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HP talks cloud delivery options, the importance of OpenStack, how it competes on price

John Dix, Brandon Butler | Nov. 26, 2014
An in-depth conversation with Bill Hilf, Senior Vice President of Product and Service Management for HP Cloud, about where Helion fits in, cloud consumption models and coming change.

So we're not only giving customers a choice of where to install and run their cloud, we also give them a lot of choice when it comes to the technology they can use because, at the end of the day, the VMware story is very vertical, the Red Hat story is very vertical, the Microsoft story, even though they talk a lot about open source, is really very vertical. Choice and a platform truly built on open source - that's a differentiation for us.

If you're pushing a high-end, enterprise-level story, why on the Helion website are you shouting about price so much? That kind of screams commodity.

As of 2014 less than 10% of enterprise IT is using cloud computing, so the growth opportunity is huge. And when you are trying to fight an early market battle for share, particularly for OpenStack oriented customers, you want to grab as much share as fast as possible.

One of the biggest advantages of a company like HP is we have all sorts of ways we can monetize. We don't need to sell software at huge margins. We don't need to sell a server for everything we do. We don't need to sell services for everything. We have all kinds of ways we can make money through the broad HP. So that gives us a bunch of freedom, actually more freedom than I had at Microsoft because we can do things on every dimension to compete and aggressively grab market share.

And one tool we can use is price. So we can go undercut the other guy because our P&L isn't solely based on software markets. We certainly compete with other OpenStack distributions like Red Hat. So one of the reasons we're coming in at the price point we are is because we want to make it zero friction for our customer when they do that comparison of OpenStack distro A versus OpenStack distro B, at every level of comparison.

But, that said, almost everything we do is through a larger enterprise relationship. Typically when an enterprise is buying from HP they're not making a singular decision for one piece of software or one server order or one set of services. So we talk about the big picture, what our cloud platform can do, how we indemnify our distribution of OpenStack, product capabilities, pricing, the whole thing.

This is really hard when you have a business model that is pegged to one thing like software because you end up between a rock and a hard place because you can't easily discount below your margin line because it's very difficult to make that up. Microsoft has a little bit more flexibility because they have such a breadth of software and they have such a breadth of offerings. For Red Hat and VMware it's a little different because they are bound to their business model, so they have some very hard floors and ceilings in terms of what flexibility they have.


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