By William Fellows
The race to capture the companies that will become the industry’s next ‘900lb gorillas’ is heating up as Hewlett-Packard Co grabs another crop of service providers from under Sun Microsystems Inc’s nose. Indeed in one case, HP has convinced mail and messaging hotshot, USA.net to throw out 200 servers and replace them with HP boxes. HP also signed SAP ASP Eonline Inc and leading Latin American portaler StarMedia.com.
HP says that in the race between the vendors to sign ASPs, it has now bagged about 30, with more to come, continuing to aim for leaders in particular market sectors. HP says the next big game in town will likely be vertical industry portals such as gas, oil and other utilities and insurance, connecting suppliers, manufacturers and distributors. It should be a good fight as Sun claims to count the likes of Chemdex.com among its existing users.
HP chief marketing officer, Nick Earle explains that the new internet economy is a whole different ball game to being able to share ISVs with other vendors. With ASPs it’s all or nothing. The notion of sharing the ISV market has gone, he said.
In the USA.net deal HP’s finance group is providing hardware and services – and making an undisclosed equity investment – totaling some $15m, which will rise to $25m over time. It includes throwing out EMC storage in favor of HP’s Hitachi Data Systems Ltd-sourced XPS256 subsystems. USA.net’s value proposition – which recently withdrew its planned IPO – is developing its outsourced consumer and business messaging and email services into unified messaging products (voice, fax, data) for which it can charge more. HP will get a percentage of the fee that USA.net charges each clients. All of the software currently running on Sun servers will be ported to HP boxes. USA.net says it’s adding 500,000 mailboxes a month.
Eonline Inc – one of SAP AG’s three top-tier ASPs – will build its data centers using HP kit. It’s a nine figure deal, the company says. It will also get access to HP channels for its hosted SAP application services. It will use HP for hosting, management, customer service and support. The solutions will be ring-fenced so as not to hurt HP’s existing channels and margins.
StarMedia will market to its users the ability to create their own e-business within 24 hours using HP hardware, software and services. From creating a web site to opening an online transaction bank account for handling credit cards. StarMedia has an existing deal with SkyBox to ship goods anywhere in Latin and South America. The service will roll out in Brazil first then in other parts of Latin America early 2000. HP will get a percentage of the revenue from these deals.
All three partners said they plumped for exclusive deals with HP because HP could provide a one-stop shop, offering the scaling and expertise, and moreover was willing to share the risk.
It’s a mantra repeated by Craig White, SVP and general manager at HP’s Technology Financing group: shared risk, shared reward. Sun, HP says, simply cannot match it here because it has no finance company. HP has a $5bn fund. White told ComputerWire that roughly one-third of HP’s partner deals now have an HP Finance component. Also, he says, HP will get revenue from partners’ existing product sales, not just future work. White says that HP will increasingly aim to use debt financing for pre-IPO companies as a way to guarantee long-time positions and eventually equity in its so-called baby gorillas.
Ann Livermore, president of HP’s Enterprise Computing unit observed wryly that we got no equity in Ariba [one of HP’s early internet partners] and we are all banging ourselves on the head now.
