Buying Networking by the Drink Could Be Just What the CFO Ordered
November 2, 2011 Leave a comment
- It is too soon to tell whether subscription pricing for networking equipment is a growing trend, with only two vendors offering such choices, but it is worth tracking.
- Network operators should think about what it would mean for their network infrastructure upgrade process and explore with their network provider of choice whether it is considering adding such a pricing option.
What if you could buy your networking infrastructure in the same way you can buy cloud-based SaaS, PaaS, or name your XaaS? If you could pay for it out of your OpEx budget, through a subscription model that allows you to pay as you grow, would you do it?
Networking provider Brocade introduced just such a model at the end of August, when it announced its innovative Brocade Network Subscription pricing model. Customers do not own the equipment, but rather pay by the metered port – a more flexible pricing option than leasing. There is no long-term commitment, and port counts can rise and fall with demand.
The customer basically estimates the maximum number (and speed) of ports that their organization requires, receives and racks the switches, and then pays for the ports it actually uses through a software license key. That number can be adjusted on a monthly basis, so the customer does not have a significant number of unused ports for which it has already paid sitting idle for months or years at a time.
There is a premium that customers pay for the subscription pricing, but it also offers some tax advantages and frees up the capital that is spent with a network refresh which is initially over-provisioned, so that it can be put to more productive use. This is especially useful for any organization that sees a wide variation in bandwidth usage, and it is particularly valuable for service providers, because as their business (and revenue) grows, the money is there to pay for increased capacity.
This mitigates the risk and shifts it back to the networking supplier. At the same time, it enables more flexible upgrades when they are needed, rather than having to wait for what is increasingly a longer depreciation period.
WAN optimization market leader Riverbed announced a similar option for its software-based Stingray Traffic Manager two months later, and officials expressed Riverbed’s belief that interest for such options is widespread. However, two networking infrastructure vendors offering such subscription pricing does not a trend make, and only time will tell whether others add such an option.
In the mean time, it would not be a bad idea for network operators to take a close look at actual network usage – not only port access, but also all of the features which they are buying with their network switch or WAN optimization appliances. In addition, they should make sure they have a good feel for that usage over time, taking into account any cyclic changes. Does such a pricing option make sense for the organization? It would be a good idea to be prepared to answer such questions in case the CFO starts asking them.