Could Hewlett Packard Enterprise Be An IoT Sleeping Giant?

By Patrick Moorhead - May 15, 2017
What HPE does My firm and its analysts has been researching and advising on the Industrial IoT (IIoT) before it was cool to do so, and we have observed many twists and turns in this ever-expanding IIoT opportunity for enterprises, suppliers and society in general. We pay close attention to the use cases, business payoffs and evaluate and focus on the technology and services vendors who deliver it. When you think of the IIoT, it’s unlikely the first brand name that comes to mind is Hewlett Packard Enterprise. HPE gets credit for leading in many things like hybrid and composable infrastructure, but I believe few consider the company an IoT leader. The interesting thing is that HPE is doing a ton in IoT and telco and the company just hasn’t been as vocal about it. Based on my recent meetings with them, I think the market is going to start hearing a lot more from HPE on this topic. Unlike some companies that tend to push an agenda that is sometimes ahead of reality, With the exception of The Machine that’s a research project, HPE tends to time their public marketing for when they have the products, expertise, and credibility to deliver on their promises. With this column, I thought I would bring some of what HPE is doing in the Industrial IoT market to the surface. It starts with HPE’s core beliefs To understand how Hewlett Packard Enterprise approaches IoT, it helps to start with HPE’s belief system, and what they see as the key drivers of the market, and how they have organized to address IoT needs.  HPE believes that enterprise IT is driven by many things, including software defined, big data and analytics. They also believe mobility will expand and IIoT will emerge. I agree with this.  Finally, the company thinks enterprises will be looking for more solutions versus point products and a heterogeneity on consumption models. Hard to argue these trends. Based on these drivers, HPE believes “the world will be Hybrid”, “the Intelligent Edge will unleash an industrial IoT revolution”, and “services will be even more critical”.  I agree with all of this, but how does HPE fit in to these trends?
What does this have to do with IIoT?
So this brings us to IIoT, which all three of those entities above are engaged with right now, bringing different capabilities to the table. HPE’s IoT targets As we have said many times before, the IIoT is not one market, its hundreds if not thousands. HPE is prioritizing manufacturing, retail, public sector, life sciences and health and telco. HPE is also prioritizing five use cases as well -- predictive maintenance, asset management and tracking, intelligent spaces (buildings and venues), future cities and connected vehicles. It’s an interesting collection of targets, not all in perfect alignment, but based on where HPE and Aruba have had past successes, where they are investing, and where the heat is, these make sense to me.

Big picture, boil the ocean IoT

The first premise is that experience and expertise in the mobile edge will help in IoT. The second is that experience matters. Many are already familiar what HPE brings in terms of the core datacenter and edge compute so I want to hit on parts of the HPE business with which people may be less familiar.
Let’s start with Aruba. I’ll admit, Aruba wasn’t big on my radar screen until HPE acquired them, but I must say, I’m quite impressed. Aruba offers much more than wireless – they deliver significant software intelligence, and security, to enable a wide variety of “smart” experiences for enterprises. Today, with big enterprises, Aruba is actually transforming digital workspaces and creating intelligent spaces. Digital workspaces are a fancy term for the “new office” and Aruba, using wireless technologies and analytics software to essentially cater to the new generation of workers. Employees can book huddle spaces on mobile apps, companies can understand what assets are really being used and how to manage electricity and HVAC based on that data. Aruba has completely transformed Box’s workspaces and is probably the best example of workspace transformation.

Digital workspaces

Intelligent spaces take this notion a step further to airports, stadiums, grocery stores, hospitals and college campuses. Consider an airport that can guide you to your gate, a stadium where they bring you the food without telling them where you are, or a hotel that self-registers when it knows you are entering the building, or a museum that plays the right audio track on your phone automatically. Aruba has some good examples of this at Rio Galeao airport, Levi’s Stadium and CN Tower. Aruba delivers this using Wi-Fi, beacons, ClearPass and the Meridian App Platform. Intelligent spaces
Digital workspaces and intelligent spaces parlays nicely into the IIoT to serve billions of people.
HPE has done a nice job enabling the IIoT in industrial and operational settings. A great example of this is the “refinery of the future” with partner National Instruments and pump manufacturer Flowserve, who worked with an unnamed refinery company to pull in sensor data from multiple refinery machines, perform analytics, and then uses machine learning to predict failures before they occur — potentially extending the life of assets, improving safety, and reducing costs.

Refinery of the future

Kaesar Kompressor is another interesting case. Sensors inside the compressors provide real-time analytics that predict and prevent system outages before they occur. Kaesar says this has delivered a “60% reduction in down time, and millions in annual savings.”  In a nutshell, HPE helps the IIoT by securing access and pulling that contextual data into the compute layer for analysis that’s proven in commercial and government applications. HPE Universal IoT Platform Unbeknownst by many, HPE has an IoT software and services platform that they developed by leveraging the decades of work they have done with telcos. HPE does a lot of business with telcos that they unfortunately cannot share publicly. Under NDA HPE showed me what they have been doing, and it’s impressive to say the least.
There are several IoT platforms out there but HPE’s IoT platform is focused and already, surprisingly, has many customers. HPE’s platform is a “wide area” platform targeting the private cloud datacenter with workloads dependent on WAN connectivity such as cellular and satellite. Target ARPU (average revenue per user) for these workloads is very low, as on $.50 to $5 per month per device. This brackets the platform into high volume future cities, connected vehicles, smart energy and telco applications. This is different from where, let’s say, GE Predix is located which is targeting highly-complex, $10-100 per month ARPU applications that are deeply complex like predictive maintenance, condition-based monitoring in manufacturing and production environments.
HPE Universal IoT Platform architecture for Wide Area IoT
Tata Communications, a $110B Indian telco is using the platform as a base for its LoRa network which is targeted to cover 400M people in its first phase. AT&T is also using HPE’s platform but will not share details on the application or deployment size. Mobile satellite service provider Inmarsat is helping industrial farmers by tracking precise water consumption, humidity levels, and other critical data like PH, salinity, UV light and humidity. Auckland Transport says they gather, analyze, and distribute video data in real-time from 1,800 cameras to improve safety for pedestrians, cyclists and motorists, while also improving traffic flow and reducing congestion.

Intelligent farming with Inmarsat

HPE Pointnext IoT services
Probably the biggest unknown IoT gem I found at HPE was its services division. Many make the mistake in thinking HPE spun off all its services folks. It didn’t. It kept 25,000 employees to drive hybrid IT, edge and IoT projects, the new stuff. Pointnext drives $7B per year in revenue, delivers 11,000 projects a year and operates in 80 countries around the world. Unlike the previous services division, Pointnext doesn’t run IT for you, they advise, build pilots, deploy IoT projects and then service them. They do that not only for HPE gear but 30 other ecosystem partners. What impressed me the most were the vertical IoT blueprints they had for multiple verticals doing multiple IoT workloads driving multiple business outcomes. I must say, I’ve never seen this depth before from any IoT provider.
HPE Edgeline servers
While I said the focus of this article were the IoT elements you probably weren't aware of, I'd be remiss if I didn't bring up HPE Edgeline servers. HPE has an entire line of edge compute devices that vary with performance, connectivity and even physical size.  We've written about Edgeline a few times here and here.This is a natural for HPE given their strength of their compute and closes the HPE IoT circle of Aruba, Pointnext and the HPE Universal IoT Platform.
HPE Edgeline EL 1000 Converged IoT So what? As I said in the intro, HPE’s IoT play is an unheralded asset that I believe should get more recognition in the near future. Other companies started talking about IoT five years ago and many since then have rolled out IoT customer after customer and made it a key part of their platform. In addition to HPE’s strong compute and security play in the datacenter and the edge, HPE is making major moves in IoT by leveraging assets few even know exist and can fully appreciate like Aruba, the HPE Universal IoT Platform and Pointnext IoT services. The ironic part is that HPE already has major IoT customers like AT&T, Tata, airports, utilities, refineries and stadiums, many other customers HPE cannot talk about but I saw under non-disclosure. It’s too bad HPE cannot disclose all of these current IoT customers as I think you would be impressed. It took me a month to fully pull together these thoughts and this is one of the challenges HPE faces – to provide one face and strategy to serve the IoT market. By the way, this isn’t unique to HPE, every company we research like this has had similar challenges. And while HPE may not be talking as much about it, they are actually delivering it, which is the inverse of many companies who talk a good game but aren’t delivering much. Net-net, HPE is a company you need to watch in the IoT space even if they’re not the first to talk about it.  
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Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights)  in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.