Compaq moves toward utility-based hardware services

Compaq on Tuesday became the latest major computer vendor to shift its focus from stand alone product sales to complete technology solution offerings.

The Houston-based company announced a change in its sales strategy, pushing software, hardware, and services packages to large corporate customers in a move to emphasize that it does more than make hardware.

Calling the initiative "Computing on Demand," Compaq will tie installation and technical support services to its hardware sales of PCs, servers, storage, and handheld devices.

This means Compaq customers will no longer have to build and scale their corporate IT networks with multiple product purchases. Instead, all of the technology a company needs, including overhead capacity for servers and storage, can be purchased at a pre-set price and performance level, depending on individual customer needs.

The initiative is intended to allow customers to focus on their core businesses while outsourcing IT requirements to Compaq.

The Computing on Demand suite applies a utility model approach to IT, said Peter Blackmore, executive vice president of Compaq worldwide sales and services.

"The concept behind this is pretty hot in the market right now," Blackmore said. "Many corporate customers [feel] that hardware is more and more considered a utility. Not a commodity, but a utility because the products are valuable [in that] they run their infrastructure on it, but they really want to pay for hardware and infrastructure the way they pay for a utility ... We think this is a fundamental shift in the industry."

Tony Iams, a senior industry analyst at D.H. Brown and Associates, in Port Chester, N.Y., said that although the move from Compaq comes late compared to similar service moves by Hewlett-Packard Co., IBM Corp.'s shift toward services is vital for Compaq, which will eventually only offer Intel-based technology.

"Capacity on Demand is something that's been done in the mainframe world for a long time," said Iams. "Services are really important to [Compaq]. They made a commitment to work with [Intel-based] components and to really renew their focus on industry standard components rather than differentiating with technology itself, and so obviously that is going to step up the challenge to differentiate with creative services."

Computing on Demand includes a number of categories: Capacity on Demand, Server on Demand, and Storage on Demand. Customers can reserve PC, server, and storage capacity, and then Compaq releases the computing power to them as it is needed.

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