22 Jun HPE Discover Conference Day One: Top 10 Industry Analyst Takeaways

Check out our full analyst coverage of Discover 2016:

Hewlett Packard Enterprise held their annual ecosystem conference in Las Vegas, June 7-9, and I attended with other global analysts.  Like other major IT houses, HPE has multiple events during the year targeted at customers, developers and channel partners, but Discover is the “big kahuna” of HPE’s events. Of special significance was that this was the first Discover held in the U.S. since the separation of HP Inc last year. The following are my top ten initial takeaways, in no order of significance. The Moor insights & Strategy team will do subsequent drill-downs over the coming months.

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HPE CEO Meg Whitman talking business strategy with industry analysts (Photo credit: Patrick Moorhead)

1/ Digital Transformation theme: “Digital transformation” was the name of the game for Tuesday afternoon’s Hewlett Packard Enterprise Discover keynote address, and for the entire event. The keynote crowd was confronted with several questions early on: when was the last time you used a travel agent? How often do you actually have to go to the bank in person nowadays? For many industry insiders like me who hop from IT vendor show to show, this may not seem very novel—but to most of the crowd who primarily have jobs running IT shops, it is.

You see, if HPE can make the case that companies need to transform, it could mean billions in new hardware, software and services for HPE.

2/ Idea Economy: While industry insiders may pause at the phrase “Idea Economy”, Hewlett Packard Enterprise has absolutely nailed why companies need to transform. In my words, companies need to change or get their lunch eaten by the next startup, their current suppliers, or even their current customers. Companies that have rigid systems and processes that can’t move fast will die not only because they can’t proactively pivot or initate change, but also because they can’t even react quickly enough. Again, my words—this what life is like in what HPE has coined the “Idea Economy”.

HPE CEO Whitman used the stage to make it clear that HPE wasn’t going to miss the boat on the new opportunities in the Idea Economy. HPE’s stated goal is to be at the forefront of the new hybrid-cloud computing, software-defined data center era—and they seem to be taking innovation very seriously. While other giant IT companies are going after a similar space, Whitman was clear why she thought HPE was different.

2/ Services spin-out to CSC: Hewlett Packard Enterprise Discover comes on the heels of the company’s announcement on their most recent earnings day that they would be spinning off and merging their $20 billion enterprise services business with systems integrator CSC. My biggest questions after earnings were on the company’s advising and consulting capability in hybrid cloud. I believe it’s important for customers and HPE to retain this capability as an ongoing concern.

Whitman led off the keynote with a reassurance to customers that the transition would be seamless, and completed no later than March 31st, 2017. Whitman pledged that HPE would continue to focus on secure, next-gen infrastructure, helping customers run traditional IT better, and building the bridge to multi-cloud environments.

During the week-long Discover conference I did get answers to most of my questions on what this did and didn’t mean to Hewlett Packard Enterprise and its customers. I was pleased to be informed that HPE will still retain the capability to advise, consult, recommend, and even build hybrid clouds, and run other projects, through its HPE Technology Services and HPE Software Professional Services groups. Together, these two groups make up 30,000 employees which is certainly enough to do what they need to do and more.

3/ Four Transformational Areas: The notion of the four Hewlett Packard Enterprise Transformational areas was introduced at Discover 2015 and I wrote about it here. These were created so that HP, now HPE and HP Inc., could more easily articulate their differentiators and what they’re prioritizing related to customers. I was wondering if and how these would change. You see, to enterprises, wild shifts mean risk and enterprises don’t like risk.

Whitman reiterated on stage that these areas haven’t changed, even with the spin-out of HP Inc. and the Enterprise Services group. Of course, the delivery mechanisms have changed, but the focus hasn’t. For review, the four transformation areas are: helping customers transform to a hybrid infrastructure, protecting their digital enterprise, empowering the data-driven organization, and enabling workplace productivity.

4/ Helion: Helion has had many twists and turns over the last four years with many strategy and leadership changes. Hewlett Packard Enterprise CEO Meg Whitman had Antonio Neri, Executive Vice President and General Manager of the HPE Enterprise Group, took the stage to introduce several of HPE’s newest updates to their cloud portfolio.

First, Neri unveiled what was billed as the first-ever Helion Cloud Suite—providing a multivendor cloud orchestration, automation, monitoring platform that comes in Express, Premium, and Ultimate editions. Touted as a major breakthrough, HPE says the Cloud Suite will significantly simplify landing and delivering private clouds across existing HPE infrastructure. It will be compatible with all of HPE’s offerings, from blades and ProLiant systems, to the new Synergy composable systems. That’s a very broad swath of compatability and could be very compelling to current HPE customers.

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Antonio Neri, Executive Vice President and General Manager of the HPE Enterprise Group (Photo credit: Patrick Moorhead)

Next, Neri introduced the Helion CloudSystem 10—Hewlett Packard Enterprise’s premier system for private cloud deployment, with multi-cloud and provisioning capabilities, and OneView 3.0 integration. CloudSystem 10 is being hailed as a significant step up from its predecessor, CloudSystem 9—offering a full software stack, including the latest versions of OneView and Helion OpenStack.

Last but not least, Neri announced Helion Stackato 4.0 (also included in CloudSystem 10). Stackato is HPE’s open application development PaaS (platform-as-a-service product), and is powered by Cloud Foundry for cloud-native applications. We hadn’t heard a lot on Stackato for a while and I think people should keep their eye on this space.

My team and I need to dig much deeper into the details on this to render any verdict but I can comment on a few things. First, I like that HPE is now focused on the private cloud and not competing with Amazon.com AWS, Azure, or Google in the public cloud. This is a scale play that HPE couldn’t win the way they were attacking it. I still do see some niche opportunities in the public cloud to add value based on HPE’s leadership investments in hardware, but that’s a longer conversation. I also like that HPE has a full IaaS and PaaS layer now. Cloud analyst Chris Wilder will be digging deeper on this in the coming weeks and months.

5/ Dropbox cloud repatriation from Amazon.com AWS: The biggest surprise of Day One came from Dropbox, one of the top cloud storage companies and pretty much synonymous with file hosting. Drew Houston, Dropbox founder and CEO, took the stage for a Q&A with Meg Whitman.

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HPE CEO Meg Whitman and Drew Houston, Dropbox founder and CEO (photo credit: Patrick Moorhead)

Houston discussed Dropbox’s move from the public cloud, to what he called a more scalable HPE hybrid model—bringing them more performance flexibility and security, all at a lower cost. Since the shift, Dropbox Business says its business has grown to 150,000 customers, and has seen triple digit growth—impressive results, to say the least. On the other side of things, HPE has become an official Dropbox business customer.

I am getting more information on exactly what was moved from the public cloud to a private cloud, but I think this could be the beginning of an even bigger trend—the repatriation of a company’s data and IT. For years, we have all heard the tales of IT moving their data and apps to Amazon.com AWS, and while Amazon.com AWS is making a ton of profits on it with incredible growth, I think we can all say the move has been slower than anyone anticipated. You see, most IT shops didn’t have a very good alternative to the public cloud because the private cloud wasn’t fully baked. The public cloud had at minimum an eight year head-start on the private cloud which is rapidly catching up. Keep your eyes on this trend.

6/ Boeing testimonial: Hewlett Packard Enterprise had Boeing CIO Ted Colbert come up and talk about their work with HPE. The aerospace giant has been a longtime customer of HPE’s, for 40 years and counting. According to Boeing, they are now using high performance computing solutions running on HPE Apollo 6000 and 8000 to significantly reduce the time it takes to develop commercial airplanes. They said they are also using the HPE Helion private cloud to enhance and leverage their data analytics to improve maintenance and operations across the board.

Colbert cited the changing landscape of the industry, both commercial and defense—new competitors, and existing competition becoming “even more fierce,”—as a primary reason for Boeing getting on board with the digital transformation and finding new solutions for their customers. “Every time a 787 lands, it drops off about half a terabyte of data,” said Colbert, “and its estimated that from 2010-2020, there will be a 14,000% increase in the amount of data coming off modern airplanes.” Such large amounts of data necessitates scalable, powerful infrastructure capable of sorting through and making sense of it all—which happens to be HPE’s bread and butter.

This was a good testimonial for Hewlett Packard Enterprise– Boeing described their own digital transformation in the Idea Economy, and showed how HPE’s products have enabled it.

7/ Docker: Whitman, along with Docker CEO Ben Golub, announced in the Day One keynote that HPE would be the first OEM to begin bundling the Docker engine with HPE’s server line. Docker is an up-and-coming company that specializes in container technology—letting developers bundle apps and components in a flexible package for easy deployment, with or without the need for traditional virtualization. Containers have taken over in the public cloud.

The companies say the partnership will be multifaceted– the two companies plan on collaborating on sales and support programs for Hewlett Packard Enterprise customers. HPE will offer across-the-board assessments for Docker containers and services and Docker will also support HPE Linux and HPE will in turn enable its software and cloud portfolio for Docker.  This is a big win for the Alliances Group and I was told this came together very rapidly which I believe is a testament to HPE’s new “speedup” mentality.

While it does appear HPE is the first to do this kind of Docker bundling, I anticipate other vendors to follow.

8/ New York Genome Center: Perhaps the most exciting and impactful (from a human standpoint) testimonial came from Toby Bloom, of the New York Genome Center. Using HPE Vertica, the organization said it analyzes up to 12 terabytes of raw data generated every day from its genome sequence appliances, in a search to understand the connection between DNA and both common and complex diseases. Bloom stressed the need for a platform that could deliver speed, and speed at scale—able to keep up with big data that was doubling and quadrupling very quickly. According to Bloom, Big data analytics has helped the organization make advancements in the field of cancer treatment, and is also helping them glean a better understanding of the autism spectrum.

It’s important for Hewlett Packard Enterprise to roll out more premier Vertica customers—the New York Genome Center was a good one, as it is both Big Data and HPC.

9/ Machine Learning with Haven OnDemand: Over the last year, companies like Microsoft, Google, Facebook, IBM and Apple have been talking up their caabilities in machine learning and artificial intelligence. Google CEO Sundar Pichai has gone as far as to say that his company is now an AI company, shifting from a mobile company, even developing AI accelerators called TPUs as AI analyst Karl Freund wrote about here. With this as a backdrop, it was imperative that HPE show some of their prowess in this space—even though as an industry, we’re in the second inning of a nine inning baseball game. In other words, HPE has to be a part of the conversation even though AI and ML are still in the early stages.

To that end, towards the end of the Day One keynote, Whitman introduced Executive Vice President and General Manager of HPE Software Robert Youngjohns to talk a bit about machine learning and deep analytics. This field historically has been relatively inaccessible without having vast amounts of resources on-premise at a company’s disposal— in the words of Youngjohns, an “army of PhDs, very expensive consultants, complex technology, and a model that’s tuned to a very specific use case.”

Hewlett Packard Enterprise’s solution to this is a cloud based big data analysis platform called Haven OnDemand. This highly accessible cloud platform allows any organization to harness the power of machine learning through a set of APIs. The platform is available for free to developers looking to do initial data application development. For businesses that want to use HPE Haven OnDemand for commercial production projects, HPE has rolled out a pricing model as well. Youngjohn’s put AI pioneer IBM on public notice, which I thought was quite daring to do, given IBM’s Watson head start.

Machine learning and HPC analyst Karl Freund did a deeper dive on Haven OnDemand here.

10/ HPE growth areas: One of the biggest questions many had for Hewlett Packard Enterprise coming into Discover was the company’s future growth areas. This was exacerbated by the fact that it had been only 2 weeks since the ES group spin-out announcement and 7 months since the divestiture from HP Inc.

In an unmoderated industry analyst Q&A after the keynote, CEO Meg Whitman was clear on the go-forward growth areas. They were:

  • the campus and branch office
  • the Industrial IoT
  • analytic software and services

These pass my initial logic test. As more and more data gets created on the edge, edge computing becomes more important and all that new data requires a new breed of analytic software and services. These growth areas also reinforce the fact that HPE will need to make some strategic acquisitions in a few areas.  One of the unanswered questions was growth in networking. There weren’t any announcements at Discover, and I’m looking forward to HPE’s next moves there. The team and I will need more to to do a deeper dive into sizing and adding up all these opportunities. 

Wrapping up

Day One at HPE’s Discover was comprehensive to say the least. Hewlett Packard Enterprise needed to show consistency and change where it mattered, and I think they did a pretty good job in the process. HPE has been consistent in their message of the “Idea Economy” driving the need for “Digital Transformation”, and on their four transformational areas. Dropbox, Boeing and the New York Genome Center were good testimonials that showed public cloud repatriation and the use of HPE’s lesser-sold software. HPE showed a lot of change in Helion (which they really needed to do), smartly related Haven OnDemand to machine learning to be part of that exciting conversation, and called out IBM’s Watson to get the buzz going. I’ll follow up shortly with Day Two assessments.