CRN Exclusive: Whitman, HP Top Execs On Beating Dell, Security Breaches And Partner Profitability

Taking The Tough Questions

HP's top executives, led by CEO Meg Whitman (pictured), answered a range of tough questions from partners Tuesday on topics ranging from competing with Dell to security breaches to partner profitability. Here are excerpts from the partner Webcast question-and-answer session, which also included Bill Veghte, executive vice president and general manager of the Enterprise Group; Dion Weisler, executive vice president of the Printing and Personal Systems Group; George Kadifa, executive vice president of HP Software; and Sue Barsamian, senior vice president, worldwide indirect sales, HP Enterprise Group.

What programs are in the pipeline to compete against Dell now that the company is private?

We have now been working for two years to get our cost structure in line with our revenue. We have had two years to crank the innovation engine. We have had two years to double back down on the importance of the channel to HP. I have to say we have done in the last two years what many of our competitors are going to have to start doing. Dell, you saw, I think is laying off one out of every three people in their company. Think about that for a minute and the disruption that will cause. Listen, Cisco last quarter had a tough time. We, because we were forced to, to be perfectly clear about it, we did a lot of the hard work that our competitors are now going to have to start to do. So for once I think we are actually maybe two years ahead of our competitors.

-- Meg Whitman

What programs are in the pipeline to compete against Dell now that the company is private?

If it is not Dell today, it is somebody else tomorrow. We need to remain very focused on our end customers and our partner programs and not be distracted. It is nice to be in the news these days for all the right reasons. At HP, I think we have got our mojo back across all of our business units. When others are in the headlines for different reasons, that really is our time, I think, as the question quite rightly points out, for us to put the hammer down. So what we are doing across each of the businesses, certainly within PPS, is ensuring we have a very complete portfolio, very focused on our strategy. I think Dell in some markets is being extremely aggressive. In some other markets they are quite distracted, as the person who wrote the question points out. If we remain focused on delivering the right solutions to our customers, ultimately, together we will win.

-- Dion Weisler

What programs are in the pipeline to compete against Dell now that the company is private?

We are focused on the superior value proposition that we can deliver to customers. And it is a great time to be an HP partner on that dimension. As you evaluate the partnership opportunities with HP and the work that we do competitively against Dell, a good illustration of this is leveraging the breadth and depth of our portfolio. If you look carefully at their server business, they are concentrated in a very specific set of geographies and specific product lines, and the reality is your customers want the full gamut of servers. They want not only the full gamut of servers, but very frequently they buy servers, storage and networking and, so, how do we bring those to bear in the form of converged systems? The Converged System Shark releases at [the HP] Discover [Conference] is something very difficult for them [Dell] to do.

-- Bill Veghte

Which of HP's software product areas do you expect to grow in 2014?

In 2014, HP Software's story is going to be a growth story across every line of business. We want to do it across our [IT] testing business, application testing, IT operations, security, Autonomy and Vertica. We are very, very encouraged. All of these businesses have been growing recently.

I look at IT operations. Cloud automation software is growing at double digits already, and we want to do more clearly to further accelerate that growth. Security is a deep double-digit growth business for us. It has done very, very well last year in fiscal 2013 and we believe will do much better in fiscal year 2014. Autonomy is on a great turnaround path. It has been growing over the last two quarters and, hopefully, this quarter will be a good one too. And, last but not least, Vertica is growing in double and triple digits.

-- George Kadifa

When will HP expand its portfolio of tablets and mobile devices?

In the past year, we have released almost a dozen new mobile devices. And we are doing that in a very careful, considered way. Where we are really focused in the future is on the commercial mobility space because we believe we have all the assets to bring to bear, whether it be intellectual property, know-how, our channel partners, a great reach out to the largest customers on the planet. So a lot of the R&D investment has swung from our consumer business over to our commercial business. I think we released a great first commercial tablet, the ElitePad 900 (pictured). I think it had all the right attributes. Now we are working to bring the cost point down for that commercial product, still have the innovation of the (add-on) jackets, and introduce a portfolio across both Android- and Windows-based devices.

-- Dion Weisler

What game-changing innovation can we expect from HP as a result of Intel Ivy Bridge, Atom and ARM processors?

You can continue to expect lots of game-changing innovation from HP. When I look at the power-consumption challenge associated with servers, there is enormous economic pressure in the market with our customers around getting the power consumption of those servers down. So what are we doing as a result? We are doing exactly what you would expect HP to do. We are innovating aggressively -- in fact, more aggressively than any other player in the server marketplace. We are doing that in the traditional form factors as well as in rearchitecting and rethinking the server architecture to enable a fundamentally different power footprint. We announced Moonshot last spring. Moonshot is the first rearchitecture of industry-standard serverers since 1989. The core of that is about providing a power-consumption profile that is 87 percent less than what you see in traditional workloads.

-- Bill Veghte

How big is the HP enterprise security opportunity?

Today the importance placed on security is huge and growing. The average cost of a breach and average time to detect a breach are both staggeringly high. In the last few weeks alone, you have heard of major breaches at Target, Snapchat and Skype and even today with Neiman Marcus putting security squarely in the largest concerns of your customers. We are a leader with our ArcSight, Fortify and Tipping Point products, and we are No. 1 or No. 2 in these markets where we compete. HP Fortify on demand, one of our flagship security services, is rapidly growing and is now available for mobile applications security testing in the cloud for faster, more secure releases. And HP Tipping Point next-generation firewall provides application visibility and control, which is combined with intrusion prevention and the best threat research in the world. The next-generation firewall is a complete and comprehensive solution that allows you to go after new customers like security-centric verticals including financial institutions and government. -- George Kadifa

What is one of HP's key channel advantages?

Not only are a host of our new offerings channel-ready, but they are channel-optimized. The channel-first mentality that we are starting to bring to the market is really evident in our announcements. The other thing is the [faster] tempo with which the three product business groups are coming together to do joint offerings that we can bring into the channel. We are firmly committed to this concept of the new style of IT. The customer base and the market in general is going through massive inflection points, and things need to change in terms of the way technology is bought, deployed and managed. And we have an amazing portfolio of solutions. And we want to make it [advantageous] for partners to do more of that business with HP.

-- Sue Barsamian

Why should partners team with HP in 2014?

In short, the reason why [you should team with] HP is that you should make more money with us. In the end, this is all about your profitable growth, and we are orienting the whole company around how do we give you revenue opportunities that are profitable revenue opportunities so that you can differentiate yourself in the marketplace. Channel first. What are the products, appliances, things that you can sell to your customers easily? And that is the reason I think we are collectively going to have a great 2014.

-- Meg Whitman

What is the converged hybrid cloud market opportunity for partners?

Cloud is, obviously, one of the key initiatives of this company. It is, I think, a game-changer in how compute is delivered, how it is paid for, how it is sold. And HP has to be a leader in this area. I moved cloud into Bill [Veghte's] organization because in many ways infrastructure and cloud is the same business and having them under the same leader can lead to trade-offs that make sense for you, our partners, as well as for us. We also named Martin Fink [HP Executive Vice President, CTO and Director of HP Labs] to run our cloud initiative reporting to Bill. Martin is a 28-year veteran [and] used to run our BCS [Business Critical Systems] business.

-- Meg Whitman

What is the converged hybrid cloud market opportunity for partners?

The core of our strategy in converged cloud is about making sure that we are building and delivering a cloud that enterprises can rely on. And I use the words 'rely' and 'enterprise' very consciously. Our belief is that it is going to be a hybrid world. The world is not all going to be just public cloud. It is going to be public, managed and private cloud. Customers need a variety of service-level agreements to manage and maintain those key applications and make sure that the data is in the right place. And, quite honestly, what we have seen over the last seven or eight months is through things like the NSA debacle or [Edward] Snowden is that the reality is customers are getting a lot more thoughtful about how and where they do their cloud buildup. And that is an opportunity for us together.

-- Bill Veghte

If partners want to accelerate their cloud business with HP what should they do?

There are two programs. If you look at the cloud market and think you want to be a service provider, then I encourage you to leverage the Cloud Agile program. The premise here is we think customers are going to want to be able to move their workloads across a variety of infrastructure, so we [are] providing a consistent, coherent way of doing that. Cloud Builder is if you want to help customers build and operate their own clouds, [you should] take advantage of that. I am really passionate and a strong believer that as the cloud build-out occurs in the marketplace, the vendor that wins is the one that figures out how to fully amplify and enable partners.

-- Bill Veghte

What advice would you give to partners on how to transform their business model?

Business models are transforming to be hybrid -- resellers, service providers, managed service providers – and to be a richer mix of hardware and software and services. Leveraging the HP portfolio and the breadth of the offerings to do that is, we think, a very strong value proposition for partners and one that they are going to have to take advantage of in order to transform.

-- Sue Barsamian

What advice would you give to partners on how to transform their business model?

If you look back at the client/server period, the partners that won in that [paradigm] shift are the partners that figured out how to deliver those solutions. This is no longer simply a resell model. It is going to put pressure on you to do that integration. One of the great opportunities with HP is we do that integration for and with you. The challenge and the opportunity for us together is customers are looking at this new style of IT. IT is under enormous pressure. And they need speed, and they need solutions. They are willing to pay a little bit of a premium for it. But as you are transforming your business, really exploit us and the solutions you hear today. That is a unique opportunity. And it is a great business opportunity for the channel broadly. So contact me because we want to make sure we work with you and go further faster.

-- Bill Veghte

What advice would you give to partners on how to transform their business model?

As-a-service is taking over the world. Software-as-a-Service has been here for some period of time. We are now seeing demand for PCs as a service, printing as a service. My view is we have to have business model innovation to match our technical innovation. So I have got our entire teams thinking about how we can leverage HP Financial Services, how we can leverage our enormous footprint and our capital to allow you to sell to your customers as a service. And that is a wave that is not here yet. This is not a wave three. This is wave two. This thing is like on the horizon cresting. That is another thing that we have to help you solve.

-- Meg Whitman

What were the biggest HP PartnerOne accomplishments in 2013?

We accomplished a lot in 2013. One of our biggest improvements was to PartnerOne. I continue to get great feedback from all of you on PartnerOne. In a recent Pulse survey of 1,100 partners, 80 percent of you indicated that paying from the first dollar benefited your business: 77 percent for the full HP portfolio, 81 percent for PPS [Printing and Personal Systems] and 89 percent of you in EG [Enterprise Group]. The next finding was you saw increased profitability with doing business with HP: 78 percent for the full portfolio, 76 percent for PPS and 75 percent for EG. You also saw increased predictability, which is one of the things I heard loud and clear when I first came to HP: Eighty-five percent said that for the portfolio, 79 percent for PPS and 84 percent for EG. You are also telling us you are anticipating growth in FY 2014. So how great is that?

-- Meg Whitman