HP puts the net pedal to the metal

An inside discussion with the man calling the shots

Marius Haas is senior vice president and general manager of HP's ProCurve Networking business, which was recently aligned with the company's server, storage and services businesses under HP's Technology Solutions Group, creating an approximately $45 billion unit. Haas, who previously served as senior vice president of strategy and corporate development, is charged with shifting the network business into overdrive. Network World Editor in Chief John Dix caught up with Haas to talk about the market and his plans.

HP seems to have found new religion about networking. What has changed and what are you guys doing differently?

With ProCurve we've done a good job building up a mid market value proposition with great technology and a great total cost of ownership structure. Last November I was tasked with leading the ProCurve organization and given the charter of expanding that value proposition into the enterprise. We knew we needed to have a converged fabric strategy for storage, networking and compute, and the ability to tie it into our overall management scheme. We have the technology from a company standpoint. We're actually the only company that has all those components in its portfolio. And when you couple that with the economic situation customers are facing, and the fact that customers are adamant about wanting a market alternative, we felt the timing was perfect and we said, 'OK, time to invest heavily in this business.' And that's what we're doing.

After you arrived and got the lay of the land, what did you realize you had to do?

It’s a total addressable market of about $19 billion, and today we only cover, from the number of customers we’re touching, about 25% of that. So we have a huge opportunity to expand our coverage even with the current portfolio. So my most important priority is to expand my reach. I do that by leveraging every asset HP has from a go-to-market perspective, invest in scaling the Networking sales force and expanding my channel and partner ecosystem. Priority number two is to create awareness and end user demand for our solutions. So that’s the low hanging fruit we’re continuing to address.

But as customers demand us to be present in more and more of the stack, we need to invest in expanding the portfolio. Last year you saw us acquire Colubris Networks which gave us a leading edge 802.11n wireless capability. Now we’re one of the only companies that can provide integrated wired and wireless technology under one management pane of glass, which solidifies us as a great network edge solution for virtually any customer. And we’ll continue to aggressively expand the product portfolio and leverage our world class R&D team.

And finally, we’re investing in integration with the other parts of HP, including our blade server and storage guys. So alignment and integration of the different R&D streams is an area we clearly see opportunity.

Are you going forward with a value story? What's your elevator pitch?

It's a story of leading edge, standards-based technology with industry-leading total cost of ownership metrics. But we also have an industry-leading warranty that many others are trying to copy. If you dive down deep, though, you see they're not even coming close because you still need to buy incremental software and upgrade packages before you truly get what we offer today. And obviously the other piece is HP is a company that's got unrivaled breadth and depth.

What advantage does being part of a gigantic computing company give you that the net-only guys will have trouble competing with?

The list is long but let me note a few things. There's a reason we're the largest IT company on the planet. We spent the last few years building up size and scale because of the value it brings to HP and the customer. So the broadest portfolio, with the greatest economies of scale, with a standards based compute paradigm, and we deliver leading edge technology solutions at leading edge TCO value propositions.

And then you start thinking about how to manage the common building blocks, about orchestration and automation and the delivery of different services. HP has the management platform that allows you to do that.

Then there is the question of how customers want to consume the IT capabilities. Do they want to own it? Rent it? Have it managed by someone else? HP can deliver on any of those options through our multiple services organizations. So all of that coupled together lets us address a broad set of the market.

You mentioned network edge when you were talking about the wireless stuff. Given Cisco's dominance in switching, is your plan to nibble away at certain pieces of the network?

In the midmarket we have an excellent portfolio and feel our customers are satisfied with what we're delivering end-to-end. What we're doing now is aggressively expanding to address the needs of all enterprises. Those enterprises are saying, 'I want to change my economic profile from a networking standpoint. I want to eliminate complexity that has been built in over the years. I want to increase asset utilization. I want to reduce costs. I want to increase flexibility in terms of how I manage my infrastructure. I want to reduce my footprint, and I want to reduce my power consumption.' So when they look at how we've been able to help them in most of the other enterprise categories, they're saying 'Hey HP, we want that from you on the networking side'.

They can start by deploying us at the network edge and grow comfortable with the interoperability of what we offer. Seventy to 80% of the time we are brought into heterogeneous environments and customers see how easily and flexibly the solutions integrate with minimal management disruption.

And with a total cost of ownership and a cost savings model that is second to none, customers then start to say, "Come work with me on what my future network fabric ought to look like and together let's start tackling the more complex mission critical environments and do it in standards-based way so I can deploy pieces when I feel comfortable based on my risk/investment profile."

So it becomes a journey, a partnership. That's compared to the competition selling an end-to-end, closed, proprietary architecture that forces not just technology convergence, but also organizational convergence. Customers are telling us they don't want to do that.

We hear Cisco is matching ProCurve prices in some deals and you guys are trying to get that word out.

Well, clearly that sends a signal to the market they're not competitive. So our position is, why not let the rest of the market know? If there's a value proposition that someone else provides that's greater and better, then it behooves us to make sure that every customer out there is aware of it. And that's part of our effort to increase awareness.

Cisco is entering computing with its Unified Computing System, arguing that integrating computing, storage and networking will lead to substantial TCO advantages. Do you agree with that vision, and is that also at the heart of your One Alliance, your efforts to work with software vendors to create applications for ProCurve environments?

But we're not doing it the way they're doing it. We're not saying customers need to move into a converged network/storage/compute fabric with a proprietary stack that locks you into a 10 year+ architecture with an as yet undefined TCO model.

We're saying we've been doing this for years. We know what the compute fabric looks like, the storage fabric, and we're absolutely investing hard in the network fabric. And we believe that establishing your data center on a holistic and integrated infrastructure which includes servers, networks, storage and management, using common architectural building blocks, is the right way to do it.

So the marketing rhetoric they're putting out there is interesting, but we decompose it and see it's forcing some trends customers don't want. It is a closed architecture with proprietary Cisco compute technologies. It doesn't scale to the capabilities we have, and it doesn't have overall data center management from an orchestration and automation standpoint, including identity management and policy management. Those are huge gaps they're not addressing.

One of the holes in your product portfolio is at the high end, an answer to the Cisco Nexus. Presuming you're going to have to address that, will you be buying or building to address the need?

You can assume I'm looking at everything. I view the window of opportunity for us as now. The customer base is saying it wants us to step up now. So we're looking at everything - build, partner, buy. What's the best investment profile from a return standpoint, not just for our share holders but for our customers? So you should assume that's the pragmatic approach I'm taking.

We're hearing more and more talk about the idea of de-layering switch architectures from three layers to two. Is this something you're looking at?

We're looking at a model we call VLL2, a very large layer 2 strategy, to see how that will transform the way the network gets deployed. So certainly, we're looking at all the different capabilities out there and saying, 'OK, how can we change the model to increase simplicity, reduce complexity, increase bandwidth and decrease latency? How can you provision devices, even for example, storage farms, on the fly? How can you deliver that all in a radically different cost structure?'

We do believe that there is a new computing paradigm that can come around from a networking standpoint.

How far out? A couple of years?

That's about right.

At the recent Interop you announced that you were investing some money with Microsoft to tackle unified communications. How's that going?

We announced a $180 million dollar joint investment to develop and deploy unified communications and collaboration solutions based on Microsoft's communication capabilities and application suites and HP infrastructure, software management tools and services. The goal is to bring unified communications and collaboration to the masses in a simple and best in class TCO model. The companies are excited about the opportunity and we're expanding our footprint in the regions as we speak. We've got a lot of training going on everywhere around the world. Receptivity from a customer base as well as from a partner community has been phenomenal.

What have you learned from this dreary recessionary period?

Clearly it's made everyone very attentive as to where every dollar is being spent. In the past no one got fired for buying Cisco, but I think that phase is over. People are looking at this line item in their IT spend and seeing it hasn't gone down. And when they decompose the margin profile of the largest industry player they're saying, 'That's unacceptable'. So they want change. They're looking for a multiple vendor strategy that enables true competition because it makes people hungry again for their business.

OK. Any closing remarks?

We're following what our customers want us to do and we have great technology that can be delivered in the way the customer wants, with a great value proposition. That's why I'm excited. That's why I'm here, because it's a market that's looking for change.

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