Compaq offers 'on demand' computing services

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By George A. Chidi Jr.

(IDG) -- Compaq Computer Corp. has announced a change in its sales strategy, pushing services to large corporate customers in a move to emphasize that it does more than make hardware.

Compaq will tie installation and technical support services to its hardware sales of PCs, servers, storage and handheld devices. Calling the initiative "Computing on Demand," Compaq plans to offer customers computing services as a utility cost, like a water bill, according to a news release from the company. The initiative is intended to allow customers to focus on their core businesses, while outsourcing IT requirements to Compaq.

Companies have generally been hesitant to outsource important parts of their IT department, fearing a loss of control, said Ned May, a senior analyst from the International Data Corp. research firm. A combination of improving network technology and deteriorating economic conditions make Compaq's plan more feasible now. "The skill shortage drove (outsourcing) in the past years, and now its a cash shortage."

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With each hardware manufacturer essentially offering the same kinds of products at the same prices, Compaq is turning to services as a way to offer some greater value to customers than their competitors, a move May said follows the trend among the big computer makers.

"Current economic conditions are helping to move it along quicker," he said. "The network that's been built out makes this more possible, the utility-delivered model."

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.

Under the Capacity on Demand program, Compaq will install reserve computing power for customers using AlphaServer and NonStop Himalaya servers. The server capacity can be put into service immediately on request, and paid for as it is used. Server on Demand will extend the plan to the company's ProLiant server line in the third quarter. The plan includes flexible financing options, as well as a pay-per-unit computing model based on application usage.

Compaq's Access Utility is a package of hardware and services with options that can be customized, according to the company. It offers four desktop or portable configurations using Microsoft Corp.'s Windows 2000 Professional and Office XP software, along with help center support, installation, program management, asset reporting, and a technology upgrade every three years.

Optional services can be added. Those services include asset recovery, backups and system restoration, desk-side support, data migration, custom image loading, and enhanced hardware support.

The initiative's effect appears to be similar to the application service provider business model.

"The network allows them to just flip a switch remotely to turn (these types of services) on," May said.

The Storage on Demand and Compaq Private Storage Utility programs perform the same kind of services function as the other on-demand programs, allowing customers to meet unanticipated storage requirements by purchasing additional capacity like a utility, on a "pay-as-you-grow" basis, according to Compaq.