CRN Exclusive: CEO Neri On HPE's 'Industry-Leading' Partner Program, Dell EMC's 'Confusing' Storage Lineup, And HPE's Spectre-Meltdown Response

Neri On HPE's Channel Leadership

Hewlett Packard Enterprise CEO Antonio Neri said the company's "industry-leading" partner program is driving channel sales momentum.

"Our Partner Ready program is the industry-leading program for channel partners," said Neri. "It is stable. It is predictable. Think about our competitors -- they keep trying over and over, they keep flipping the programs. More rebates here. Less rebates there. Invest here. Move there."

Neri said the HPE Partner Ready program is providing the company with a big advantage in the sales trenches against rival Dell EMC.

"The channel knows they can make good money with HPE in every aspect of our business," he said. "Dell has come out with new incentives in certain areas of the portfolio but they are taking away from other areas of the portfolio. So from my standpoint, I think there is confusion and skepticism out there [with regard to the Dell channel program]."

Neri's comments came after HPE delivered blockbuster quarterly results well above Wall Street expectations with a whopping 24 percent increase in storage sales; a 27 percent increase in networking sales; and an 11 percent increase in compute/server sales.

HPE shares were up 10 percent, or $1.60 per share, to $18.02 Friday after the company reported first-quarter non GAAP diluted net earnings per share of 34 cents on sales of $7.7 billion. That was well above the Wall Street consensus of 22 cents per share on sales of $7.07 billion.

Neri thanked HPE partners for the quarterly sales performance, with sales out through partners up year over year in every segment of the business and called on partners to "double down" on their HPE investments.

What was the channel performance during the quarter?

First of all, I want to thank the channel partners because we would not have delivered this performance without the channel. As you know, most of our business goes through the channel and the results speak for themselves.

We saw great performance across every segment of the market in the channel with double-digit growth in many aspects of our portfolio particularly with core ISS [industry-standard servers] and Aruba. I measure the channel health through our sales out performance [with partners], and the sales out was up year over year pretty much in every business.

I think that is a testament to our innovation. Innovation is making a difference, allowing partners to compete and win. Second is our channel program. Our Partner Ready program is the industry-leading program for channel partners. It is stable. It is predictable.

What are you seeing from competitors in the channel?

They keep trying over and over, they keep flipping the programs. More rebates here. Less rebates there. Invest here. Move there.

We don't do that because at the core we have been and we continue to be a channel-first company with predictability. And then we allow them to compete and win with our portfolio.This is a time for the channel to double down on Hewlett Packard Enterprise.

What is the HPE channel march and engagement compared to Dell?

We are consistent and predictable. The channel knows they can make good money with HPE in every aspect of our business. Dell has come out with new incentives in certain areas of the portfolio, but they are taking away from other areas of the portfolio.

So from my standpoint, I think there is confusion and skepticism out there [with regard to the Dell channel program]. Stay tuned because as we get ready for HPE Discover [June 19-21 in Las Vegas] where we are going to have our Global Partner Conference, we are going to announce new incremental benefits to the program we have. Our program is the market leader. Partners can make the most dollars with HPE.

What was the storage performance in the quarter?

This was a great quarter for us on many fronts. In terms of storage, we had solid execution and performance. Obviously, Nimble and 3Par now provide together with SimpliVity a complete, rounded-out portfolio on the primary storage side of the house.

HPE InfoSight now supports both 3Par and Nimble. So we have modern architectures and modern technologies with a simple value proposition: cloud volume offers with predictive analytics and autonomous capabilities.

Dell EMC has to go through a massive, re-architecting of their portfolio. Compellent is dead. EqualLogic is dead. They have to revise what they are doing with VMAX and VNX and Unity. Isilon is also there. It is a very confusing story for customers and partners. We give them a simple portfolio with modern architectures for the new digital era that customers need going forward.

How was the data center networking performance and the company's intelligent edge growth?

I am incredibly pleased with our performance in data center networking with 27 percent growth year over year. That is very good. And on the intelligent edge – which includes campus switching, wireless, services and edge compute -- we grew that business as a segment 9 percent. We grew more than 20 percent on campus switching. We grew services 6 percent. We had a little bit of a tougher compare on wireless because last year we had the Home Depot deal.

We had a phenomenal Q4 and then had more than 20 percent growth in bookings on wireless. We could have done slightly better there. That said, the innovation in that Aruba portfolio is second to none. Think about our ClearPass solution with machine learning and behavioral analytics. Think about our Aruba Central [network management] for wireless connectivity in a managed services engagement or even Meridian with the analytics to really provide customers the ability to monetize that connectivity and provide a better experience that is second to none. And we continue to bring new solutions: Think about campus aggregation switching with one consistent security experience. We are very well differentiated.

Some of the deals we just won are, for example, Royal Dutch Shell, which is going to use Aruba as their standard platform going forward. Wellington Management -- a large investment firm -- is on Aruba. There are many of those customers. I am very upbeat about the future in intelligent edge. It is a market that is growing.

What is the Spectre-Meltdown opportunity for HPE and its partners?

Spectre-Meltdown is a serious issue. We take it very seriously. It is an industrywide issue with all CPU vendors. We are working very, very closely with each of them to make sure all of the patches and microcode upgrades are fully tested and verified.

HPE has a responsibility and we are well known for our ability to test those solutions better than anybody else in the market. From the channel perspective, our channel partners should have peace of mind that whatever we roll out there will be fully tested.

Secondly, we have not seen any decreases or increases [in workload application performance] because of this issue yet. One of the things we do very well is the performance assessment when we deploy these patches.

Some workloads will see a significant impact on performance. That is why we have made available offers that are all available through our channel partners whether it is consulting engagements where some channel partners don't have that capability. We can go in and assess what needs to be done from an upgrade perspective. We are taking that problem off the customer's hands.

What kind of solutions can partners bring to customers in the wake of Spectre and Meltdown?

We can modernize customer platforms to the latest technologies particularly with our Gen10 [server] with security features built into it with our iLO technology.

The way customers want to consume incremental capacity is evolving. If a customer needs 5 percent or 10 percent more [compute capacity], they may engage us through HPE GreenLake so they don't have to use their capital budget to solve this problem.

Remember, this problem was announced at the beginning of January, which means most customers did not budget for this problem. That is why Flex Capacity is a great option for our partners to sell our great secure infrastructure for the customers that need it.

How big is the opportunity for the channel for the OneSphere multi-cloud management Software-as-a-Service platform that is now generally available?

We are seeing momentum there. We see a lot of customers doing proof of concept.

Listen, this is going to be a hybrid IT world. We already know that. We have proven that. Customers are going hybrid. That is going to be the journey. They have to connect these public cloud environments with their on-premise environments whether it is traditional IT or private cloud.

HPE OneSphere is that platform in a true multi-cloud environment whether it is multi-cloud on-prem, or virtualization, and then off-prem in a true, multi-public cloud environment, all connected in a seamless way with the analytics and consumption-based models that customers need.

Partners who are also service providers can add their own clouds through APIs to that platform. We want to make sure our partners take advantage of that because we want them to use their capabilities as a preferred destination for the services they provide. So the call to action is get on board with HPE OneSphere and then connect to that platform through APIs with the tools that we have provided so they can sell more on-prem and yet sell services off-prem through the cloud offerings they have.