& cplSiteName &

HP's New Risky Business

Ray Le Maistre
12/12/2012
50%
50%

HP Inc. (NYSE: HPQ) has unveiled a new pay-as-you-use networking equipment offer to communications service providers (CSPs) that aims to help lift the capex burden from the CSPs and their enterprise customers while generating new business streams for HP. (See HP Unveils Network Advantage Program .)

But as HP executives admitted here in London today, it's a risk for the giant IT vendor, albeit a calculated one. And the company does have some assets that, to a certain extent, mitigate the risks: It has the financial power to entertain the model; it has the product set around which CSPs can build a service offering; and it has a reference customer from day one in the form of Swisscom AG (NYSE: SCM), with the added bonus for HP that it seems to have developed a better engagement model, for the Swiss operator at least, than arch rival Cisco Systems Inc. (Nasdaq: CSCO). (See Swisscom Buys Into HP's Utility Vision.)

The HP FlexNetwork Utility Advantage Program (thankfully not known as FUAP) is based on the following concept: Enterprise users want to upgrade their networks but don't want the capex burden; and CSPs want to offer a broader range of flexible managed services that meet the ever-changing demands of their enterprise customers.

So HP is prepared to provide enterprise networking equipment to CSPs, with no upfront payment, that can then be installed at enterprise locations depending on the end user's needs. The enterprise, once it has agreed a managed services contract with the CSP, then pays only for the ports it uses in any given agreed timeframe (for example, per month) and the CSP then pays HP based on the volume of ports activated.

In this way, says HP, the enterprise does not have any capex costs associated with the managed services it is using (so freeing up the capital it would normally spend on new hardware) and the CSP doesn't have capex costs associated with the managed services it provides using the HP networking gear.

"We are prepared to share the costs and share the risks with our [CSP] customers," stated Nick Watson, vice president of sales, at HP's EMEA Networking division, during a media briefing in London Wednesday. "We're confident this offer is really strong and we expect it to work [in our favor]," he added, noting that this is absolutely not an equipment leasing arrangement.

"Enterprises have always looked at networking as something that sits on the balance sheet as a capital expenditure and a lot of budget is sucked up" simply through investing in the network assets required to keep a business running, stated Mike Banic, global VP of marketing for HP Networking. "But that means there is a lot of under-utilization, a lot of stranded assets that are paid for but not being used," added the HP man.

Model approach
With enterprises and CSPs now becoming more familiar and comfortable with the pay-per-use model, HP believes there's a real opportunity for CSPs to provide their corporate customers with a broader range of flexible IT services that reduces costs and inefficiencies.

So are CSPs interested? Apart from Swisscom, Watson says HP is targeting the "top five" telcos in Europe to become program partners. "We are at an advanced stage with two other operators in Europe and part way along with another two," he said, adding that the model is being taken global by the vendor.

And is it much different from rival offers? In August 2011 Brocade Communications Systems Inc. (Nasdaq: BRCD) launched its Brocade Network Subscription service, which has roughly the same model for its router products. (See Brocade Sells Router Subscriptions.)

The main difference between HP's offer and Brocade's, said Watson, is that "we have a customer."

That was fightin' talk, so we contacted Brocade. Its director of global communications, John Noh, retorted that HP is "grossly misinformed. The fact is, Brocade is seeing good interest among our customers in key targeted segments such as CSPs, data center hosting providers and federal government for our Brocade Network Subscription Services. As to your question specifically, we have already announced customers who have acquired our networking equipment through Brocade Network Subscription," including Rackspace (NYSE: RAX) and Denver-based hosting company PeakColo.

Maybe there's something in this pay-as-you-go lark, then....

— Ray Le Maistre, International Managing Editor, Light Reading

(0)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Interviews
Verizon: Beware Unknown Unknowns

12|7|16   |   04:58   |   (0) comments


Chris Novak, director of the Verizon Enterprise Solutions Risk Team, explains that enterprises who don't conduct a thorough audit of their assets often leave some things unprotected because they don't know they exist. Many times these unprotected assets are part of corporate M&A activity but left unshielded they can become a hacker's playground, he tells Light ...
LRTV Interviews
ETSI's CTO Talks NFV, 5G & NGP

12|5|16   |   09:45   |   (0) comments


Adrian Scrase, CTO at standards body ETSI, talks about the various initiatives and specifications developments related to NFV, 5G and NGP (next-generation protocols) that will underpin next-gen networks.
Women in Comms Introduction Videos
Korn Ferry Consultant: How to Find, Cultivate & Be the Best Talent

11|30|16   |   4:10   |   (2) comments


Erin Callaghan, a managing consultant for Korn Ferry Futurestep, shares strategies for companies to improve how they recruit and for women to ensure they don't get lost in the pipeline.
LRTV Custom TV
We Can Make the World More Sustainable

11|29|16   |     |   (0) comments


GeSI is a global e-Sustainability Initiative organization bringing together 40 big multinational companies around the world. According to GeSI's report, information and communication technology can make the world more sustainable. Luis Neves, chairman of GeSI, shared with us his opinion at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
Finding a New Way to Engage Customers & Drive Revenue

11|29|16   |     |   (0) comments


Mobile revenues are declining. Digicel, a player in the Caribbean telecommunications/entertainment space, has found a new way to engage customers and drive revenue. John Quinn, CTO of Digicel, shared with us its story at Ultra-broadband Forum (UBBF2016)
LRTV Custom TV
Do You Really Need Gigabit Infrastructure?

11|29|16   |     |   (0) comments


Altibox is the biggest fiber-to-the-home (FTTH) player and the largest provider of video and TV in Norway. They started out with zero customers in 2002. Now they have close to half a million households and companies attached to their FTTH business. Nils Arne, CEO of Altibox shared with us their story and insight on 5G at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
BTís Openreach Strategy & Its Updates in 2016

11|29|16   |     |   (0) comments


A lot of developments at Openreach this year in terms of strategy and planned investments. Peter Bell, CIO of Openreach BT, shared with us the updates of Openreach at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
ITU: The Broadband Is Our Future

11|29|16   |     |   (0) comments


At Ultra-broadband Forum, Houlin Zhao, Secretary General of ITU, discussed how important it is for countries, companies and everybody to be working together to help to build the broadband and digital economies (UBBF2016).
LRTV Custom TV
Tackling 5G in Dallas

11|28|16   |     |   (0) comments


Here are our highlights of the 5G North America show in Dallas, Texas with Light Reading's Dan Jones.
LRTV Interviews
Cox Prepping for Virtualization Trials

11|14|16   |     |   (0) comments


In this video interview, Cox's Jeff Finkelstein discusses MSO's plans to test managed business services in early 2017 and tackle Distributed Access Architectures.
LRTV Custom TV
Drivers & Potential of NGP

11|11|16   |     |   (0) comments


ETSI has created an Industry Specification Group to work on Next Generation Protocols (NGP ISG), looking at evolving communications and networking protocols to provide the scale, security, mobility and ease of deployment required for the connected society of the 21st century. The NGP ISG will identify the requirements for next generation protocols and network ...
LRTV Custom TV
Huawei IP 2020 for Future Networks

11|11|16   |     |   (0) comments


Future Networks should satisfy many requirements such as high throughput, extremely low latency, flexible mobility, intrinsic security, networking automation, and so forth. The Chief Architect of Huawei Future Networks addresses a holistic solution, i.e., IP 2020, to achieve these requirements for various future life scenarios (e.g., autonomous driving, tactile ...
Upcoming Live Events
December 6-8, 2016, The Westin Excelsior, Rome
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Hot Topics
Cable Nodes Becoming a Choke Point
Brian Santo, Senior editor, Test & Measurement / Components, Light Reading, 12/5/2016
WiCipedia: After-School Coding, Salary Probing & Pro-Parenthood Companies
Eryn Leavens, Special Features & Copy Editor, 12/2/2016
Altice Plans FTTH for Entire US Footprint
Iain Morris, News Editor, 11/30/2016
Altice FTTH Bill Could Hit Almost $9.6B in US
Iain Morris, News Editor, 12/1/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Eyal Waldman, CEO of Mellanox Technologies, speaks to Steve Saunders, CEO of Light Reading, for an exclusive interview about the 100 GB cable challenge, cybersecurity and much more.
Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
Animals with Phones
Live Digital Audio

Even when there's a strong pipeline of female talent in the comms industry, it tends to leak all the way to the top. McKinsey & Company says women experience pipeline leakage at three primary points: being unable to enter, being stuck in the middle or being locked out of the top. Each pipeline pain point presents its own challenges, but also opportunities to stop the leak. Wireless operator Sprint is making a conscious effort to improve its own pipeline from new recruits to the C-suite, and it wants the rest of the industry to do the same. In this Women in Comms radio show, WiC Board Member and Sprint Vice President of Enterprise Sales Nelly Pitocco will give us her take on the industry's pipeline challenges. Pitocco, who joined Sprint in May and has spent 20 years in the comms industry, will also offer solutions, share how Sprint is tackling the challenge within its own organization and take your questions live on air.