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>> Okay. We're hearing the cube unpacking the HPE GreenLake
announcements.
Daniel Newman is here, principal analyst and founder of
futurum research.
Dan, you good to see you again.
>> Dave, always good to jump.
Jump on with you. It's good to have a minute to sit down.
>> So what's your favorite announcement from, from GreenLake?
What do you, what do you make of what they announced today?
>> Well.
I love the opportunity for the company to position itself up
against a, a growth monster like snowflake.
I mean, looking at the ability to handle
the breadth of the data
at scale and offer a data service
that can compete in that space.
That's exactly the kind of narrative
that I think the markets,
the outside world is going to want to hear from HPE is how,
how, you know,
you're not just competing with your traditionals,
the Dells and the Cisco's, the IBM's you're going after the,
the, the mega growth cloud players and data services.
And for me,
that's really attractive because I've been really on top of
HPE saying: "Hey, you're doing a lot of the right things"
but people have to feel and see the growth.
>> To me, this is a major move toward
a TAM expansion strategy.
It's kind of the job of every CEO, right?
As to expand the TAM.
And I'm interested to see how HPE plays this and
communicates this because, you know,
traditionally it's a hardware company moving into
data management, data services.
That's an enormous market. I mean,
we always talk about how important data is, but,
but data management is just huge.
And to do it in a cloud-like fashion.
How do you see that as potentially expanding the total
available market for HPE?
>> Well, first let's just almost walk it back a second, Dave,
HPE is a cloud player.
Okay.
And that's the story that it is trying to get out there.
It is not a hardware player. That's tinkering in software,
but HP has done software. This isn't its first go.
But if you want to be a cloud player,
you look at the big hyperscalers. You look at the AWS,
as you look at the Google, you look at Azure,
the Google built, not just on hardware.
It's built that big see.
You and I've had this conversation before.
All the things that make up the cloud. It's the hardware,
it's the software, it's the services,
the platform you've got to put all these things together.
And if HPE wants to be a public cloud experience,
taking advantage of where we're moving with hybrid and
offering it private,
it has to have that same subset of services.
Look at the investment,
whether it's been AWS or Google or Azure in data services,
HP has to be in this space. So seeing this come to fruition,
in my opinion, is directionally the right path,
getting it to be well-received, winning the right customers
and showing the growth from these investments,
is going to be the next important phase.
>> Do you see.
that as a service model,
as being more margin friendly for HPE, and if so, why?
>> Well, I think universally,
we found there's two major improvements that moving to the
azure service one is it does over time create expanded
operational margin. It's just economies of scale.
You can utilize every resource more efficiently.
Of course there are CapEx expenses.
You've seen the amount that hyperscalers have had to spend
to expand their footprint globally.
So there is some CapEx up front,
but that also on the back end creates depreciation and
different bottom line profit creators.
At the same time though,
as a service is huge for the multiples in the valuation,
which by the way,
is one of the things that has been real in focus point for
HPE is how does it up that, that number, you know,
you look at the snowflakes, not even profitable,
but getting huge, you know, you know,
huge multiples on revenue.
And then you see even the other hyperscalers,
all getting bigger plays on revenue and on, you know, EPS,
most of it has to do with the fact that recurring revenue is
beloved by investors,
but it's also really sticky and creates a ton of stability
within the company for the culture of the business to say:
"Hey, we have customers.
They're going to stay with us. They're not going anywhere."
They're subscribed to our services.
They're buying into what we're doing. And by the way,
net revenue expansion, as you get them sticky, you,
you layer in new services.
We've seen how this has worked across the board with public
cloud, with software, with SAS, can HPE do it as well?
And of course it's, it's been something they're doing,
but it's something we need to watch really closely.
And I think it's an opportunity that the company needs to
lean into. And, and I think they will.
>> Mentions SnowFlake a couple of times there's a, there's a,
there's a discussion in the industry.
It was sort of prompted by Martin Casado and Sarah Wong
about repatriation,
and particularly as it relates to software SAS companies,
that, that the, the, the cloud bill is so high.
At some point they're giving away margin.
So they're going to have to come back on prem.
I'm not sure that to date that has applied to, you know,
the general audience of customer,
although there's a lot of debate as well between the
expensive cloud, obviously, you know, egress charges,
et cetera. So it's, so it's,
it's hard sometimes to squint through that.
When you think about HPE bringing GreenLake to market at
scale, bringing repeatable processes, driving automation,
et cetera.
How do you think that that cloud repatriation argument,
which frankly, I haven't seen a huge cloud repatriation in,
in the macro,
but how do you think that will play out over time?
Do you feel like the on-prem play can be as cost-effective
or more cost effective,
or maybe you feel like it is already today?
>> Well, I also listened to the injuries in Horwitz,
a repatriation narrative as well.
I think there are economies of scale of cloud that companies
have to look at closely,
but I also think that has a lot to do with why hybrid has
been sort of the story of the day.
That's why hyperscalers are going. On-prem more.
And that's why On-prem are moving to the cloud is
because it's always going to be some, you know,
some group of different placements of workloads to
ultimately get to that optimized result. And so, you know,
when you look at, you know, sort of what you asked,
in my opinion, you know,
ultimately it's all about the efficiency of your
organization trying to accomplish what your business is,
and will there be some repatriation of workloads possibly,
but there will be a very important hybrid mix.
And I think we're going to continue to see that trend.
And I think that's exactly where everyone's going and HPE is
going as well.
>> All right, Daniel. You've got to leave it there.
Thanks so much for your insights. Appreciate it.
We're going to definitely have you back.
You and I are going to do some cool stuff together, so
>> Yeah, we'll talk soon
>> Take your time.
>> Thanks.
>> All right, thank you for watching.
This is Dave Volante for the keeps coverage of
HPE GreenLake announcement. Keep it right there.
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