Compaq fuels service provider market

By George Lawton, ITworld.com |  Development

In a move to capture a bigger share of ecommerce-related growth, Compaq Computer, of
Houston, has agreed to commit more than $1.1 billion to service providers in years to
come. Such service providers include application service providers (ASPs), Internet
service providers (ISPs), and network service providers (NSPs). The $1.1-billion
commitment will be spent on financing, equity investments, and comarketing funds. Irv
Rothman, CEO of Compaq Financial Services, said that the financing money would be used
for everything from the smallest service providers to behemoths that might need as much
as $50 million for expansion.

Compaq's launch comes at a time of heavy interest in service providers on the part
of big computer houses. Last month, Sun announced its iForce program to continue to
foster its image as a network server powerhouse. Dell Computer recently said it will
target ISPs as a group. Just today, Hewlett-Packard unveiled the HP Garage Program at
the VentureOne Summit conference in San Francisco.

Several of these programs include not just technology but also comarketing and novel
financing.

For his part, Compaq's Rothman said that a new program called Storage on Demand
would enable service providers to immediately deploy several years' worth of storage
capacity, while only paying for annual storage needs. Along the same vein, the company
announced the StorageWorks Service Provider 24000, or "Terabytes in a Cabinet." It is
designed to provide massive storage in data centers where floor space is at a
premium.

The company is hoping this investment will make it the technology supplier of choice
for service providers. The company believes the market for those companies will grow to
$16 billion in the next three years.

Keith McAuliffe, vice president and general manager of Compaq's Service Provider
Business Unit, said the Compaq approach of focusing on the whole business, and its wide
range of technical offerings, set it apart from competitors such as Dell Computer.

"The financial model we have in place is unprecedented," McAuliffe said. "When you
look at what service providers are trying to do, it is a business offering, and
technology is an important element." He also pointed out that Compaq has developed a
high-end technical support offering on a global basis to support service providers who
might not have enough of the technical competency on board that's required to meet
growing demands. He cast Compaq's service offerings favorably versus Dell's.

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