HPE CEO brands Dell APEX decision 'a little bit strange'

Antonio Neri questions Dell's decision not to give detailed quarterly financial updates on APEX in wide-ranging interview with CRN

What is the key to the record GreenLake growth partners delivered in the quarter?

First of all, we cannot do this without our partners. As you know, we designed our strategy with partners at the center together with our customers.

You can see in Q4 we did the most business ever on HPE GreenLake with our partners, growing in excess of 70 per cent, lapping big, big numbers. When you grow 70 per cent over [previous growth of] 100 per cent, that makes it difficult.

It was a combination of many things: one is the strategy with GreenLake at the core of it; No. 2, our portfolio is now differentiated because of HPE GreenLake and because of the work we have done on the solutions portfolio.

The demand we had in the quarter was enduring and steady. We have a book [of business] that is enormous and gives us confidence as we enter 2023.

All the hard choices in the transformation that we drove from IT to processes to go to market are paying off now. It is a confluence of multiple things that are coming together. That is giving us momentum as we enter 2023, and the partners are at the forefront of that because they are driving more business than ever before through HPE GreenLake. You can see they are growing faster than our direct business.

HPE CEO brands Dell APEX decision 'a little bit strange'

Antonio Neri questions Dell's decision not to give detailed quarterly financial updates on APEX in wide-ranging interview with CRN

What did you think of Dell saying it is not going to provide quarterly updates on Dell Apex just one quarter after the company said its Apex as-a-service business had hit $1bn in annual recurring revenue?

Everybody makes choices and decisions. I find that a little bit strange. We were very clear out of the gate to define ARR [HPE's financial measure to assess its as-a-service growth], to define GreenLake the offer and how we account for it. As you know, we provided a specific set of metrics that [HPE Executive Vice President and CFO] Tarek [Robbiati] has shown quarter after quarter after quarter.

It's a little bit [like Dell] saying, ‘We have more work to do before we can show you the numbers.' That is my takeaway.

For us it doesn't matter because, honestly, what I really care about is the customers and partners coming with us, and that is ultimately what really matters.

You had incredibly strong growth in the compute business with 16 per cent growth. Contrast that with Dell.

Our compute business—not just in Q4 but when you look at the balance of the year—we did better than Dell. We gained share.

Also look at the profitability. Our partners that sold HPE compute for sure made more money than selling Dell. If you think about the level of profit, it is just remarkable. It is a combination of our actions plus pricing discipline, which we have been very good at. That's because we follow profitable revenue growth, not just revenue for the sake of revenue.

With [HPE ProLiant] Gen11, we have a unique platform that for the next three years plus is going to give us more differentiation because now it is tightly coupled with HPE GreenLake. It is the way you deliver compute through HPE GreenLake.

HPE CEO brands Dell APEX decision 'a little bit strange'

Antonio Neri questions Dell's decision not to give detailed quarterly financial updates on APEX in wide-ranging interview with CRN

Talk about the opportunity for partners with storage and new block storage as-a-service incentives for partners.

I am really excited about our storage business. We are well underway with our transformation. You saw our numbers. We grew six per cent. But, actually, when you peel back the onion our own ... set of storage products with Alletra grew high double digits, and Alletra itself grew 100 per cent quarter over quarter. That is the platform we are going to continue to enhance going forward. The reason we are excited and why we are incentivizing the partners is because it is all software-defined and cloud-delivered. As the content shifts to software more than hardware, that becomes incredibly profitable for both of us. From the customer standpoint, they get a cloud value proposition that is consistent from the entry point to the high end.

Obviously, we have a very strong edge business that grew at 20 per cent. We had compute with GreenLake on fire. But I will tell you 2023 is the year of storage. I am very bullish about storage.

How differentiated is Alletra in terms of the cloud operating system that powers it?

When you buy an HPE Alletra, you subscribe to the software that is embedded in the HPE GreenLake platform and you actually download the bits, if you will, into that commoditized hardware for the features and functionality you want. That will get expanded as we go through 2023. That is so easy to do.

You deploy storage and ProLiant Gen11 almost the same way, and then you deploy HPE Private Cloud Enterprise with all of the hybrid capabilities and automation you are looking for.

HPE CEO brands Dell APEX decision 'a little bit strange'

Antonio Neri questions Dell's decision not to give detailed quarterly financial updates on APEX in wide-ranging interview with CRN

You took the GreenLake business and fully integrated it into HPE. How important is that?

It was pivotal. In 2018 at HPE Discover in Las Vegas I said that the enterprise of the future would be edge-centric, cloud-enabled and data-driven. In 2019, we said everything we offer is going to be available as a service. That drove a massive cultural transformation of the company because the way we are delivering this new value proposition is through a platform-driven approach where everything we put in the platform is software-defined, cloud-enabled and is a cloud experience, and the hardware gets delivered as a part of the solution versus selling the hardware with an attach of software and services.

In addition to that, we drove the integration from edge to cloud and, on top of that, on the cloud we provided a true hybrid experience between on-prem and off-prem, whether a public cloud, [co-location], all the way to the edge.

As I reflect, looking back, and think about the future and the legacy that I will leave behind, it is the pivot to this platform-centric approach, to focus on our own [intellectual property], to really drive the segments in an integrated experience, and ultimately that consumption model becomes paramount to everything we do because customers are moving away from Capex to Opex over time.

HPE CEO brands Dell APEX decision 'a little bit strange'

Antonio Neri questions Dell's decision not to give detailed quarterly financial updates on APEX in wide-ranging interview with CRN

How do you feel about the growth that you delivered this quarter and the future?

I am proud of it. No.1, we are delivering value for our shareholders. You saw the Q4 record results. We have put in place a strategy that is future-proof for the next decade. The strategy has been validated by customers and our partners.

We have also made huge improvements in the [HPE] culture. I mentioned that in my remarks. Our employee engagement score is 20 points higher than five years ago.

All of this is driving our performance. As always, there is a lot of work to be done. There are a lot of challenges to be dealt with. If I reflect on my 20 quarters [as CEO], we have dealt with everything that has been thrown at us, from natural disasters to wars to earthquakes to global supply chain challenges to geopolitical tensions to COVID. I don't know what else is left, but I am sure there is something coming. But we are better prepared.

You had big growth in the intelligent edge business. What do you expect to see going forward with that business?

What excites me is what we are going to do in the next 18 months, which is going to put more fuel to the momentum we already have. We have talked about private 5G, SASE and extending our portfolio in data center switching, which is an easy expansion of where we are. We already have the operating system. We just need to finish some features and functionality, and the rest is all hardware with more ports and more power. That gives us more adjacency TAMs (Total Addressable Markets) to expand this momentum.

But as we architect it, we are using the same experience, which is a point of differentiation. You don't have to manage a data center switch this way and a campus switch this way and Wi-Fi the other way. We are driving this in a cohesive approach. Customers are loving it because it doesn't matter where the port is. It could be in the ceiling, a closet or the data center. You have a consistent user experience, which is unique in my view.

HPE CEO brands Dell APEX decision 'a little bit strange'

Antonio Neri questions Dell's decision not to give detailed quarterly financial updates on APEX in wide-ranging interview with CRN

Are you gaining share from Cisco?

Cisco and others. We grew 23 per cent in the most recent quarter.

Clearly we are winning. We exited Q4 with order bookings [for intelligent edge] that was larger than Q3.

Are you having more fun now than when you started as CEO in February 2018?

I have found my rhythm. We have a fantastic team of people that are committed and passionate. There is always an opportunity to go further and faster.

What excites me is, while we have made tremendous progress, there is way more that we can do. Ultimately it comes down to that passion to win, and always raising the bar.