& 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
Kicking off BCE 2017, Light Reading founder Steve Saunders lays blame for NFV's slow ramp-up and urges telecom to return to old-fashioned standards building and interoperability.
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 Custom TV
VeEX at ANGA COM

6|27|17   |     |   (0) comments


At ANGA COM 2017, Cyrille Morelle, president and CEO of VeEX, updates Alan Breznick with VeEX's new products and technology. This includes VeSion cloud-based platform for network monitoring, AT2500-3G advanced spectrum analyzer and MTTplus-900 WiFi Air Expert module. He also comments on DOCSIS 3.1 deployment and Remote PHY technology.
LRTV Custom TV
The Overall Objective Is to Win the Game

6|26|17   |     |   (0) comments


SCTE•ISBE's Chris Bastian discusses Energy 2020's success to date and the importance of a flexible approach that allows for changes in specific strategies in order to reach significant milestones.
LRTV Interviews
CenturyLink: Let's Get Past SD-WAN Hype

6|23|17   |   04:02   |   (0) comments


Technology becomes a "shiny object" unless it's properly focused on solving business needs for enterprise customers, says Bill Grubbs, network solutions architect for CenturyLink. He explains to Light Reading why SD-WAN deployments have to be tailored to specific needs – and more.
Women in Comms Introduction Videos
Infinera's Sales Director Paints Tech's Big Picture

6|21|17   |   4:14   |   (1) comment


Shannon Williams, Infinera's director of sales, shares how she achieves work's many balancing acts -- between her role and the broader company, today and tomorrow's tech and more.
LRTV Custom TV
SD-WAN Innovation & Trends

6|20|17   |     |   (0) comments


Versa CEO Kelly Ahuja discusses with Carol Wilson the current status and trends in the SD-WAN market, Versa's innovation around building a software platform with broad contextualization, and the advantages that startups can bring to the SD-WAN market.
LRTV Interviews
Ovum's Dario Talmesio on 5G in Europe

6|20|17   |   02:16   |   (0) comments


At 5G World 2017, Dario Talmesio, principal analyst and practice leader on Ovum's fixed and mobile telecoms European team, explains the emerging trends amongst European operators as they prepare for 5G.
LRTV Custom TV
Putting Power on a Pedestal

6|19|17   |     |   (0) comments


ARRIS's John Ulm says a major accomplishment of SCTE•ISBE's Energy 2020 program is increased focus on power cost and consumption, including inclusion of energy requirements in operators' RFPs and RFIs.
LRTV Custom TV
Gigabit Access: The Last-Mile Pipe for All Future Services

6|19|17   |     |   (0) comments


A Gigabit access platform being deployed today must be able to deliver all types of services to an increasing number of devices. A non-blocking architecture is necessary to support the ever-increasing growth in bandwidth demand. The Huawei Gigabit access solution is based on a distributed design that is fully scalable to deliver a unprecedented performance.
LRTV Custom TV
Key Factors to Successfully Deploy an SD-WAN Service

6|19|17   |     |   (0) comments


As service providers transition their SD-WAN solution from trials and limited deployments into production at large scale, there are important considerations to successfully operationalize these solutions and realize their full potential, without adding complexity, introducing uncertainty or disrupting current business operations. Sunil Khandekar, CEO and Founder ...
LRTV Custom TV
IoT Solutions: Rational Exuberance

6|19|17   |     |   (0) comments


IoT solutions are morphing from hype into viable business opportunities. Huawei has the platform and ecosystem support to help carriers successfully address new business opportunities in the IoT space.
LRTV Custom TV
Realizing ICN as a Network Slice for Mobile Data Distribution

6|19|17   |     |   (1) comment


Network slicing in 5G allows the potential introduction of new network architectures such as Information-centric Networks (ICN) as a slice, managed over a shared pool of compute, storage and bandwidth resource. Services over an ICN slice can benefit from many architectural features such as Name Based Networking, Security, Multicasting, Multi-homing, Mobility, ...
LRTV Interviews
Ovum's Mike Roberts on 5G Uptake

6|19|17   |   04:08   |   (0) comments


Mike Roberts, research director for Ovum's service provider markets group, explains why he has boosted his 5G subscriptions forecast.
Upcoming Live Events
October 18, 2017, Colorado Convention Center - Denver, CO
November 1, 2017, The Montcalm Marble Arch
November 1, 2017, The Montcalm Marble Arch
November 2, 2017, 8 Northumberland Avenue, London, UK
November 30, 2017, The Westin Times Square
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
No Imagination: UK Chip Biz Goes Up for Sale
Iain Morris, News Editor, 6/22/2017
Does AT&T Deserve Time Warner?
Mari Silbey, Senior Editor, Cable/Video, 6/23/2017
Netflix's Lesson in Culture Expectation Settings
Sarah Thomas, Director, Women in Comms, 6/21/2017
Kalanick Steps Down as Uber CEO
Sarah Thomas, Director, Women in Comms, 6/21/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Following a recent board meeting, the New IP Agency (NIA) has a new strategy to help accelerate the adoption of NFV capabilities, explains the Agency's Founder and Secretary, Steve Saunders.
One of the nice bits of my job (other than the teeny tiny salary, obviously) is that I get to pick and choose who I interview for this slot on the Light Reading home ...
Animals with Phones
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.