The HPE Corner

While it may not be everyone’s cup of tea to page through the quarterly financial reports coming from HPE or check out all the commentaries posted by the financial community who closely follow HPE, it is still important for the NonStop community to be aware of how HPE is performing. Quite frankly, on first reading, some of the stories making headlines these past couple of weeks were pretty hard to take.

For instance, among the headlines that came across my terminal were The Slow Death of Hewlett Packard Enterprise (Investor Wand, March 6, 2017) and Hewlett Packard Enterprise Earnings – Has The Company Done A U-Turn On A Trip To Nowhere? (Bert Hochfeld, February 27, 2017). I subscribe to the popular news aggregation site, Seeking Alpha, and have any update on HPE automatically generate alerts to my desktop, but even so, I wasn’t expecting quite the number of analysis reflecting as poorly as they did on HPE that have appeared of late. It’s as if whatever respect investors may have had for HPE has dissipated completely and it is now open season on anything related to HPE.

What follows here are just a few of the commentaries provided in the above papers and elsewhere:

… the reason why we’re concerned is because the enterprise hardware business where HPE competes has no long-term viability. As the world moves to cloud, the demand for proprietary servers and storage continues to shrink.

The migration of workloads to public cloud service providers will likely deter companies from increasing investment in on-premises data centers, which means that less infrastructure supplied by HPE will hit the market.

It was never going to be an easy or seamless progression to straighten out HP’s hardware business in an era in which enterprise data centers are thought by some to be an endangered species and the fact that issues have emerged is not terribly surprising.

What’s far more important are questions about the long-term viability of a strategy related to selling a hybrid-cloud infrastructure to enterprise IT customers. And the company, which through divestiture will be shrinking itself to less than $30 billion a year in annual sales, is going to need to replace the sales strategies that were appropriate when it was a behemoth, and could use its consulting practice as a lever to promote sales of enterprise servers and storage.

Ouch – on the surface a critical summation following the release of its quarterly results even as, “reported EPS exceeded expectations, revenues were a miss and guidance was reduced noticeably for the balance of the year.” The news that everyone in the NonStop community needs to pay attention to – HPE is a big ship and like any really big ship, it takes time to swing the bow around even by just a few meters but when that bow does come around, these big ships can quickly put many miles between where it is now heading versus where it had been heading only a short time ago. Unfortunately, in a world that is quarterly driven, not every analyst is prepared to look much further than the bow of the ship nor do they even sense the subtle movement of the deck as the bow begins to rotate.

I am one of those HPE watchers who is far more optimistic about the future of HPE and NonStop. Take for instance cloud computing. It really is Mainframes 3.0 as one of my clients acknowledged. Yes, the third iteration of a very big system – from a uniprocessor model to a cluster of nodes to servers in a box. For any IT professional who has worked in the data center for a number of decades, much of the hyperbole being thrown around in support of clouds today looks awfully familiar! Déjà vu, all over again! While there has been much toing and froing over whether NonStop systems were ever mainframe category systems, with camps deeply divided over the issue let’s just say it out loud – NonStop is a system that fits the mold of a mainframe. Perhaps not as general-purpose as some would like, but all the same, a really big “mainframe class” system! At a time when so much is being discussed concerning transformation to hybrid infrastructures then certainly, for the workloads typically found today running on NonStop systems, it’s easy to consider it as a mainframe alternative.

Moving on from this and back to more familiar ground for the NonStop community, very few systems can scale out the way NonStop can and more recently, scale up the way NonStop can. For NonStop now to make a break from being hardware dependent to where it can run on a virtual machine is just another significant milestone when you consider what Mainframe 3.0 is really all about. NonStop has a firm handle on what is required of enterprises today and has enough differentiating features to warrant a presence inside enterprise data centers. If Mainframe 3.0 really is all about clouds in a box than the kicker here is that yes, NonStop can run happily on any x86 cloud in a box enterprises elect to bring into the data center. The only real issue for NonStop, as of right now – and one that was referenced ever so subtly in HPE financial reports – revolves around just how close the rest of HPE elects to get with those working on NonStop. HPE is reshaping its product portfolio and this time, there’s a real interest in insuring NonStop plays a part. Mistakes have been made in the past – but should the barriers to greater participation by NonStop in the reshaping of the product portfolio come down as I believe they will, then everyone in the NonStop community will be very pleased with whatever outcomes are generated.

In closing, let’s just revisit what HPE CEO, Meg Whitman, said on her call to financial analysts immediately after the release of the last quarter’s results. Quoting from the Hewlett Packard Enterprise’s (HPE) CEO Meg Whitman on Q1 2017 Results – Earnings Call Transcript, “In just the last quarter, we’ve reshaped the entire Enterprise Group business to better drive the three pillars of our strategy, hybrid IT; the intelligent edge; and services. We appointed a new Global Head of Sales and new sales leads in each of our geographical regions. We hired a new leader for the Technology Services business, and we hired a new leader for our channel program. These are the some of the more significant changes we’ve made to set the Company up for long-term success. While these changes were the right changes to make, it was a lot for the organization to take in. Frankly, as we headed into Q1, we overloaded many of our top people and disrupted the day-to-day cadence of our business more than we should have. The good news is that we’ve identified the problem and are fixing it. More importantly, once the dust settles, the changes we’ve made will leave HPE in a much better position to compete and win.”

So maybe, just maybe, the commentaries that have dogged HPE since the breakup of HP into separate HPE and HPQ entities will begin to see something they like. And maybe, just maybe, any gulf that may have existed in the past between NonStop and the rest of HPE will be bridged. HPE, I believe is beginning to turn and as it turns, perhaps the first signs of such a change will be the sight of NonStop, visible for all to see, lining the decks of this really big ship.