates, of course, into faster profitability for you. The reason that Gen8 is doing so well is because of the intelligence and automation designed into the product line to help redefine the economics of the data center.

Only HP's Gen8 server platform delivers a five-month-or-better return on investment. We know it is a challenging market, but nearly 73 percent of the partners selling blades grew their business over the past year.

-- Bill Veghte

Talk about some of the partners that are growing their blade server business.

Companies such as Open Systems Technologies [in Grand Rapids, Mich.,] and [St. Louis-based] World Wide Technology in the Americas and PQR in Europe are selling millions of dollars in blades and have more than doubled their blade system [sales] in the past year. Interestingly enough, the partner's growing their blade business grew better and faster than any others. So there is money to be had and I encourage you to work with your [HP] PBMs [Partner Business Managers] to get in the game.

-- Bill Veghte

Talk about the HP Networking product opportunity.

HP Networking is another profitable, fast-growing opportunity particularly in our wireless and BYOD solutions. We certified 325 new partners on wireless this year, including about 75 technical certifications and about 250 wireless LAN sale certifications. Even with that growth, only 11 percent of our partners worldwide are certified and selling wireless.

If you are not participating, there is a lot of wireless going in, and it is an opportunity to get on board. Just this last quarter, the partners selling wireless LANs increased their sales 29 percent over the previous quarter.

We are just getting started. It is really coming down to a two-horse race in networking in the enterprise between HP and Cisco. Together we can do a lot [of business].

-- Bill Veghte

Talk about the Moonshot opportunity.

Moonshot is our game-changing new software-defined server. is already successfully running Moonshot. And, many of the biggest Web players are now talking with us and testing Moonshot as proof of concepts [POCs]. And, we are starting to see signed deals from them. We are building on this momentum: Think of it as a very aggressive release cadence to go workload by workload to deliver the right value for our mutual customers.

-- Bill Veghte

Talk about the 3Par opportunity.

Our 3Par StoreServe 7000 midrange systems are on fire, the fastest growing product line in the entire EG portfolio. And in [FY] Q3, more than 1,000 partners sold 3Par, triple the number of partners a year ago. Why? Because it is a storage category game changer and that makes it a money maker. Partners are earning over 30 percent margin on new deals and getting 75 percent of that paid up front. Customers love 3Par because they get tier-one features at midrange prices. We also guarantee through HP's Get Thin and Get Virtual Guarantee that they will be 50 percent less [storage] capacity and get more out of their virtual server environment.

We are also the only company offering one simplified architecture for primary storage that is easy to install, own and upgrade, and uses all of the same software.

-- Bill Veghte

What is your message to partners around the unique market opportunity right now?

I am particularly excited right now because we are in a unique time in the IT industry with both your and our customers looking to accelerate their rate of innovation, increasing their agility, and simplifying and lowering costs. Together we can do that. HP's leadership in infrastructure and the new style of IT solutions allow us to deliver that. But we are only half of the equation. You are the other half.

My job, and the entire enterprise group's job, is to serve you and have us collectively serve our customers on their journey toward this new style of IT, together winning in the marketplace.

Many of you have just received your first rebate paychecks from HP's latest partner program. Whenever we can make money on both sides that gets me excited. Under my leadership of the enterprise group I am dedicated to driving that profitable growth for and with you.

-- Bill Veghte

Talk about the SMB server opportunity.

We recently launched an entire lineup of entry-level servers at new aggressive price points for greater channel value. They all feature full enterprise-class capabilities and offer unmatched value and innovation such as built-in intelligence and automation for easier operation, and HP's Smart Technologies to maximize server performance and availability. My personal favorite is you have got to check out the ProLiant Micro Server. The industry's only personal built server for micro businesses. It is the ideal first SMB server. Small in size, but big in functionality, beautifully designed, quiet and when paired with our specifically designed HP Networking Switch you can offer your SMB customers an entire infrastructure in a box. The goal of these new products and program innovations is simple: We want to make doing business with us faster, easier and more profitable for you and for our customers.

-- Bill Veghte

Talk about the opportunity in the PC and printing markets.

We need to leverage the massive change going on in the industry to create opportunity. I firmly believe the amount of change is equal to opportunity, and with the amount of change happening, there is certainly a lot of opportunity for us all. So, a very simple but very important point: We will create more opportunity for all of us. We need to do this by expanding our total available market.

Our multi-OS strategy is clearly an opportunity to expand the market, bringing ink into the office in a meaningful way expands our total available market opportunity.

Instant ink is a new business innovation. We need to focus on that and ensure that we continue the great trust we have with Office Pro X. Price brand competitiveness is a major focus of mine, and you will see more aggressiveness in the volume space coming from Hewlett-Packard in the future.

-- Dion Weisler

Talk about your first several months on the job.

Two months into the role now, I have spent time with 40,000 employees, I have spent time in our ink business, laser business, our personal systems business, with our largest and most important customers and spent time with more than 235 partners from Columbia to Geneva to Dallas. I have looked at every single road map, looked at every single price band.

It is clear that we are taking share in some spots and we are losing share in others and I am manically focused on that. We need to continue with our focus on strong innovation, on building speed and agility particularly around our [price] quoting process. We need to be extremely serious about our competition at every single price band.

-- Dion Weisler

Talk about your background and channel commitment.

I started in the channel, first as a reseller, [and] then I moved to distribution before moving to my first role in vendor land. Most recently I was leading our business in Asia Pacific and Japan, and we invested very heavily in partner programs. I am a partner guy. I firmly believe in channels and the ability to drive scale for our business. And, the results were amazing. When you look at last quarter's IDC results, Asia Pacific took 2.8 points of share growth year over year. We grew SMB faster than the market. And, we took more business through our partners. We were effectively running at greater than 86 percent through our indirect channels because I really believe this drives efficiency in our business model.

-- Dion Weisler

Talk about channel loyalty.

Seventy percent of our business in PPS is done through the channel. Loyalty really does matter. I firmly believe that not everybody is equal. There is more for more. When you do more business with us, we provide more back to you.

This is about a leadership change not a strategy change. Our commitment to the partners hasn't changed. I am firmly committed to the partner community. I believe it provides us with scale. And, I am very committed to providing the most innovative products to enable you to grow. Our partnership is key. It is predicated on mutual success. I look forward to working with all of you, and together we will win.

-- Dion Weisler

Do you think Dell's aggressiveness will continue as they go forward as a private company?

It's always a competitive landscape. If it is not Dell, it is somebody else. We just have to assume it is going to continue and plan to have incredibly innovative products to bring to market. I am really psyched about a bunch of products we are bringing to market.

I am really psyched about how well our 9470 EliteBook is doing. That is really targeted at the commercial enterprise. It has exceeded all of our expectations. We just need to drive innovation. I think when we drive innovation and we remain focused on that, it doesn't matter whether Dell is competitive. We need to be competitive. It will be Dell today. It will be somebody else tomorrow. We will win by delivering great value to our customers.

-- Dion Weisler

Talk about the pressure Dell may face as a private company.

I think we have the best product lineup I have seen in quite some time coming out of our PPS Group. But, what I will tell you is a lot of customers are nervous about Dell. What I can tell you first hand is uncertainty is not our friend in the business. I learned that when I came to HP.

I think it is an opportunity to go after Dell's installed base and sell HP and our innovation plan and the fact that we are financially incredibly healthy. We are at a zero net debt position. Last year, we generated $10 billion worth of cash. And Dell going private, they are trading the public market master, which is sometimes inconvenient as we know, with the private market debt master. And, when you have to service $15-$18 billion worth of debt, it is not that easy.

-- Meg Whitman

Talk about the change in the industry-standard server market.

The industry-standard server business is going through significant evolution in the market broadly. But, the reality is that you and I and our customers are going to consume a lot more compute per capita than we ever have. But, the shape of that business, who is buying, where is that being delivered, is absolutely going through a very significant evolution. And, that represents opportunity. Change represents great opportunity, and as market leaders it is your obligation and my obligation to pursue that with focus and urgency. And, that is exactly what we are doing. If you are looking at the product innovation we are bringing to bear with Gen8 servers, Moonshot, the Micro Server, it is reflecting where the market is being reshaped to provide better business value for customers.

-- Bill Veghte

Talk about business model innovations taking place in the IT market.

It is not only about the product innovation; it is about the business model innovation. And, you have my commitment, and my passion and my energy to simplify and to go faster. When I look at the Moonshot rollout, as an example, I love the fact that we have sparked the imagination around the fact that people should expect a fundamentally different power profile and cost profile on those servers. Fantastic. I love the fact that many vendors are coming to us and saying 'I would love to optimize my workloads for this new architecture.' Now what we have to do is we have to translate that into marquis wins. We have got a couple. I want to see more, and from marquis wins to a solid stable platform with great value proposition for the high volume workload.

-- Bill Veghte

Talk about Henry Gomez's appointment as chief marketing officer.

Last March, we centralized marketing and communications under two different executives. The next logical step is to unify the two organizations, and I have asked Henry Gomez (pictured) to lead this effort. I have asked Henry to put a strong focus on what we call demand generation or lead generation, not only for our direct business but for all of you. Marketing success is going to be measured by the business that they are driving for the channel.

He is all about lead generation for the channel. That is what he is all about. Yes, we want to have some big [end-user] marketing that sets the table to reposition HP in the marketplace. But in the end, if we are driving leads to you for Gen8, for our newest PC product or Autonomy or Vertica, that is really what is going to make the cash register ring for you and secondarily for us.

-- Meg Whitman

Give an update on the partner business plans.

I gave every channel executive and each PBM [Partner Business Manager] very clear direction. They need to be working with every single partner on creating a joint business plan. One of my personal business philosophies is: If you don't know where you are going, any road will take you there. So, we have to have a business plan with line of sight into products or software or services so that you can grow. The good news is that since our GPC [Global Partner Conference] in February, we have created more than 700 partner business plans. So, we are really making some great progress.

I saw some plans that were truly collaborative in nature with input from the PBMs and partners. The plans that we have in place now currently represent over 50 percent of our channel revenue, and we need to expand that going into FY year 2014.

-- Meg Whitman (pictured)

Talk about the recent HP management changes.

As CEO, my job is to make sure I have got the right people in the right job at the right time who can accelerate HP's turnaround and drive more business for you. So, what I have got to do is, at the exact right time as we go into, really, phase two of this turnaround, I have got [to have] the right people. And that's why I have asked Dion and Bill to step up because they have got the energy, the enthusiasm, the vision of what we need to do to drive more business results to you and turn around HP. So, I am really comfortable with our team. All of my business unit leaders now, I think, have their arms around the business. And, I think you are going to see accelerated performance from HP.

-- Meg Whitman