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By Barbara Morgan, 4 May 1999 13:21

NEWS Hewlett-Packard (HP) has launched a business plan in which it gives away its midrange and high-end hardware. HP's new E-Services plan involves risk/reward profit sharing, with the IT giant either acquiring a company, giving away hardware in exchange for a percentage of a company's revenues or taking an equity stake in a company that then promotes HP hardware for its own products. Bhaskar Gorti, director of business development for HP's E-Services division, said: "We bring whatever is required: the hardware, the networking equipment and the applications." The business model will be used in HP's new 'Commerce for the Millennium' service, aimed at enabling ISPs (Internet service providers) to provide fast-track ecommerce hosting services for SMEs (small and medium-size enterprises). Gorti said: "Unlike solutions that service providers have to assemble themselves, Commerce for the Millennium is a pre-integrated solution that HP will deploy in less than 90 days. As a partner, HP is deploying, supporting and co-marketing the solution at no up-front cost to the service provider." According to Gorti, the business model allows service providers to better match their revenues with their costs. "In return for a portion of service-related revenues, HP will deploy and support the solution," he said. HP's risk/reward-sharing financial arrangement also includes co-marketing support from HP for activities such as promotional campaigns and end-user seminars. "This is a significant departure from the HP way of doing business," Gorti said. "This is a must-have that the industry will be taking." The plan will be rolled out initially in the US, but Gorti said HP will unveil its first European alliance in mid-May, with plans for Asia to be announced in June. Giga Information Group analyst, Rob Enderle, commented: "It's a good model if you look at the way the market is maturing. There are a lot of companies with huge potential but not much cash. If you want to capture those companies as customers and grow with them, you have to be extremely flexible in the way you do business with them."