Tech Industry

HP offers ISPs deals

The firm unveils a new business strategy in which it gives ISPs a break on hardware in return for shared revenue.

Hewlett-Packard today unveiled a new business strategy targeting Internet service providers, a market it believes could generate billions in HP revenue within a few years.

In addition to offering machines with both Unix and Windows NT operating systems, HP thinks its reputation with enterprise customers and a partnering approach with ISPs will help ISPs move into application outsourcing, an emerging area where companies let an outside vendor run applications for a monthly fee.

To sweeten the deal, HP is offering a financing deal that lets ISPs pay only part of the cost of HP hardware if they'll agree to share revenue with HP on business generated by the machines.

"We're a little late to this market, but we think HP has strengths with enterprise customers that will benefit ISPs," said Nigel Ball, general manager of HP's Internet and application systems division.

The program includes alliances with more than 30 software vendors, including SAP, Baan, Oracle, Netscape Communications, and Microsoft.

"They are looking to establish partnerships with ISPs, not just make them customers," noted Juliana Nelson, senior analyst with International Data Corporation. "HP will be there with networking, mission-critical technology or whatever you need to run for your customer base."

But Larry Howard, senior analyst with Infonetics Research notes that HP faces an uphill battle among ISPs that mostly run on Sun hardware.

"HP has an opportunity to provide solutions that are interesting to ISPs and big customers," Howard added, noting that HP's Quality of Service and OpenView network management software will both solve problems for ISPs and give big outsourcing customers more confidence.

"HP's approach is to bring mission-critical robustness to the Web," HP's Ball said, highlighting Web Quality of Service, which lets ISPs allocate different amounts of bandwidth to specific applications or customers so they can offer service level guarantees. He said HP's new ISP strategy has been in the works for about six months.

"The line between the ISP and the enterprise network is becoming increasingly blurred," noted Jim Balderston, Zona Research analyst.

HP also will deliver two new, compact versions of its Unix servers to make them more suitable to stack at ISP facilities, where floor space can be an important consideration. The new hardware, due to ship by October, has built in HP Web Quality of Service technology so ISPs can offer service-level guarantees for outsourced applications.

A new secure Web console appliance, priced at $590, will allow secure remote server management. Pricing for the HP A-Class servers under $2,400, while the R-Class servers begins at under $11,000.

"Everyone is still trying to push a lot of their hardware," noted David Baltaxe, an analyst at Current Analysis.