Hewlett Packard Enterprise CEO Antonio Neri says the company’s GreenLake on-premise cloud service is growing faster than public cloud with a ‘record-breaking’ 82 percent growth in service orders in the most recent quarter.
“When you look at the performance of public cloud vendors nobody grew at 82 percent,” said Neri in an interview with CRN after HPE posted better than expected results for its third fiscal quarter ended July 31.
“The reason we are doing well is we provide a true hybrid experience. Cloud is not a destination. It is an experience. Seventy percent of the apps and data are still on prem, and more and more apps and data is moving to the edge. Customers want a true consumption driven model from edge to cloud. GreenLake offers that in an automated way.”
Microsoft Azure revenue grew at a 47 percent clip in the most recent quarter followed by 43 percent for Google Cloud and 29 percent for Amazon Web Services.
With the addition of other HPE sales added to the GreenLake service orders, the pay-per-use platform is growing at 100 percent clip, said Neri.
HPE signed several of its largest GreenLake orders in its history in the quarter including a blockbuster US$27 million digital transformation deal with LyondellBasell – one of the world’s largest producers of plastic resins, said Neri.
Overall, HPE’s GreenLake annualized revenue run rate (ARR) was US$528 million, up 11 percent from the year ago quarter.
In wake of the strong GreenLake results, HPE reiterated its guidance of a 30-40 percent compounded annual growth rate for GreenLake ARR from fiscal year 2019 to fiscal year 2022.
HPE’s big GreenLake cloud services gains come in the wake of the blockbuster release of new standardized point and click GreenLake offers and the launch of HPE’s Ezmeral open source container software.
HPE’s new standardized GreenLake services include virtualization, infrastructure as a service, container management, machine learning operations, data protection and connectivity as a service.
Paul O’Dell, a director at CPP Associates, a Clinton, N.J. HPE Platinum partner which was recently named HPE Solution Provider of the year, said GreenLake is now ready to compete head to head against public cloud.
In fact, CPP has added GreenLake to its Infrastructure Anywhere Assessments that determine cost of on-premise versus public cloud and is consistently coming in at 20-30 percent below the cost of public cloud, O’Dell said.
“We’re really pumped up about the GreenLake opportunity,” he said. “We have seen a 10 times increase in the GreenLake pipeline. It’s gigantic. There are tons of opportunities.”
GreenLake’s technology muscle and new standardized building blocks have reached an inflection point that makes it viable for CPP to lead with GreenLake, said O’Dell. “GreenLake is competitive out of the gate now,” he said. “We shouldn’t be delivering a capex quote. We should be delivering a GreenLake quote because it has gotten that competitive.”
Neri, for his part, said the “vast majority” of the GreenLake sales growth is coming as customers pit GreenLake in head to head comparisons against public cloud.
“What customers realize as they get to a larger scale is that it is cheaper to keep the workloads and most importantly the data on prem and yet automate everything and get the same cloud experience and pay the same way as if they moved to the public cloud,” he said. “It is a cost benefit and an experience benefit.”
Another big plus for customers it the managed service experience provided by HPE and its partners, said Neri. “We guarantee services levels and outcomes so their IT professionals don’t need to spend time on that versus the public cloud where they still have to curate those workloads and make sure they are performing to the levels they want. With GreenLake we manage that and take care of that for them. So it is a unique value proposition. It is all software driven.”
Overall in the quarter, HPE posted better than expected results with Non-GAAP earnings of 32 cents per share on a 13 percent sequential increase in sales to US$6,82 billion. That is well above the Wall Street consensus of 24 cents per share on sales of US$6,14 billion, according to Zacks.
HPE shares were up 57 cents or six percent to US$9.90 in after hours trading.
Neri said the strong results come with COVID-19 increasing the need for HPE’s portfolio including GreenLake as a service offerings, secure connectivity, remote workforce capabilities and analytics to unlock insights from data.
“Our solutions are aligned to these needs and we see a tremendous opportunity to help our customers transform and digitize their businesses as they continue to adapt and operate in a new world,” he said.
Among the storage highlights of the quarter were a 114 percent growth in the Primera next generation intelligent storage platform with 104 new customers; Nimble distributed HCI growth of 112 percent and 31 percent growth in big data storage solution sales, said Neri.
In the compute segment- an area in which HPE ships four servers and 46 terabytes of storage every 60 seconds- HPE had a “solid quarter” with 29 percent sequential growth with strong demand in the VDI (virtual desktop infrastructure) market, said Neri.
One of the biggest VDI wins was a deal with Erasmus Medical Center in Rotterdam, Netherlands, which in preparation for future waves of COVID-19 inked a deal for a complete HPE hyperconverged infrastructure solution that included HPE Synergy and HPE Primera.
Neri said he sees “steady” enterprise demand with expectations for “gradual quarter over quarter performance” going forward.
“While much of the uncertainty is still there in the market and the global pandemic is still with us, we are actually cautiously optimistic,” he said. “We will see quarter over quarter improvements going forward across our businesses. At the same time we are investing in the future which is essential for us. I am very pleased with our execution and the pivot to as a service. You can see the momentum there!”