HP just came up with a really cool new service to sell enterprise networks. It imitates the way Amazon sells cloud computing.
It's called the HP FlexNetwork Utility Advantage Program. It turns a corporate network into a service where enterprises pay for their networks based on how much they use them.
The pay-for-use idea is called a "managed service." It's not a wholly new idea, but it is unique for the local-area network (LAN). Today companies buy their LAN network equipment. Cisco is the leader in this market, with HP's networking division playing chase.
One element of the HP service is odd. HP isn't renting the network gear directly to enterprises. Instead it is renting it to telecom service providers and getting them to rent it to enterprises.
The plan works like this: the telecom service provider signs on to use HP's network equipment and it pays nothing up front. It pays HP only based on how much its customers use it. The service provider is to turn around and offer the same pay-for-use service to its business customers. The enterprise pays the service provider a fee based on how much they use their networks.
That's like if Amazon didn't let people use its cloud directly, but offered it only to Dell, who then turned around and sold it to everyone else.
HP already has a large direct sales force and already sells its gear to enterprises. So why the middleman here? HP's says that its better to try an gain customers through service providers that already have managed services customers. (HP's full statement about this is below.)
In any case, the equipment will be owned by HP, who is responsible for maintains and upgrade. And that's another cool thing about this plan. HP is using its "software-defined networking (SDN)" gear, which means much of the network's fancier features are done by software, while the hardware becomes dumb plumbing that simply sends data around to where its supposed to go.
In this way, HP can easily upgrade an enterprise network so that it always has the latest new features. It's like getting new features on a network in the same way you would get an operating system upgrade on your smartphone.
So far, one service provider has signed on to try the scheme, Switzerland's Swisscom. HP hasn't yet announced any U.S. service providers though it says its working on those deals.
Here's the full explanation from HP of why it is using service providers instead of selling the service directly to enterprises:
"The HP FlexNetwork Utility Advantage Program is designed for CSPs to deliver managed networking infrastructure to their enterprise customer-based. CSPs are a natural choice to partner with to bring this type of program to market as this extends the CSPs managed network offering. This is important for CSPs and enterprises alike as CSPs can offer them new managed services such as Unified Communications and Collaboration that require a modern network, and enterprises can embrace more cloud services and handle mobility/BYOD with a refreshed network. HP is the only company able to package a complete end-to-end network architecture, spanning data center, campus and branch, through a pay-per-use model."
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