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Subscribe to our hardware, says Brocade

Install now, buy by the port later

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Hoping to use its elbows against Cisco’s hold on the data centre market, Brocade has decided on a pitch to the bean-counters: switches that you pay for according to the ports you’re using.

The "network subscription" pricing model, unveiled at VMWare’s cloud-fest VMWorld, works like this: Brocade will ship and install the switch into the data centre, but the customer will pay a monthly fee based on the number of ports enabled during the month.

In other words, as cloud loads scale up or down (and network loads rise and fall with them), the number of ports the customer pays for will also rise and fall.

ANZ regional director Graham Schultz told Oz media and analysts at a presser on Wednesday August 31 that this approach would be suitable for customers spending in excess of $AU500,000.

He said data centre investors face a problem: they know they will have to provision their hardware – and therefore spend their money – ahead of full utilization. In other words, Schultz said, the purchase of hardware to fit out a data centre inevitably results in idle capital.

Because it’s difficult, pre-launch, to predict the likely loads in a data centre, he said service providers “tend to over-invest in equipment”, after which they have to wait for their sales successes to get their returns.

In the “network subscription” model, Schultz said, “we put the kit on the floor, and we bill the customers for the ports they use.” Pricing is, of course, dependent on which kit the customer is buying, and how much.

There’s a side-benefit to the CFO: this model turns even the network hardware into an operational expenditure rather than capital – making it more attractive from a taxation point of view.

It is, however, an approach that carries risks for Brocade: it, rather than the customer, is assuming the up-front capital risk for an installation; and second, the financial viability of the “network-as-a-service” model depends on Brocade’s ability to create a workable billing system.

There is also the risk of push-back from the channel, since Brocade will only offer the network subscription products direct. ®

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