HPE NonStop Corner – one partner’s perspective

It was a report that many of us in the NonStop community wait for at the end of each HPE financial quarter – the financial results. Once again, HPE managed to combine good news with some much-needed explanation as well as some news that hit closer to home for everyone in the NonStop community.

First up, it was clear from the opening paragraphs that HPE CEO Antonio Neri was pleased with the results. However, it was also very clear that the revenue transformation under way at HPE needed further explanation – the stated mission to become a world-leading edge to cloud platform as a service company meant that there would be some impact to the bottom line as the company moved to a pay-as-you go financial model with GreenLake. At least, during the transition, but again, nothing that anyone who has been involved with a predominantly software-based company hasn’t experienced before.

Secondly, and probably just as importantly, with as much emphasis that HPE places on the Intelligent Edge and on the contribution Aruba provides, its revenues still trail those of the combined HPC / MCS organization. What’s remarkable here is that adding the HPC component to the organization meant that big deals were hard to come by and when they happened, revenues were spread out over a very long time. While HPE doesn’t disclose numbers for individual product lines, from past conversations together with what was disclosed at the latest NonStop TBC event, it’s clear that the NonStop organization continues to provide a solid contribution to HPE’s bottom line while maintaining better than average margins.

This was borne out in the subsequent call with the financial analyst community that followed the release of the numbers. As you can expect there were quite a few questions directed at Neri but before getting into the responses given (and not included in the March 2 press release) came the news that will likely impact the NonStop community most of all:

Today, I want to share the news that Pete Ungaro has decided to leave the company in April. Pete joined HP with Cray — with the Cray acquisition and ensured the successful integration of the two companies. He has made significant contribution and has grown the business despite the complications and backlog brought by the global pandemic last year.

Pete will stay on with the company in a consulting capacity for six months. And I’m really grateful for him — to him for his leadership. I am pleased to announce that Justin Hotard, a seasoned HP leader, will take over the leadership of the HPC MCS business and also Hewlett Packard Labs reporting to me. Justin has brought an extensive experience across the company that includes leading our HPE Compute business, where he transformed the x86 compute portfolio and delivered revenue growth, profitability and market share expansion.

I’m excited about what Justin will bring to the business.

I expect we will miss the enthusiasm Pete Ungaro had for NonStop based on his opening remarks at the NonStop TBC last year and we will just have to wait and see how this plays out under the new management team. From the information provided to LinkedIn it would appear Justin knows the Asia Pacific / Japan marketplace quite well and that cannot be a bad thing for NonStop given how there has been success for NonStop in this region over the course of the past couple of years.

Very early in the question period of the analyst call Neri did give insights into how important he sees data – a topic of great interest to the NonStop community given how HPE recognizes that data is created on NonStop:

So what we see though is an acceleration for definitely the access to data, the analytics side. We see AI machine learning taking holding every segment of the market because data insights is necessary to compete in this new digital economy. We see, obviously, the need to improve IT resiliency based on the learnings we had in 2020. We see also the need to deploy cloud everywhere.

And remember, our definition of the cloud is an experience, not a destination. And that’s why we are very bullish about our HPE GreenLake cloud services. 

This bodes well for all those NonStop vendors involved in moving data to data warehouses, lakes and the like and doing so in real time where the fresh data from NonStop is likely to be valued most highly. It is also a reinforcement of how HPE continues to view cloud as “an experience, not a destination.” Sets the stage, doesn’t it, for the effort under within the NonStop group to provide NonStop SQL Cloud Experience.

Then there was Neri’s response to the question many financial analysts were interested in – does HPE anticipate the market recovering and indeed growing as the global pandemic shows more signs of easing:

Yeah. I mean, I think the market, in general, is recovering. 

I think it’s across all businesses. And I think it’s a combination of our execution because of our strategy and the emphasis on the innovation that we bring to the market. And obviously, as the market gets better, we should take advantage of that. But remember, we have a unique value proposition.

We are a company that has unique portfolio from edge to cloud. Our competitors don’t have all of that. Some have in one area, some have in another area. And what customers want is an integrated experience more and more.

And obviously, the shift to a consumption-driven model is in our favor because once we land a customer in GreenLake, basically, they get what they want, whether it’s at the edge or what is in the core or whether it’s in a managed services for the hybrid model that they are all adopting.

And HPC, I’m very bullish about HPC because ultimately, the data sets we see in customer sites continue to grow. And they all need AI machine learning at one point in time.

Bullish about HPC (including MCS) with data sets continuing to grow. Perhaps this is something to hold onto as we move deeper into HPE’s financial year 2021. In his interview with financial news channel, CNBC, Neri emphasized how HPE was back to pre-pandemic numbers, even better in most regards. “HPC and MCS are on track to deliver full year FY21 growth of 8 – 12% with over $2B in contracts.”

As for the planned move to Texas and the recent power grid failure, Neri expressed few concerns. When it comes to how HPE will continue to operate in the US, Neri made it clear that “we will continue with social distancing and mandate masks when we open our offices because now they remain closed.” With HPE share price up 20% for 2021, perhaps HPE’s execution is going well after all, financial transformation included.