HP insisted it is not playing catch-up to smaller rivals such as Brocade as it lifted the veil on its first rental programme for networking equipment.
Offered exclusively through the channel, HP FlexNetwork Utility Advantage will allow communication service providers (CSPs) to offer managed network solutions on a pay-per-port basis.
Swiss CSP Swisscom is already on board but HP intends to roll out the programme to about five of Europe's largest telcos over the coming months, including one unnamed UK partner.
The new rental model will be aimed at very large enterprises looking to free up capital expenditure (capex) that can instead be ploughed into innovation, Nick Watson, vice president of HP Networking EMEA (pictured), explained at today's launch.
"The interest has been hugely towards the bigger companies because they have a huge network and want to refresh it due to customer demand, but are unable to because they are stuck with no capex," he said.
"This is fundamentally different from a lease. We have spent a year trying to construct this internally within HP so that we can avoid any form of lease contract with the end customer."
The model allows customers to turn ports on and off based on their monthly networking consumption, with the risk and financial burden being shared between HP and the service provider.
Swisscom said it will charge its customers CHF6 (£4.01) per port, per month and a one-off installation fee of CHF800.
Although the scheme will draw comparisons with Brocade's Network Subscription Programme, which was launched 13 months ago, Watson claimed HP has no serious rivals in the networking rental space.
Talking to ChannelWeb, Watson said: "We are aware of competitive offerings, but I do not know anybody who is using them.
"We are launching with Swisscom because it is very easy to create something and just have a PowerPoint on it. The way we are providing the financing allows us to scale enormously. We are part of a truly gigantic organisation that is highly profitable, so our ability to change into a revenue stream a relatively small part of this giant organisation is a piece of cake.
"I would not want to be an anonymous networking vendor with relatively small revenue and say I'm going to do it this way. I have no idea how they could do it."
With enterprises splurging more than 70 per cent of their IT budgets on "keeping the lights on", taking networking equipment spending off the balance sheet will free up more capex budget for innovation, HP claimed.
The firm has put in place several "guard rails" to minimise the risk to itself and its partners.
Matt Greenly, chief financial officer, Networking, at HP, said: "You will not see us flex from zero to x – we want to ensure the service provider is protected so the consumption will not go above a certain point and at the same time we are saying that the average utilisation is going to be x [60 per cent] and we are not going to go below that."
Although the recession is driving enterprises to embrace opex over capex, Watson conceded he was clueless as to why the market had not moved to rental models earlier, given its dull nature.
"I have been in the [networking] industry since 1982 and it has been a constant source of confusion for me that people want to put networking equipment on their balance sheet and treat it as capex. Frankly, I have never understood that – it's not like a shiny new car – it's not something you particularly want to look at.
"You want to take the benefit of it as an infrastructure and run your applications over it and consume the service."
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