Ed. Note: This is a transcription of an interview of the EVP and General Manager of Hewlett-Packard’s Enterprise Servers, Storage, and Networking Division (ESSN), David Donatelli, by Wikibon.org Co-Founder David Vellante and SiliconAngle Founder John Furrier at the HP two-day press event in Barcelona, Spain, in late October. The interview was Webcast on SiliconAngle.tv at http://www.siliconangle.tv/video/hps-dave-donatelli-barcelona-inside-cube. The transcription is published here for use in research by the Wikibon community.

DV: We’re here in Barcelona with SiliconAngle’s continuous coverage. I’m Dave Vellante of Wikibon.org and I’m here with Dave Donatelli, who’s the Executive VP and General Manager of HP’s Storage, Server, and Networking division – notice how I put “storage” first. Dave welcome. Good to have you here. You guys had a big announcement today, a big press conference. The place is packed – you must have 100+ folks here. How do you feel?

DD: I feel great. We’re really excited about converged infrastructure & the market acceptance we’ve seen with that. So far in our first three quarters our business has grown 24%. We’re seeing higher growth in servers and higher growth in networking. So today’s announcement was really adding on to that growth.

DV: We had Marius on earlier, and he was talking about the networking world. That’s phenomenal – 198% total including the 3COM acquisition, but 40% organic; that’s a good number. So congratulations. So let’s talk a little about what converged infrastructure means to HP.

DD: Simply put it’s our vision & strategy to change the way data centers are built and infrastructure is deployed. Unlike some visions where it is: “Here’s our vision, wait 5 years and it’s all magically going to happen”, I think the neat thing about converged infrastructure is customers can buy and implement it today. Each and every day, similar to the announcement we made today, we keep expanding the capabilities people can deploy around converged infrastructure.

DV: We talk to a lot of customers and a lot of CIOs and they are always telling us they’re sick of buying in stovepipes. I presume you’re seeing the same trend.

DD: Absolutely. One of the neat things about my job is I get to talk to customers and partners all over the world. A key trend we see is customers want to buy from fewer, larger suppliers. They want to buy from fewer suppliers because it makes their lives easier, they want to buy from larger suppliers because they want to make sure whomever they invest in will be in business for years to come. I think that really uniquely positions HP in this marketplace going forward.

The other thing that’s really interesting about us is we are the only company out there that develops natively its own servers, networking, and storage and management software. So we have the unique capability to design the product from the ground up.

And one of our key tenants when we design these products is we design them all to open standards. In additional to wanting to buy from fewer suppliers, probably the biggest question we get from customers out there is “Are you going to lock me in? I like what you’re saying, is this product open, or am I going to get locked in with you?” The great thing about what we’re doing is it’s all built around open standards, we’ve supported open standards for years, we don’t fear them, we embrace them, and we think that’s really a big differentiator for us in the market.”

DV:' Talk a little about that openness. We love open here at Wikibon/SiliconAngle, but how do you add value in that kind of open environment?

DD: I thing you can add lots of value. It’s all in how you do it. If you look at how we are developing converged infrastructure, at the hardware level we’re going for a common, modular infrastructure. So what that simply means is you can share parts where you never could before – between storage arrays, between Unix servers, and between industry-standard servers. For instance now you can swap power supplies around; you can move servers in racks between industry-standard servers and Unix servers. It simplifies things for everybody. It makes it easier for us to execute in our factories, it makes it easier for customers to deploy things, makes it easier for us to do maintenance, makes it easier for them to train people. So that’s what most people would consider the commodity level.

Then on top of that we add all kinds of innovation. So one example is CF (?) sensors. That’s technology we invented in HP labs that allows us to monitor in real time the power and heat used by servers & storage. In doing that we tie that to our management software. By doing that you get a real-time view of what’s happening in your data center. You can do things like power capping – you get a real deterministic view of how much of those resources you’re using, and that solves a huge customer problem. In most data centers today if they can’t get that real-time view they have no other choice than to configure for the worst case scenario. And what worst case scenario means is you’re way over-provisioned. So people are building whole new data centers that in many cases they don’t need because they really do have that power capability available if only they knew how to manage in real-time.

DV: So let’s talk a little about your converged infrastructure relative to the others. You know this industry’s consolidating. Everybody knows you guys are one of the whales. How would you stack up HP’s infrastructure story with the competition?

DD: I think we can rationally say and very well defend that we are way in the lead. So why can I rationally say that? If you look at converged infrastructure, first you look at servers. We have the largest server marketshare, and this year alone we’ve updated every single server HP makes. We have all new industry-standard ??? servers, all new Integrity servers, which is our Unix server line, all new rack-mount servers, and with today’s announcement we have a whole new architecture of servers for service providers.

If you look at networking, we have network products today that are faster, have a higher core density, use half the power, and cost 35%-40% less than the current market-share leader in networking offers. If you look at storage and our very acquisition that we just closed last week with 3Par, 3Par we believe is the storage architecture for the nest generation and the next 10 years. It has all the features customers want around private cloud, around multi-tenancy, the ability to load-balance very well, as well as the ability to automatically move data non-disruptively between tiers of storage, whether it’s flash or ATA drives.

So if you look at that all together, Dave, I don’t think anybody can put that much new technology with the latest features into the marketplace like HP already has, and then we top that off with our Matrix operating environment that lets you manage that as a cloud all non-disruptively.

DV: It’s a good story. You’ve been busy.

DD: A very busy year.

DV: So let’s talk a little more about that. You said you have completely filled out your converged infrastructure portfolio. So does that mean you’re done acquiring companies?

DD: I like to say we’re never done. Because if I say we’re done then we might as well go home. The neat thing about the IT business is it’s always evolving, there’s always more features and functions you can do. And if you look at our philosophy at HP, it’s we always want to do both – we always want to do organic development and we want to do acquisitions. Because we’re not arrogant enough to think we have every great idea in the world, and that’s where acquisitions come in, to help fill out parts of the portfolio. But at the same time we have an incredibly rich history of doing our own development, and we always want to continue that. If you look at our business in particular, ESSN, we have over 10,000 engineers, we grew that engineering population more than double digits this year, and we announced last week at our analysts day meeting that we are going to continue to grow engineering faster than we can grow revenue. So a huge investment in our own organic development. And in addition we have said we will continue to look at acquisitions.

DV: Let’s talk a little about the R&D side. (IBM CEO) Sam Pamisano recently said, “I don’t worry about HP because they stopped investing.” Has HP stopped investing?

DD: Okay, you just heard me talk about all new servers, all new networking, and all new storage. So I will put up - -and I mean this sincerely – I will put up our technology against anybody’s in feature/function comparison, right down the line. I think it’s ironic that after Sam made that comment they went out and bought a small networking company in order to try to catch up with the organic development we did around our Virtual Connect technology, which is really innovative converged infrastructure technology – we’ve already sold 3 million ports of it – that connects servers to storage and servers out to IP networks.

DV: R&D doesn’t always pay off. We’re seeing a lot of large companies now have a healthy mix of R&D and acquisition. I think it’s a pretty viable approach to going to market. Let’s talk a little more about 3Par. We didn’t hear much about storage today, because tomorrow is all about the 3Par drill-down. So the 3Par acquisition was obviously phenomenal, the whole ping pong match was sort of interesting. But 3Par as you talked about earlier brings a cloud dimension. So how much of the 3Par acquisition was cloud-related and future growth versus trying to fill out the portfolio?

DD: Well, here’s the thing about 3Par, and I’ll say the same thing about our Store Once technology, we have two new technologies that cover multiple market segments with one product. No one else in storage can say that. So if you look at 3Par technology and at the traditional storage pyramid, you have low-end, mid-tier and high-end storage, 3Par covers mid-tier storage and high-end storage. And as you know most companies have separate architectures and separate products for mid-tier and high end. With 3Par customers can start small and grow large. That’s unique – no one else can do this. In addition to that, it covers the cloud. We have all that software out there that people want – multi-tenancy for security, the ability to have niche workloads and still meet SLA performance, all those features 3Par has natively. So what’s cool about it again is one product, multiple use cases out there.

The second thing is our Store Once deduplication technology that came out of HP Labs, the native innovation we were speaking about. With that, dedup is one of the fastest-growing spaces in storage. People do client-side dedup, they do inline dedup, they do primary storage dedup. In today’s world prior to Store Once you had to buy three different products to do those three jobs. The Store Once architecture is one architecture that does all three. So we’re seeing huge customer uptake on that because again one product that meets multiple demands, simplifies their life, simplifies their environment, and gives them more innovation faster.

DV: So that’s potentially, and this is technology that doesn’t exist today, a technology that you can put across the portfolio in different use cases and not have to rehydrate when you move data around. Is that correct?

DD: That is correct.

DV: That’s sort of the vision of that if I understood it correctly. One of the things you didn’t talk about it today, maybe you’re going to talk about it tomorrow, and you kind of alluded to it in your answer – what about big data? We hear a lot about big data in the industry. You saw Oracle’s announcements at Oracle OpenWorld. EMC buys Green Thumb. What’s your angle on big data?

DD: That’s a different division of HP. So big data itself and the management of big data happens out of our software division. So we already have technology in that space, and I think you will hear more from them coming up in the future.

DV: So from a storage standpoint, and I think this is where I think you did answer it, you said, “We want to be the best infrastructure for Microsoft, the best infrastructure for VMware, the best infrastructure for big data.”

DD: Right. Again it’s not just big data, it’s all those major applications. I think what’s different today is you’ll hear talk in the industry about appliances, and we’re a believer in appliances, we’ll be shipping an appliance. But we do it differently. The whole concept that we do is this: Our view is horizontal. Don’t just buy one appliance for one application. In converged infrastructure we want to be the best at running Oracle, the best at running Microsoft Exchange, the best at running SQL Server. So the people can make that decision once and then have their choice of applications, because you know everybody runs a mixed environment – they have home-grown apps, they have packaged apps, and what we want to do is provide that one infrastructure that they can manage ???

Technology we talked about earlier, where Virtual Connect, CF Center, all run horizontally across the infrastructure, versus trying to solve it one app at a time.

DV: The appliance market is cool, it’s simple to plug in. many of the customers I talk to complain that they can’t scale independently with the appliances – “I’ve got to buy servers and storage together”. So I think that’s a need that if I understand it correctly that horizontal structure can address.

DD: The horizontal structure is meant to solve that problem. So you can scale those elements independently, but you have a unified way of doing it to simplify the environment.

DV: I’ve heard you talk in the past about the supply chain. You have a $50B supply chain.

DD: $60B now! And growing.

DV: How do you leverage that for competitive advantage?

DD: I think it’s huge. At the end of the day customers want great IT. But at the same time I have not met a customer yet who wants to pay more money next year for what they bought this year. So that puts pressure on everybody in our industry. You always have to become increasingly efficient, and at the same time you always have to be providing that great IT. And that’s why I think HP has such as great combination. You already heard me talk about our thousands of engineers who are developing native technologies. But we run those native technologies on industry standard products. And simply put it’s just like in your personal life – volume begets better pricing. So when you’re buying $60B in components, and you’re the largest buyer of disk drives in the world, the largest buyer of memory in the world, the largest buyer of Intel products in the world, chances are you’re going to get the best prices. And the bigger our company gets, and we keep growing, the larger that advantage becomes.

DV: One of the things that I have always thought HP could have done a better job at, and I wonder if you’ve brought this ethos to the company, is this area of reference architectures. IBM has Red Books, just proving to customers that the solutions they are going to deploy will actually work in the field. Customer–oriented configurations. Are you investing more in that area?

DD: Yes we are very heavily. And we aren’t only doing it just with HP equipment, and I’ll give you an HP example. We talked about our cloud server program, where you can start up your own private cloud in 30 days or under using the reference architecture we developed.

DV: We had Carnegie Mellon on the Cube at VMworld. It is phenomenal.

DD: Isn’t that amazing? That is a reference architecture you just spoke about. The other thing though is our vision extends beyond just the architecture into these primary applications. So you see these announced publicly with Microsoft around Azure, around SQLserver, around Exchange. We are doing the same thing with SAP around large memory servers to make SAP run more efficiently. So you’ll see us do more of these right up to the customer’s most popular applications. And again the whole idea is to simplify the environment, make it easier for people to get things up and running faster and deployed into their production environments.

DV: What’s your take on the cloud? Do you think it is as big as everybody thinks it will be?

DD: Well I think it depends first on what your definition of the cloud is. I think the big thing is everybody defines cloud differently. But I will say this: In my conversations with customers around the world there is clearly more momentum around customers deploying private clouds. So that momentum is there today, we see the market for it. In addition to that we have a bunch of new-wave service providers out there. Think of the gamers and different applications out there and the social media applications that by my definition are clearly cloud applications that five years ago we weren’t talking about. And the amount of infrastructure those people consume is massive. We gave an example at the press conference today of one of the social media players who buys 40,000 servers at a time. Most of our businesses probably don’t have 40,000 servers total. So yes I think it is a big and growing opportunity.

DV: So the big announcement you made today was the Podworks Factory. You used the analogy of Henry Ford: “can I get a pod in another color besides blue?” So talk a little about Podworks. Why is that unique, and what does it bring to customers?

DD: So back to our discussion around cloud, what we see is people consuming infrastructure very differently. And there’s actually multiple ways that people want to consume infrastructure. So if you are a big business out there today, one of the challenges they face is that we’ve been going through a building boom like crazy of next-generation data centers. And depending on the size of your company you’re spending hundreds of millions of dollars, to in some cases billions, on data centers. And as I like to say, if you’ve ever built anything in your life, as soon as you’re done you always have regrets. Maybe I should have built it this way, maybe we made a mistake here. The idea behind Pods is to solve that problem for them. Make it so we can have a mobile, frankly recyclable, piece of the data center for ultimate flexibility. They can put them in warehouses, they can put them outside, they can park them in a parking lot if they need to. They can get a piece of the data center without having to go through years of design and building a next generation data center. For service providers who are scaling incredibly rapidly, they don’t have time to build that next generation data center. So for them the Pod is the perfect solution for them to get a very highly dense environment with servers, networking and storage. So I think this is a really unique alternative for people to buy.

What we announced today, and I think we used the analogy appropriately of Henry Ford. He brought the car to the masses through having an automated assembly line. And Pods need that as well. So what we’ve done with Podworks is built the first automated factory to build Pods. And we can configure them to meet the needs of whatever people want to do, which speaks to that flexibility I spoke about.

DV: We have a situation that we have talked about a lot at Silicon Angle and Wikibon, where these private clouds are beginning to benchmark themselves against the cloud service providers. They probably won’t get 100% of the way there, but they have to get close enough in terms of self-service and on-demand pricing and things like that. The Pod is a real innovation that will help them get there.

DD: The Pod is a way to get there, and our automation software and the Matrix where I’ve seen out customers benchmark just as you said. And through a combination of converged infrastructure and a couple of the other technologies we talked about today they can meet or beat those prices.

DV: Mark ???, who we will have on later, is talking about a PUE coming out of the Pod of 1.2, which is astounding. It’s in the box, and you just get that benefit. So my last question for you is what’s on your to do list. What are your objectives for the near- and mid-term?

DD: Actually we have very ambitious objectives. Simply put we want to change the entire enterprise infrastructure marketplace. I say that very seriously. And if you look at the work we’ve done in the last year, compared to where we were even just a year ago, we believe we’ve changed the dialog in the marketplace, we’ve certainly changed customer buying behavior, and you see that in the financial results we posted, and we’ve changed the direction of technology. And I know that’s a very ambitions call, but of you look at Hewlett-Packard, we have the heritage, we have the scale with things like the supply chain, we have the engineers, and we have the market presence to make that truly happen. So what we’re doing is really driving that vision forward. You’ve seen us be very aggressive this year in our ???, we’re very excited about what we have, and I can tell you, Dave, we are not standing still. We have even more exciting things coming, and you will here more and more from us in this space.

JF: Dave, the PC and client/server created a huge burst of productivity in the enterprise. Now we’re seeing Apple driving faster innovation on the consumer side. And some say enterprises are lagging behind. Tell us about the vision of how converged infrastructure will fill that gap for enterprises to catch up if you will to the productivity we are seeing on the consumer side.

DD: The real challenge that many enterprises face is that their infrastructure grew so rigid and so diverse that they got very slow in time to market in order to adapt to change. It really is not uncommon that if you were to call an enterprise today within any large company around the world and say, “I need a new infrastructure provisioned” that answer you are going to get back is typically weeks to months. And as you know in the consumer world you can get that in hours to minutes. So a lot of the technology we brought out is designed around taking what was weeks to months and doing it in minutes to hours. We have real-world customers who have made that conversion. And I think there is continuing pressure over time for enterprises to speed up and also consumerize over time. Buyers what to bring in their own devices, they want that flexibility in infrastructure. They want to provision their own infrastructure, which again we allow them to do as well. And I think that will only accelerate from here.

JF: How is the culture changing within the enterprise – in the old days it was siloed with app guys, network gusy, server guys.

DD: I think customers have been under tremendous strain due to the global economy. That has forced creativity in how they prioritize what they want to do in their environments. I think that has lead to positive change in that the silos that had been in place for decades are starting to break down under necessity and people are looking to manage more It as a shared resource.