HP Enterprise kicked off its HPE Discover 2015 Europe event Tuesday in London. It is perhaps one of the more significant editions of the show as it comes one month after the split of the old Hewlett-Packard company into two separate companies: HPE Inc. dedicated to PC and printers, and HPE, which is focusing on transformational solutions tackling business problems.

In her address, CEO Meg Whitman gave us a flavor about the complexity in splitting HP, a process that required the vendor to achieve four years of transformational work in a time span of only ten months. On Day1, HPE wasted no time introducing its Synergy Platform, which should become a GA product in the second half of 2016. Synergy represents “as revolutionary a product as we have introduced probably in the last decade” according to Whitman.

Developed by HPE Labs under the code name Thunderbird, the platform provides a set of open APIs that deliver software intelligence to deploying workloads, depending on the applications’ business demands. The unified architecture allows customers to intelligently deploy and monitor virtual machines, software containers and bare metal systems in a datacenter. The goal is to catapult HPE over converged infrastructure plays from competitors such as Cisco and Nutanix, and to simplify the process of deploying infrastructure for new applications, making it as straightforward as it is on cloud platforms such as AWS EC2.

Another significant announcement was the expansion of HPE’s recently announced hybrid cloud partnership with Microsoft via the launch of a new hardware product. The Hyper-Converged 250 integrates HPE ProLiant technology and Microsoft’s Azure services in a single appliance. It delivers compute, storage, and networking “cloud-in-a-box” functionality that can be used on-premises in data centers connecting to the Microsoft Azure public cloud. In the future, HPE will bring some more of its own elements to Azure, including application lifecycle management, big data and security.

Lastly, HPE also introduced its HPE Helion Managed Cloud Broker, which provides access, consolidation, provisioning and security for multiple cloud workloads and providers. The idea behind this offering is to enable an enterprise to consume and control cloud service providers more easily from both an IT and business perspective. From the IT side, the product enables customers to more effectively govern internal and external services and partners, while simultaneously lowering “shadow IT”. From a business standpoint, it delivers self-service and a single portal access to all available services.

These three announcements were perhaps the most significant ones in Day 1, which was packed with keynotes, customer testimonials, demos and breakout sessions providing deeper dives into servers, networking, storage and services. The troika of the Synergy “composable” infrastructure, the Azure Public Cloud from Microsoft wrapped around HPE elements, and the cloud brokering software can prove to be a powerful combination in the marketplace.

HPE Growth Drivers Going Forward

The shift to cloud models is challenging IT hardware markets in the most significant way since the arrival of the PC. Over the past couple of years, every dollar of revenue growth at AWS led to a corresponding $4 of sales decline at companies exposed to categories in which AWS competes in. Even more significantly, the cannibalization rate of the IT industry’s profit dollar is 6x. That said certain segments are experiencing growth as a result of cloud model adoption, including the volume server market.

Even though conventional wisdom is that the majority of public cloud hardware systems are being built using an ODM model, the reality is that about 50 percent of hardware sales to public cloud providers are via traditional hardware suppliers such as HPE and Dell. HPE has roughly a 30 percent share in this space, and is looking to build on that by targeting hyperscale cloud providers. One example of this effort is in the Cloudline servers, introduced earlier this year. Cloudline combines HPE innovation with the low-cost of Foxconn’s manufacturing, providing HPE with a cost-competitive server that can go head-to-head against Asian server ODMs such as Quanta Computer, which previously landed server tenders from the likes of Amazon, Facebook and Rackspace. The Moonshot line of servers will also enable HPE to gain share due to the compelling TCO it offers, costing 77% less than traditional servers, while being 89% more energy efficient at a footprint that is 80% lower.

Storage and networking will also likely provide two additional growth stories for HPE in 2016. The recent acquisitions of 3PAR and Aruba Networks have elevated the company further in the storage and networking markets, respectively. The converged storage business now represents over half of HPE’s storage business and it is tied with NetApp and IBM for the second largest vendor share. The storage business is gaining momentum with the integration of 3PAR’s all-flash array product. On the networking side, the combination of HPE and Aruba created the second largest WLAN vendor, and sales of the Aruba solution will undoubtedly benefit from HP’s broader distribution, especially for large enterprise customers, a segment in which Aruba traditionally underperformed in. Moreover, after the Tsinghua transaction, HPE networking could experience significant share gains, particularly in China versus its North American peers.

Much work remains to be done, including the stabilization of HPE’s services. The key will be to deliver the 7-9% target that the company set for itself. While the recent cost cuts are a step in the right direction, they are not sufficient to turn around the service business. Therefore, HPE will likely have to substantially invest in areas such as App Development over the next few years. HPE will also need to add higher growth assets to its overall portfolio via M&A in order to be better positioned in domains such as hyperconvergence and software defined data centers. The onus will be to execute solidly in integrating these new acquisitions.

Ronald Gruia is the Director for Emerging Telecoms at Frost & Sullivan. He can be reached at rgruia@frost.com