The HPE Corner

There is a reason the music industry has its “top of the pops” lists and why we have polls tracking the performance of sports teams. Those of us interested in one or the other want to know what is trending up. For us, the basis of purchase of music tracks and tickets to games is based on the presumption that if something is trending up then it will be good! Without an appreciation of what’s going up and what’s coming down many of the decisions we make as we go about our daily lives may not give us the results we otherwise would have expected.

When it comes to IT there is no end to the charts and lists being produced. If we want evidence in support of a new initiative then there is a plethora of web sites we can turn to that would provide us with such information. How many of us have pegged our careers on the “magic quadrant” charts Gartner produces on a regular basis and how many of us have worked extra hard to ensure our products make it all the way up to the top-right quadrant? However, when it comes to how a company reports its quarterly results it is a little less speculative and open to interpretation as regulations have brought with them a degree of consistency of reporting that makes it a lot easier to understand how a company is fairing.

It was only a short time ago that HPE published its Q1, 2018, quarterly results and followed up with calls to financial analysts. This time, the results looked a lot better than for the past year or so and while it is not often that I pull information from my private weekly updates for my clients, this month I am making a small exception and will quote a couple of items from that client-only weekly update – a publication I refer to as a Buckle’d View.

Q1 proved to be a surprise for the financial community as it beat many of the forecasts. Furthermore, there was a noticeable uptick in the stock price folowing the release of the numbers that is helping boost the market cap for HPE  and I sense that momentum will develop here with the stock getting more support from these finanical analysts in the weeks ahead. Can it be sustained for the rest of 2018? There are some doubters, but it will all come down to execution and HPE having the right people in the right place across the organization. No surprises here with this observation but every bit as important is the maintenance now of both top and bottom line performance.

But here’s the thing; the path to greater profitability has now been established and it is a lot brighter without being weighed down by “non-core” Software and less than stellar Services, what the financial analysts warmed to was that the new HPE was easier to follow and easier to predict. And that is goodness for HPE! And yes, goodness for NonStop. But what exactly will NonStop look like as we continue to see HPE promote its vision and its strategy? Having said that then looking at the chart depicting revenue growth (below), and looking at how HPE will be bringing back repatriated profits from overseas (thanks to the reduced tax burden), there may be surprises install for just what NonStop will look like by the end of 2018. Kind of makes you interested in what will be covered in this year’s NonStop Technical Boot Camp, doesn’t it?

As HPE CEO, Antonio Neri, explained it in his call with the financial community following the release of the Q1, 2018, results, “as you know, we have defined our strategy, built our portfolio based on the market disruptions we’re all experiencing, driven by the digital transformation and the resulting explosion of applications and data.” Which is nice to hear, isn’t it, given that NonStop wasn’t part of the spin-merge of 2017 that included non-core software products. No, NonStop was considered too valuable to be let go and for two very good reasons – too many “blue-ribbon” high-end customers and yes, no clear migration path to any other platform in the HPE product portfolio. Read this last point as little more than confirming the oft-thought implication of there being no value whatsoever in handing such a blue-ribbon customer base to another vendor.

Will the revenue growth chart above continue its upward trend over the next three quarters? Whether it was caution in general or simply an acknowledgment that something else was going to disrupt HPE (and the rest of the industry), Neri cautioned the financial analysts that HPE may hit headwinds during the second half of the year. No further explanation was provided and perhaps this was just setting the stage for something else to take place – justification for another acquisition, perhaps?

Participation in a consortium addressing either new technology or new verticals – with the news that first Amazon (along with Chase and Berkshire-Hathaway), Apple and now Alphabet all want to get into healthcare if just to address the needs of their own staff, will we see other technology vendors follow suit? Or perhaps it is the looming challenge that analytics and AI are presenting today that will see something new coming from HPE that may make the above charts a moot point as strategies change?

If lists are important to you and where your favorite vendor ranks within those lists critical to purchasing decisions, then Q1, 2018, results should be very good news for you. They should go a long way in renewing your sense of relief as well as fueling new enthusiasm for HPE and for NonStop. But NonStop is about to change. NonStop is going to come out of the shadows and no longer remain a “best kept secret” among IT professionals.

My reasoning for this is that very soon, traditional NonStop systems will be relegated to a custom, bespoke, option whereas the majority of focus will be on virtualized NonStop as with vNS, NonStop can play a much bigger role that is more tightly aligned with HPE’s open, industry-standard, commercially available off-the-shelf (COTS), strategy and for that, as much as it may fly in the face of current expectations, we all need to make preparations. NonStop wasn’t unloaded with the rest of non-core software for a reason – it singularly offers unique differentiation for workloads even as HPE embrace open, industry-standard and COTS – and when it comes to thinking strategically, of course, and executing on a vision then once again, it all comes back to the OS.

Upgrade to the L-Series now and be ready to ride the upward curve with everyone else – it’s going to be harder to ignore and gives you options and as everyone knows, being able to choose is ultimately what HPE is pursuing for NonStop and with that, we have a clearer appreciation as to why NonStop was never considered “non-core!”