Light Reading
European operator sees more potential in HP's pay-as-you-use enterprise networking model than in the managed service developed with Cisco

Swisscom Buys Into HP's Utility Vision

Ray Le Maistre
12/12/2012
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Hewlett-Packard Co. (NYSE: HPQ) gave its new FlexNetwork Utility Advantage Program a turbo boost at launch today by being able to unveil an existing customer for its new pay-as-you-use enterprise networking model in the form of Swisscom AG (NYSE: SCM). (See HP's New Risky Business.)

Swisscom is using the HP program to offer its enterprise users a managed service called LAN Management Flex and the European operator believes demand for the offer is set to be strong -- at least much stronger than its LAN Management Standard service developed with Cisco Systems Inc. (Nasdaq: CSCO).

Swisscom enterprise services executive Oliver Spring, talking to the media in London on Wednesday, said the Flex offer involves customers paying a monthly fee for the ports they use on HP IT equipment managed by Swisscom. Enterprise Flex customers don't buy any of the hardware: Instead they pay an initial installation fee of 800 Swiss francs (US$861) per location and then CHF6 ($6.46) per month for each Gigabit Ethernet port being used. If more ports are needed, they just plug in to any unused ports or order additional boxes from Swisscom when needed (delivery takes two to five days).

The service is in trials with enterprise users and Spring predicts extensive interest as it looks to develop its managed services offerings to combine WAN, LAN, unified communications and SIP trunking services into one package.

Spring certainly hopes the Flex service will generate greater uptake than the LAN Management Standard service that doesn't have the pay-as-you-use model for hardware: After a year it has no customers for that offering.

Spring is confident that the flexible usage approach will attract enterprise users because of the current inefficiencies in corporate networks: The Swisscom man notes that, in enterprise networks it has monitored, up to half of the Ethernet ports deployed are never used. Helping enterprises run more efficient networks without the burden of upfront capex should, he believes, encourage greater investment in collaborative video services and other value-added offerings such as managed security.

Ultimately, Spring hopes he can take the service international if the right partners sign up for the HP offer. For example, he sees tremendous opportunities to offer the same model to Swiss corporate customers with overseas locations if current international communications services partner Verizon Enterprise Solutions signs up to HP's program.

HP says it is engaged with operators globally about its FlexNetwork Utility Advantage Program and will make further CSP partner announcements in 2013.

— Ray Le Maistre, International Managing Editor, Light Reading

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