HP Giving Away Mainframes?

Erbo writes "No, that's not a misprint--Hewlett-Packard is now giving its most powerful hardware away. But there's a catch, of course...they'll be wanting "a piece of the action" in return. Could this be the next step after the "free PC" business model? Will it carry HP by leaps and bounds into the 21st century? ZDnet has the details. "

This is very very bad

[Anonymous Coward]

This practicce is wrong and should be illegal if it isn't already. HP is putting itself in a position to own a stake in every new internet startup. What happens when "HP grants you an exculsive license to use this equipment. If you do not agree to the terms of this licensing agreement, then you must return your computer"?

If this keeps up OEMs will own every new (read: small) company that needs a computer. HP is not stupid. They are doing this because they know they can make more money off this than selling the hardware the old fassioned way.

Venture Capitalism

[Jeremy Erwin]

Often the best way to make an insane amount of money is to invest in a company before, or during its IPO. The herd mentality of investers will do the rest.

HP is hoping that it will be able to take advantage of the internet stock frenzy, and increase revenues. Imagine if Amazon had sold 3-5% of its equity for a mainframe-- before the IPO.

What makes me somewhat leary is that last payment option:

"Give us your comapany, and we'll give you a mainframe..."

This is not new...

[John Fulmer]

Several others have tried it before: Computer Associates with their SSO product , Network Associates with their security suite (although it is different, pay us every year for the same product)...

So far it's proven to be a non-winner for those companies....

The big problem is that once you do this, you are COMPLETELY locked into a single vendor. You can't get out, because they own part of you.

This is probably the WORST thing that could happen, technically. Lack of competition for GOOD products in large corporation could really stifle the computer industry...

This is not new...

[Nemesys]

It certainly isn't new. How different is this
from EDS and IBM outsourcing deals?

Can you say "Sell your soul"

[The Mayor]

HP recenetly split up the company into a computer company and a test equipment company. The computer company is still called 'HP'. I forget what the test equipment company is called. It seems that your advice was already taken!

It's not Free!

[eponymous cohort]

They want either a stake in the company, or a percent of revenues. If your company does really well, you may end up paying HP more than the value of the hardware.

This may appeal to startups, who don't have the cash on hand for a mainframe, but I don't think it's as revolutionary as it sounds.

New business models

[Rayban]

Has anyone noticed how these new business models are popping up all over the place? First RedHat, now HP. I'm glad that people have finally woken up from the 18th century and starting seeing that our current form of capitalism is having trouble coping with the current state of our world.

I'm interested to see which company takes the next step. Maybe we'll see an open-source version of OS/2 in the near future. ;)

Free everything

[coreybrenner]

A.C.,

I love you, man...

(but I don't want no damn Bud Light, gimme yer Guinness)

--Corey

Lets hope the "dragon" doesn't try this on O.S.

[thebrit]

"It could be the beginning of a huge trend," Brown said. "It's about time that people woke up to new ways of doing business, instead of just making Microsoft and Intel rich."

In a MS sales pitch the practice could become ....

"Buy Windows2000, and let us have all/some/what-ever-we-want of your company, and by the way you'll have to put up with beta 3 for a while."

Eeek !

Where does the revenue come from these days?

[bagel]

It's pretty amazing the way things are working out. Years ago, hardware manufacturers gave away the OS, usually with source, because they really didn't care about it, the OS was only there to make the box run. Then Microsoft came along and showed how they (as a relatively small [!] software company) could make mega-bucks from the OS. So everybody closed up the OS, without realising they weren't making any more money that way, and customers got an inferior product.

Then, companies realised they could make more money by using a quality, free OS like Linux, and could even give away free copies of their own product (like Sun and Solaris 7). Closed companies like Wintel start to get worried... Consumers (especially the clever ones) start to get excited...

Then, and this is the important bit, the same hardware manufacturers realised they weren't getting enough revenue from selling the boxes that had done them fine for decades. Too much competition, E-business is everything, open protocols give you no competitive advantage, etc...

Enter: The 'Services' company. You don't need capital, even an office, all you need is an idea! Witness 'Amazon' and the like, great (on the whole), modern companies that are providing things the consumers really want! Only problem is, they're making all the money and the hardware/software vendors are losing badly.

HP are onto a great thing here, I hope it works for them and they don't abandon it when the first few startups take advantage of the offer and then disappear...

Now, I need to think of a way to get one of those shiny boxes on my desk... (Under my desk? Beside my desk? In a massive room all to itself? :)