HP Launches Pay Per Use Networks

Peter Judge has been involved with tech B2B publishing in the UK for many years, working at Ziff-Davis, ZDNet, IDG and Reed. His main interests are networking security, mobility and cloud

Don’t see networks as a capital investment, says HP

HP has launched a service where companies can get enterprise networks without buying or leasing the equipment. The FlexNetwork Utility Advantage programme is available through partners – and Swisscom is offering networks at six Swiss francs per Gigabit Ethernet port, per month.

The scheme uses HP’s FlexNetwork product range and is not a lease agreement, but a move to apply “cloud economics” to  network hardware, HP stressed. HP ships network kit to service provider partners who install it at customer premises. There is a small initial payment, and then the customer only pays a monthly fee for the number of 1Gbps Ethernet ports they use – and the service provider shares the fee with HP.

Nick Watson HPDon’t see networks as capital investment

“People have looked at the network as a capital cost, and yet 70 percent of  the money goes on keeping the lights on,” said Mike Banic, HP’s worldwide vice president for network marketing, at the London launch of the programme.

Nick Watson, EMEA vice president for HP networking (pictured), went further, asking why the network should be on the balance sheet at all. While most network companies will lease equipment, this deal is not like that, said Watson: “We have constructed this to avoid a lease contract.”

The service currently offers LAN ports, and will be extended during 2013, to include VLAN (virtual LAN) services.

In this agreement, HP shares the risk with the service provider partner, said Banic: “We are putting a disruptive model in jointly with the service provider.”  Although HP gets less revenue on equipment that it ships, he believes the deal will unlock demand and help to grow HP’s share of the market. “We are being very deliberate in how we are bringing this to market, using trusted partners.”

HP flexnetwork graph

The arrangement has been tested for some months with just one partner announced so far – Swiss telecoms provider Swisscom. “Our customers want to focus on running their business rather than operating networks for employee access to applications like voice and videoconferencing,” said Oliver Spring, head of product management at Swisscom.

Physical network equipment can be delivered within two to five days, said Spring, and after that, new ports can be added within two days. However, since managing the network is part of the contract, Swisscom normally offers new ports proactively when it can see that the network is nearing capacity, he said. The initial cost to move to the FlexNetwork Advantage scheme depends on whether the user decides to contract Swisscom to move their network to the HP hardware, or do the job themselves, he said.

Originally envisaged for smaller businesses, the service has proved attractive to large enterprises as well, said Spring, pointing out that big users have reduced budgets, and this service lets them perform needed network upgrades without having to get capital budgets.

Despite the interest from large customers, Banic said HP has no intention of offering the service directly to customers. “This will only go through partners,” he told TechWeekEurope. 

Use of the network is not metered, Watson emphasised to TechWeekEurope: “Users are charged per port, not per byte.”

Although there is no UK partner announced, all the HP staff assured us that talks were advanced to establish one.

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