Antonio Neri On HPE's Greenlake Advantages Vs. AWS Outposts

AWS - Welcome To The Hybrid IT Market

Hewlett Packard Enterprise CEO Antonio Neri "welcomed" Amazon Web Services to the hybrid IT market in the wake of the public cloud behemoth's introduction of AWS Outposts.

"I am really, really happy that AWS made that statement (on hybrid IT) because it validated our strategy," said Neri, who along with former HPE CEO Meg Whitman put in place HPE's hybrid IT strategy three years ago. "(HPE Board member) Meg (Whitman) and I at that time said the world would be hybrid. They validated last week that the world is hybrid."

AWS surprised the industry by endorsing the on-premises hybrid IT market with its launch last week of AWS Outposts – fully managed and configured compute and storage racks built with AWS-designed hardware that can run in a customer's on-premises environment. AWS Outposts is not set to be delivered until the second half of next year.

"Customers are looking for openness – not lock in," said Neri, responding to the AWS Outposts announcement. "They want true multi-cloud and multi-stack. We are offering that alternative plus the same consumption-based model on-prem with HPE Greenlake, which is our flagship product. To give you some perspective, we have more than 400 customers on Greenlake and more than $2 billion in total contract value."

Neri's comments came after HPE posted better-than-expected results for its fourth fiscal quarter ended Oct. 31 with Aruba intelligent edge sales up 17 percent; compute sales up nine percent; storage sales up six percent and HPE Greenlake pay per use consumption orders up 30 percent.

HPE also delivered strong performance for the full 2018 fiscal year – Neri's first fiscal year since he took the helm last Feb. 1- with higher than expected sales growth of seven percent to $30.9 billion. That full-year sales growth was led by 13 percent growth in the intelligent edge business; 13 percent growth in the storage business; nine percent growth in value compute offerings including 25 percent growth in high performance compute and 280 percent growth for Synergy composable systems with a more than $1 billion annual run rate; and 54 percent growth for HPE Greenlake.

Talk about the better-than-expected results as you closed out your first fiscal year as CEO?

I am really pleased with the year. We delivered on every commitment we made more than a year ago. We have grown the company high single digits. Thank you to the partners who have done a phenomenal job for us. We expanded profitability. We are pivoting to the innovation that customers are looking for no matter how you look at it.

That is good for partners because we are positioning them for the future. What customers are looking for are solutions that optimize for specific workloads in a hybrid, cloud enabled environment. My vision is the enterprise of the future will be edge-centric, cloud-enabled and data-driven. All our innovation is geared to that.

What kind of outlook do you see for HPE products and services in 2019?

Why I am confident about 2019 is the data continues to explode around us. That data has to be stored and managed. It is just physics. That is a big opportunity for both us and our partners around how we really accelerate outcomes from that data with the best edge to cloud architectures with connectivity, security, AI and the right cloud computing associated with those workloads. I am actually bullish about it unless something really bad happens from a recession perspective where people stop buying things completely. I don't think this is going to slow down in the near term. That is an opportunity we need to take on with our partners.

Talk about intelligent storage with HPE InfoSight including the announcement of the new composable cloud.

When you think about providing workload-optimized solutions and you think about data being the core, you need to make sure that data fabric is intelligent and autonomous and can take care of itself. That is why our HPE InfoSight has been a phenomenal success. It is available for both Nimble and 3Par and last week we announced it as an extension of the entire composable fabric for everything that is run on premises including computing and networking. That is a differentiation.

Talk about the storage market share gains you are seeing.

Our storage business grew 13 percent for the year which is faster than the market so we are gaining share. If you add the hyperconverged (storage) we grew (storage by) 19 percent.

We couldn't do any of this without our channel partners. Our channel partners see the value of our architectures and the software defined intelligence that we are bringing to it. Customers are seeing that they can deploy this on premises cheaper and they can run it more autonomously. That is the opportunity for us and the partners.

What are the estimates on how much more cost effective the HPE software-defined solutions are versus the public cloud?

It depends on scale and the type of workloads. The reality is you can't size it as one size fits all. It can be 10-20 percent or even higher. It just depends what you are talking about. If you are talking about an SAP HANA implementation – depending on the size of the data- the math is very clear. If you are talking just general purpose compute for infrastructure as a service with fewer VMs (virtual machines), the math may be not as clear. But if you are talking about thousands of VMs at scale you get into 20-30 percent quickly. That is the reality of it.

For customers it has been hard to truly understand it, but as they become more sophisticated at understanding the economics and consuming the same way on prem and off prem then they become much more intelligent on where to gravitate that data and where to run the applications.

Our strategy is open, multi-cloud, multi-stack and with the announcement of composable cloud last week with a composable vision now we have an end to end platform strategy. We allow customers to do this in a very effective way.

Where would you like to see more partner participation in terms of the HPE product and services portfolio?

We have some partners that are moving really, really fast with us. The opportunity that exists for all partners is first edge compute. The sooner partners jump on that wagon the better it will be for both of us. That demand is going to explode driven by the edge and intelligent edge which includes IoT (Internet of Things).

Number two is the consumption-based model (with HPE Greenlake). That allows partners to have a control point with the customers so they can take over the management of their infrastructure and be able to add things as the customers see the need. Those are the two big ones in my view.

Obviously intelligent storage is a big opportunity to really provide customers an alternative (to traditional storage). Nimble has been a phenomenal success for us. 3Par has been a very solid platform for us. We are giving customers a consistent experience. That is the beauty of what we do. You don’t have to sell multiple things. You sell one thing and you get a consistent, single pane of glass experience. For the partners it is easier because they only have to manage one thing.

Three years ago HPE put its hybrid IT stake in the ground. What do you think about Amazon Web Services moving into the on-premises hybrid IT market with AWS Outposts?

I am really, really happy that AWS made that statement (on hybrid IT) because it validated our strategy. (Former HPE CEO and HPE Board member) Meg (Whitman) and I at that time said the world would be hybrid. They validated last week that the world is hybrid.

Taking that off the table, customers are looking for openness – not lock-in. They want true multi-cloud and multi-stack. We are offering that alternative plus the same consumption based model on prem with HPE Greenlake which is our flagship product. To give you some perspective, we have more than 400 customers on Greenlake and more than $2 billion in total contract value.

Partners need to jump in even further on Greenlake because that allows them to control the customer experience. Whether they want to be on-prem or off-prem we will manage it for them where it makes sense economically. We always give one consumption model (for both on prem and off prem).

I welcome what AWS stated (with AWS Outposts). Customers want choice. Our open approach is very unique and differentiated.

What is the call to action for partners as they enter the new fiscal year with HPE?

Come with us on the storage journey. We have the most intelligent storage on the planet, continue to accelerate the edge and jump on edge compute with Aruba connectivity and security. Our consumption-based model is very unique and differentiated, and our composable (hybrid) cloud allows them to play a pivotal role with value added services. Those are the big four.

I am very bullish about what we are going to do in 2019 and beyond. Our partners last week at Discover were ecstatic about the strategy and how we are working with them. I have never seen such positive feedback and momentum from customers and partners.