The Top 10 HPE Stories Of 2016

A Busy Year For HPE

For HPE, 2016 was a year of blockbuster spin in mergers and deals aimed at making the company a smaller, faster-moving, more innovative next generation infrastructure hybrid computing superpower.

Ultimately 2016 marked the year that HPE CEO Meg Whitman delivered on her five-year plan to make HPE matter again. The one time battered behemoth was viewed as a Silicon Valley dinosaur with a dispirited partner network when Whitman took the helm in September 2011. If that wasn't enough the company was $12.5 billion in debt.

HPE ended 2016 with $7.6 billion in cash and its sights set squarely on dominating the next generation software defined hybrid infrastructure market with a reignited innovation engine led by an all-star channel team.

The year included a number of breakthrough technology offerings including the ProLiant EC200a – which changed the SMB cloud services landscape – and new Edgeline systems, which are being touted as the industry's first converged systems for IoT.

Here are the top HPE stories of 2016.

(For more of our 2016 retrospective, check out 'CRN's 2016 Tech Year In Review.')

10. HPE's ProLiant EC200a Changes SMB Cloud Services Game

The HPE ProLiant Easy Connect EC200a hyper-converged hybrid IT appliance was a recurring revenue game changer for SMB focused partners.

The new product was sold by partners with one- and three-year subscription plans starting at less than $10 per month, per user- accelerating their move to the recurring revenue strategic service provider cloud business model.

Partners said the new product kicked their recurring revenue models into high gear. They applauded HPE for designing a product from the ground up for the managed services market.

The new Xeon-based server appliance, in fact, featured a managed services software platform from British software maker Zynstra that is aimed at helping partners and customers avoid the hassle of security patches and updates in a subscription model. The on-premise appliance is managed and updated through the cloud.

9. HPE's IoT Breakthrough -- New Intel Edgeline Systems

HPE set its sights on the exploding Internet of Things market by going where no vendor had gone before: creating Intel Xeon-based converged IoT systems designed for the edge of the network.

HPE unveiled the Edgeline EL1000 and Edgeline EL4000 systems, which are being touted as the industry's first converged systems for IoT.

"What is cool about this is it is a new product category we are inventing," said Dr. Tom Bradicich, general manager and vice president of servers and IoT systems for HPE, who was one of the driving forces behind the creation of the converged systems product category many years ago. "This has never been done before. This is not just a new product. Everybody has new products. It's a new category."

Bradicich said the new systems mark the first time a company has brought high-performance standard x86 computing power to the edge of the network with data capture and control along with proven device management technology and security from HPE's Aruba business.

Up until now, there has not been an industry-standard Intel IoT edge system designed to collect data from the millions of sensors and devices and analyze it in real time at the edge of the network, said Bradicich.

8. HPE Buys SGI, Giving Company More High Performance Punch

HPE doubled down on its high-performance computing offensive with an agreement to acquire SGI in a $275 million all-cash deal.

The acquisition of SGI, a longtime computing innovator whose 3-D workstations were considered state-of-the-art in the early 1990s, strengthen HPE's position in the $11 billion high-performance computing market, which is growing at a 6 percent to 8 percent compound annual growth rate.

Partners said the deal expands HPE's reach in critical markets including research, life sciences and government. What's more they said the deal gave HPE additional high performance punch in the big data infrastructure market.

7. HPE Takes Aim At Cisco With Arista Software Defined Partnership, Sales Pact

HPE turned up the heat on rival Cisco Systems with a strategic software-defined infrastructure partnership and sales pact with software defined network switching innovator Arista Networks.

Under the terms of the pact, Arista 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 has a converged architecture agreement with Arista, is also offering solution providers and customers the ability to buy the Arista network switching products directly from HPE and its partners.

"Arista has taken 13 points of share from Cisco," said HPE CEO Meg Whitman. "No one has taken 13 points of share from Cisco in the last 30 years. So our partnership is designed to open the channel to Arista because they sell very little through the channel."

6. HPE Gets DropBox To Move Some Business to HPE Cloud Solution

HPE took a bite out of Amazon Web Services with a highly publicized breakthrough deal with storage cloud service provider powerhouse Dropbox.

Under the deal, Dropbox moved move of some of its huge cloud storage services business from AWS to a hybrid cloud model with an "open architecture approach and a custom server solution" with HPE ProLiant and Cloudline service provider systems -- all financed by HPE Financial Services.

Drew Houston, founder and CEO Of Dropbox said the move to a hybrid cloud HPE model was driven by the "performance flexibility and, most importantly, the security" Dropbox could get from an HPE cloud solution -- all at a lower cost than AWS.

"We are a little unusual because we started in the public cloud, but we realized moving to the hybrid infrastructure brought a lot of the [Dropbox] accounts -- all that performance at a lower cost and a lot more flexibility," he said.

5. HPE Sells Cloud Software Assets To SUSE

Hewlett Packard Enterprise continued its selling streak in 2016 when it sold the final pieces of its once-prized cloud software assets to SUSE.

The deal transferred ownership of HPE's OpenStack cloud software assets including the HPE Cloud Foundry Platform as a Service, to SUSE. Terms of the transaction, which includes HPE naming SUSE as its preferred partner for OpenStack, Cloud Foundry and Linux, were not disclosed.

The cloud software asset sale came just three months after HPE entered into an $8.8 billion spin-in merger with SUSE software parent, Micro Focus.

4. A Channel Strong Team

HPE ended the year with a channel strong all-star team as the company moves to double down on partners with a new sales structure aimed at accelerating channel growth.

The channel team is headed by Americas Channel Vice President Scott Dunsire (pictured), who oversees HPE's entire channel effort. It also includes a more prominent role for HPE Vice President of US Channel Sales for the Enterprise Business Terry Richardson, who is now overseeing all of the value-added reseller partners across the country.

The appointment of Richardson, who was previously overseeing the East region, marks a return to a prominent national channel role for the highly respected channel stalwart

Fred Traversi, president of Alpharetta, Ga.-based AdvizeX Technologies, one of HPE's top 10 enterprise partners and a unit within services giant Rolta, a $500 million IT services powerhouse, said he expects Richardson to combine wth Dunsire to give HPE a "one two" channel punch.

"Scott is a channel pro, and Terry knows the enterprise value business extremely well," said Traversi. "Together they'll make sure that what Meg calls the increasing role of the channel is true, which will manifest itself in HPE growing top line and gaining market share."

Dunsire, for his part, told CRN at the annual BoB Conference that HPE aims to increase the percentage of sales going through partners from 70 to 90 percent of sales.

3. HPE Spin In Software Merger With Micro Focus

In September, HPE announced an $8.8 billion spin in merger to combine its "non core" software assets – including its Autonomy and Vertica big data software and its security software portfolio with British multinational software maker Micro Focus.

Under the terms of the deal, HPE moved to spin off its big data, enterprise security, application delivery management, IT governance and IT operations management software for a 50.1 percent stake in the new company plus a $2.5 billion cash payment prior to the completion of the merger. The majority stake and the payment result in a deal valued at $8.8 billion.

HPE said the deal creates one of the world's largest pure-play enterprise software companies, with the global strength and agility to drive software innovation across a wide array of products. At the same time, HPE said the deal opens the door for HPE itself to become the industry leader in hybrid IT.

Partners said the spin-off will provide a shot in the arm both to the software business and the sharply focused HPE software-defined infrastructure business.

2. HPE Enterprise Services Spin In Merger With CSC

HPE's spin in merger of its $20 billion services business with systems integrator CSC in one fell swoop created a $26 billion, market-leading, pure-play global IT services powerhouse.

At the same time, the blockbuster deal set the stage for HPE to become a more agile, sharply-focused $28 billion next generation software-defined infrastructure company.

Whitman said the deal creates a new "powerhouse IT services company" able to grab share in a consolidating IT outsourcing market, while at the same time positioning HPE to move even faster in the software-defined infrastructure market.

"In some ways, shareholders get the best of both worlds," she said. "They get to maintain a position in Hewlett Packard Enterprise with a more focused software-defined data center and edge strategy, and they get to ride the upside" of a global services business."

1. A Smaller But Stronger HPE

HPE ended the year looking forward to life as a smaller, but as a more nimble, more innovative and sharply focused next generation infrastructure provider.

The company, which ended fiscal 2016 as a $50 billion company, will end up as a $28 billion company next year once it completes the spin in enterprise services merger with CSC and the spin in software deal with Micro Focus.

HPE ended the year with $7.6 billion in cash – a far cry from the $12.5 billion in debt when HPE CEO Meg Whitman took the helm five years ago. "It has been almost a $20 billion turnaround in the financial strength of the company over the last five years," says Whitman, noting that she may well be the "only CEO in America" who is happy running a smaller, more nimble and innovative company. "We have room for acquisitions. We have room for investments in companies like Docker and Chef and Mesosphere."

Once the spin in mergers are completed, HPE will have a a total addressable market of $250 billion growing at 2-3 percent per year, said Whitman.

Over the last year, she said, HPE has delivered the "financial performance we promised, fulfilled our commitment to groundbreaking innovation and began to transform the company in ways we believe will deliver an exciting future for customers, partners, employees and investors. I am excited about the path we see ahead and very much look forward to the journey."