Two and a half years into Meg Whitman’s five-year turnaround plan, Hewlett-Packard has managed to reverse much of the strategic damage wrought by its previous two CEOs, but the hardware titan still has a long way to go towards making up for the years of lost development time racked up under their watch.  SiliconANGLE’s theCUBE took the opportunity at the recently concluded HP Discover conference to review the company’s progress so far and map out its trajectory heading into the second half of the recovery journey.

Charting the right course

In the first of the three broadcasts discussing HP’s turnaround path at the summit, SiliconANGLE founder John Furrier and Wikibon chief analyst Dave Vellante dived into the company’s strategy for a glimpse at the road ahead. Whitman has succeeded in cultivating patches of optimism where there had been none before through a series of conservative financial measures and well-thought out product decisions, according to Vellante, but the whole picture remains very much a work in progress.

“There are some growth spots, certainly networking is a growth area, Meg calls out Vertica as a growth area, printers and PCs grew a little bit last quarter and converged infrastructure is a growth area from the smaller base but in general, the company is not growing,” he noted. “It’s gotta shrink to grow.” That is already happening, with HP recently announcing plans to lay off another 11,000 to 16,000 workers as part of its turnaround plan for a total of approximately 50,000.

Although positive, the cuts alone are not enough to get HP back in the competitive saddle.  The key to achieving that is restoring the company’s historic engineering focus,  Furrier said, which took a backseat under former CEO Mark Hurd.  “Now Meg Whitman is almost taking them back to that same trajectory, which is their roots. They kept their PC division, keeping their consumer stuff – the consumerization of IT is now the hottest thing on the planet, good call there – and they’re back into the high-end supercomputing market,” he remarked.

Equally important as organic innovation are acquisitions, which have been put on hold by Whitman as part of her efforts to cut costs but Vellante believes to be vital for the company’s long-term success. “They gotta get back into the acquisition game to grow, otherwise they’re just going to bump along,” he notes. “So I think Meg’s strategy is to pay down the debt, stabilize the base – essentially keep revenues flat for as long as they can – and then start the acquisition engine back up again.”

Putting the vision together

Hewlett-Packard hasn’t returned to the M&A scene just yet, but it’s already pushing internal product development to full throttle. The vendor is especially focused on building out its Helion hybrid cloud portfolio and addressing the accelerating adoption of solid-state memory in the enterprise.

HP passed a major milestone on the latter front at Discover with the addition of deduplication to its 3PAR Storage Serv 7450 array, an upgrade that it claims brings down the appliance’s cost per gigabyte from about $13  to under $2, which is comparable with the rate of so-called high-performance 15,000-RPM disk drives in use with most enterprises today.  That, as Vellante noted in a follow-up segment at the beginning of second day of the conference, represents a major milestone not only for the company but the industry as a whole.

“This is the day we’ve been waiting for, the day that flash replaces high-end spinning disk and eventually it will eat into the core of the disk market, but that will take some time,” he explained.” Filling in for John Furrier, co-host Jeff Frick added that the downward trajectory of flash prices will allow more organizations to take advantage of the tremendous performance advantages offered by the technology to drive new value higher up the stack.

“We talk about cost-based pricing and value-based pricing, and it really feels to me that flash in this perfect storm of Big Data, cloud and infrastructure with Moore’s law now applying across the entire stack is now making that investment look a lot different from an ROI point of view,” he said. Hewlett-Packard hopes to enable even greater disruption with “The Machine,” an entirely new computing architecture unveiled at Discover that employs a revolutionary storage technology known as the memristor.

Storage disruption beyond flash

Conceived in 1971 by University of California professor and IEEE Fellow Leon Chua, the memristor is the missing link in electronic circuit theory, combining computing and memory in an ultra-dense hybrid that can hold onto vast amounts of data even without power. The concept was first implemented in 2008 by HP Labs senior fellow R. Stanley Williams and is set to hit the market in 2016, while the Machine is expected to follow suite in 2019.

Speaking on theCUBE on the third and final day of HP Discover, where the platform was unveiled, Vellante pointed to the initiative as a concrete sign that the vendor is in fact returning its system development roots as Furrier had noted previously. The Machine is the long-term component of the company’s ambitious data center push, which extends beyond just on-premise infrastructure to the public cloud as well.

“HP is stuck in the middle here in the strategy and what they’re trying to do is flank on two fronts: getting some public cloud up and running as a sandbox for the technology they’re incubating,” Furrier observed. “What I see the public cloud being more of a front-end for developers and really moving in to the hybrid cloud with Helion where OpenStack is a critical component.”

See the event’s entire playlist below:

feature image via Hewlett-Packard