Interview Migrating your data to the machine that is Amazon Web Services is a little like booking into the Hotel California, the title track from The Eagles late 1970's album of the same name, the rub being that customers, like guests at the hotel, can check out anytime they like but never truly leave.

This is the view of HPE CEO Antonio Neri, who told The Register that contrary to early claims from the likes of AWS, the cloud is not democratising IT, nor is it an open environment, just the latest form of vendor lock-in.

At the Discover event in Munich, Neri – who started out at HPE in a Netherlands call centre and rose through the ranks to replace Meg Whitman as the boss of HPE on 1 February 2018 – noted the General Availability of AWS Outposts in early December: an on-premises rack running native AWS or VMware environments that hooks up to to AWS's public cloud.

"The first message there is I think [AWS] has finally recognised the world is hybrid," he said. "The world is hybrid and apps and data live everywhere, and so for them to continue to drive the growth they need to bring the cloud to the data."

According to HPE's estimates, three-quarters of data will be created outside of the data centre and outside of the cloud, at the "edge" - everywhere else except the bit barn or the cloud.

"It is cheaper and physically easier to move the cloud to where the data is, not the data to where the cloud is. What the public cloud really wants is your data, [providers] don't care about your workloads, and so once you check your data in the public cloud you are kind of locked in, it is like checking into Hotel California - you check in and you never check out."

Data, he said, has a "gravitational force and once that data gravitates to a place it's very hard to move it… I think the customer is realising now that the cost of [taking] that data out of the cloud is the biggest part of expense."

He said: "Maybe five years ago or 10 years ago the cost of [public cloud] compute was very attractive to [customers] because they don't have to deal with labor, power, cooling, de-appreciation, all the things that you normally go through when you deploy infrastructure, and that was appealing. Plus the simplicity, right, I don't have to deal with all the software, the maintenance aspect of this. I don't have the skill sets to move to the cloud - the cloud should be all about speed and agility, enabling faster delivery of services, all that was interesting and good."

Neri claimed AWS, via Outposts, is giving customers a "tentacle" to extend its public cloud into their own data centre.

"The reality, they've [AWS] already told you, [is it] will cost you more, at least 30 per cent more than moving your data into the public cloud. So it is a way to attract you back to the public cloud. What we want is an open approach, a true, multi-cloud approach where you have choices, you have the flexibility to move data and apps to where it makes more sense, whether it is for security purposes or for experience purposes or cost purposes."

Lots of easier workloads have moved to the cloud – email, dev work – but the vast majority of traditional enterprise scale workloads remain on-premise. IDC reckons that as of 2023, 70 per cent of these workloads will remain on site.

What the public cloud really wants is your data, [providers] don't care about your workloads, and so once you check your data in the public cloud you are kind of locked in...

Neri is an engineer by profession but as CEO he seamlessly slips into salesman talk. "We believe we have a better approach, an open, cloud native approach. Intelligent and secure. And this is why we announced our unique partnership with a company that is led by my friend, John Chambers, called Pensando, and in order to deliver that edge cloud experience you need to implement different architectures."

In October, HPE led a Series C round of investment of $145m in Pensando – Pensando sells programmable software-defined cloud, computing, networking, storage and security services at the edge. This cash came from HPE's Pathfinder programme that seeks to invest in startups. As part of the move, HPE CTO Mark Potter joined Pensando's board.

Edgy moves

HPE has bet the farm on edge computing, and is directing 75 per cent of its R&D spending over the next few years to develop further innovations that let clients capture, analyse and use real time data at the edge rather than sending it all down the pipes to a cloud, which can be prohibitively expensive and relatively slow.

Data continues to "explode", the CEO told us.

"What a customer realises now is that it's not as simple to manage multiple estates which are siloed. I have a public cloud here, I have on-prem there. I have a traditional set of applications which are not going anywhere. How do I bring that unification experience and have control of that estate? [IT managers have] lost control - first because the line of business swiped the credit card and went to the public cloud. Now as they start doing these trials and moving data to the public cloud, they say 'Oh, this is way more expensive'. And so they realise that the world is hybrid and more and more of those workloads are moving to the edge."

CIOs are trying to figure out if they can be the service provider to their organisation and take over control of "expedience, cost, SLA, compliance and security," Neri said.

HPE's big push in this area has been GreenLake, infrastructure sold as a service, configured and managed by the vendor and paid for via a mix of subscription, pay-per-use and consumption-based models. A private cloud-as-a-service, if you will.

By 2022, HPE wants to sell its entire portfolio as a service though its hardware and software will still be able to be bought in the classic way.

As of June last year, just 5 per cent of HPE's turnover was transacted as-a-service, so its got a lot of mileage to make up.

With this in mind, HPE recently confirmed availability of GreenLake Central, a self-service portal and ops console intended to let heads of IT working for end user businesses monitor costs, security, compliance and the use of tech resources in terms of clouds (AWS, Azure and - soon - Google Cloud Platform) and what they have on-premises. As we pointed out at the time, the tool has limitations.

Neri told us that through this tool, HPE is passing "back control" to the department, and then "giving them the choice to either be in the running [things] side of IT or be in the innovation side of IT."

Customers want choices, "not locking in", he said. "If you think about the past, customers used to have two vendors on premises, sometimes three. Now we can give them multiple cloud options… we still give them an experience, just as a service."

'We're shutting apps all the time'

HPE and multiple other vendors have talked about customers trying to escape AWS but very few have gone public with their frustrations and the cost of doing so. Neri said customers are asking for help and the advice is take a "very app and data centric approach". He said the splitting of HP let HPE change the way it uses tech, with a plan to be more nimble.

"We're shutting apps all the time. We are consolidating a number of apps because we are consolidating the way we run the company. So the first question [for customers] is how many apps you can get rid of? How many apps can you run in SaaS? And then ultimately, of the apps that are remaining: how many apps can you put in the cloud?

"Then, based on the data and the experience you want to provide... for customers it can be a hybrid model, but we give them the full experience so customers are asking us for help from an advisory perspective first of all, and then re-platforming of certain apps in a cloud native approach."

This plays to HPE's container launch that happened in November, as does most of the things that Neri says during our 30-minute discussion with him. He isn't alone in this respect. Most CEOs try to discuss issues that conveniently dovetail with the latest and greatest thing they are selling.

The cloud wars

AWS is by far the largest public cloud seller in the industry, but how about Microsoft and Google: do they lack an open approach in the same way HPE claims AWS has?

"Google is trying to become hybrid but they have some technology challenges in terms of scale because, you know, the way they architected the cloud was for Google, and if you need a small cloud, like say in a closet, Google does not scale at the rack level or the server level," Neri tells us.

"I think Microsoft definitely has a much more clear strategy on hybrid and that's why Hewlett Packard Enterprise is the biggest provider of Microsoft Azure today because we have done deep engineering integration of Azure," said Neri.

This is true. Sadly for HPE, Microsoft didn't keep up its end of the bargain.

When the alliance over Azure was struck in 2015 – after HPE ditched its own public cloud – Microsoft pledged to use HPE servers to bulk out its own data centres, but then opted for cheaper kit.

AWS, Neri says, has been "very clear since the beginning - its the public cloud, the public cloud, until a year ago when it came up with the concept of Outposts, but that I think is nothing more than just a way to still bring you in the public cloud, particularly on the pricing".

Vendor lock-in isn't a new term that pertains to cloud vendors. It is one that refers to a range of technology companies that started life in the last century.

Neri concedes that in mission-critical systems, HPE has not always been so open.

"But even then we run on an open-source Linux solution, so I think the reality is you have to define what lock-in means. In my view of HPE, that is a definition of optimising a stack for a specific workload, which is to provide the best possible experience for the lowest possible cost, from silicon all the way to the management layer of that infrastructure, all the way to the PaaS, potentially. And that can be a full stack of HPE. I don't call that lock-in because we are trying to do the right thing."

HPE seems to have a much clearer strategy since its split with HP Inc, and the sale of the Enterprise Services and Software sides of the house. But this isn't necessarily feeding through into the financial results yet.

Temperature check

In fiscal '19 ended 31 October, total revenues were down 6 per cent – Neri prefers to highlight that revenues were down just 2 per cent in constant currency (because 60 per cent of HPE's business is "transacted outside the US") and excluding the fall in sales of servers to tier one cloud builders.

Sales were down for each of the divisions - Hybrid IT; Pointnext; and Intelligent Edge. Financial Services shrank too. Operating margins were, however, were up in the hundreds of basis points, and were up to 13.2 per cent in Hybrid IT, a historic high. Of course HPE Next has reduced overheads, including through redundancies, and this, in addition to a mix of higher-margin products, has helped improve profit.

HPE today remains a hardware company, as evidenced by the profile of its revenues, but the future looks software and services shaped.

For 2020, HPE has told investors to expect "sustainable, profitable growth". And judging by the direction of travel with regard to acquisitions – MapR, Blue Data, Cloud Cruiser and Red Pixie – will there be more investments in services and software businesses?

"Correct, absolutely spot on... as I think about inorganic, which is always on the premises of return on invested capital, and bringing in IP and talent, definitely it's more software and more services oriented."

So one-time CEO Leo Apotheker maybe wasn't so wrong in his plans for HP all those years ago when he plotted to reduce the company's reliance on boxes. Maybe he lacked finesse in execution.

The Reg has asked AWS for comment. ®