CRN Exclusive Interview: HP Enterprise Chief Veghte On The Trouble Ahead For Cisco's Public Cloud Initiative

Veghte On The Public Cloud Troubles Ahead For Cisco

HP Enterprise Group Executive Vice President Bill Veghte, one of the architects of HP's cloud strategy, spoke with CRN about HP's public cloud and the economic and architectural realities Cisco will face in the public cloud marketplace. Here are excerpts from the question-and-answer session.

What are the big differences between the Cisco Public Cloud and the HP Public Cloud?

I think one of the challenges and benefits that HP has is that Cisco is at the end of an era and we are at a new beginning. It is very challenging for a company to reinvent at a fundamentally different margin structure and to reinvent where it is not just about the switch and the router, but it is a broader solution. That is a very different model.

I think there are some wonderful things that they [Cisco] have done over the years. It has been a great run. For HP, for any number of reasons, we started on that transformation two and a half years ago and they have got a transformation they have to go through.

Talk about the challenges Cisco faces as they go through this transformation.

How many architectures do they have? When were those architectures done? Some of the partnerships Cisco has are fundamentally challenged. You know this well in terms of how Cisco [initially] chose to enable vs. build. There are plenty of public statements [Cisco made] to date that they would provide the capabilities but would not build its own [public cloud].

Two years ago we laid out a program that was predicated on cloud builders and cloud service providers and that is what they effectively announced. So we view it as a strong endorsement of the direction that we have been on and a strong endorsement of the opportunity that partners have with our platform and our solutions today.

What do you think about Cisco participating in OpenStack?

I think having Cisco participate around OpenStack is a great thing. I look forward to the engineering contributions that they will make. That validation is useful for customers.

Is there a potential for lock-in with Cisco vs. HP?

You know Cisco's past track record. They did an announcement vs. 'Here is the technical architecture and how it is going to work.' I haven't seen that yet. But I think the reality is when I go back to customers, whether it be a medium-size customer or a larger customer, they are still trying to figure out how and what bets they should make on the cloud. It is hard for them to make a singular bet on an Amazon when you are saying, 'Wow it's an early market and I want flexibility and I want interoperability.' What OpenStack represents provides customers with that flexibility and choice.

How much can partners make going to market with HP vs. Cisco on the cloud journey?

The solution is not just a switch or a router, the solution is the infrastructure, the solution is the management tools, the solution is the security tools around it. And the core services to enable that.

We vs. other players in the marketplace have a broader and a deeper portfolio than anyone else. And to the extent that we can effectively provide the right level of integration, while enabling customers to choose, that integration provides simplicity and speed that is very hard for competitors to follow and gives partners an opportunity to pursue this in a way that is more economical for them.

What kind of enterprise-grade public cloud momentum do you have?

The HP Public Cloud is about drinking our own champagne or eating our own dog food. When I go talk to a partner that is aspiring to be a service provider, I want them to know that I am asking them to do something that I do every single day for and with customers.

In the context of public cloud, we made the bet on OpenStack. We are one of only two players in the marketplace that has actually put it up there with an enterprise-grade SLA [service level agreement] and that gives us enormous expertise as we roll out the work that we are doing with and for partners in a managed or a public cloud context.

What kind of cloud feedback have you gotten at the partner roundtable discussions this week?

What we heard again and again from partners is that the amount of enablement that they have to do for this is big. And to the extent that they have one enablement model as opposed to going from vendor for one element of enablement, then another for another enablement, then another vendor for another piece of enablement. And God forbid those three partners get in a messy divorce because they disagree on strategy or at the core they are at cross purposes for how the business is going to evolve.

What are partners not doing that you would like to see with regard to the cloud opportunity?

I am very pleased with the progress that we are seeing from partners on this front. You can see it in the CloudBuilder numbers, the 250-plus partners. The quality of conversations that I have had here were fantastic. They understand the technology. They understand the opportunity. And it was what true partnerships are all about, two very smart institutions and smart people rolling up our sleeves saying, 'How do we take it to the next level?' This vs. two years ago. These guys get it. They are on it. I don't feel we are wildly out of whack where our strategy is here and they see the market over here.

Why HP vs. Amazon for partners?

Many partners that I talk to want do more than just resell. They want to deliver solutions. Many partners I talk to want to deliver solutions that are fundamentally about enterprise and, at the end of the day it is about TCO [total cost of ownership).

HP said the time is right for partners to pick primarily one vendor for new style IT. Do you think customers are going to feel the same?

Customers value simplicity, agility and lower TCO. What we showed with Sharks was a lower TCO, a greater agility and higher performance vs. what you can do with an eroding partnership [VCE- VMware Cisco, EMC] that has high margins across each one of those partners.

Talk about HP's strategy to drive partner profitability with the broad portfolio.

You see us being very thoughtful about the adjacencies. If the partner is invested in the 3Par platform at the backup/renewal time, selling StoreOnce is a very logical thing. The partner doesn't have to go through all that incremental investment. That is a home run. If you sell a blade server then you can sell the attach with it. The partner can choose to resell TS [Technology Services] or they can deliver TS.

One of the things that came up again and again this morning is that we are accelerating partner enablement, the enablement around a better way to virtualize is an example, the enablement of how to modernize IT.

What is the sales outlook for the Converged System 300 and 700 virtualized systems?

The good news is pipeline looks great [with partners]. They are great entrepreneurs. They know we have hit a nerve in a positive way. There is a bunch of them leaning in hard. They are very pleased with the pipeline. We are getting the wins and at the same time we are learning every day. [HP Senior Vice President ConvergedSystems] Tom Joyce may be the most popular guy at the conference. It is never one thing.

If enterprise partners had to choose one product to accelerate the move to the cloud what should it be?

We want to make our partners superheroes for IT. To do that what IT needs is they need great private cloud solutions that offer the end customers self-service and multitenancy without the risks and costs of the other alternatives.

How big is the HP Microsoft partnership and the Microsoft HyperV opportunity?

I think what is significant about the Microsoft announcement we did yesterday was two companies getting together on the engineering side and on the go-to-market side to deliver a better customer experience for those Microsoft workloads and a better customer experience on HP gear. And then correspondingly to be able to show up in the market together to deliver something that is, frankly, less friction for the end customers. Simplicity, convenience, agility matter a lot. And when you have simplicity, convenience and agility for the end customer, that is a good thing for the partner.

Are you committing more engineering and resources to the Microsoft partnership?

First of all, it is team out. As a team we have really rallied behind this concept of delivering great customer experiences for the leading workloads in the marketplace. I do a regular check-in status with Microsoft. We do a regular session going through what do we need to do on the engineering side, the go-to-market side and what feedback are we hearing from partners, from customers and then how do we optimize based upon that.