The pay-as-you-go network?

22 Nov 2011

Brocade recently announced a new subscription service for networking infrastructure buyers. If it proves successful, a legion of copycat services from other networking vendors will no doubt follow, says Jessica Twentyman.

At last week’s VMWorld conference in Las Vegas, networking specialist Brocade had an interesting proposition to put to attendees: Why not pay for your networking infrastructure on a subscription basis, scaling your network (and your monthly payments) up or down as business needs dictate?

That’s the idea behind the company’s new Brocade Network Subscription service, which is squarely targeted at organisations migrating to cloud-based IT environments. In essence, participating customers will estimate their base and peak switch port needs, install the ports needed to accommodate peaks at no upfront capital cost and pay on a monthly basis only for those that are ‘switched on’.

Announcing the service, Brocade chief marketing officer John McHugh described it as “the ‘virtualisation’ model for infrastructure procurement.”

“With Brocade Network Subscription, customers can turn on vast amounts of networking capacity, from high-end routers to wiring closet switches, without any upfront capital costs,” he said. “Just like application virtualization, this innovative approach allows organisations to acquire network capacity with little risk, while helping them scale up and scale down, in line with their month-to-month needs.”

That is potentially good news for IT professionals responsible for data centre networks, especially those populated by virtualized servers. Already, the demands of virtualization and cloud computing place a considerable burden on existing networking gear – and whether they like it or not, many CIOs will be forced to invest a good portion of the IT budget in new networking equipment over the next few years.

And it’s the nature of these investments that have typically given the CIO a headache. Where network capacity needs are hard to predict, over-provisioning is common practice. But that’s just the start, because in many cases, customers are locked into a product refresh cycle of around six years in length – or at least they are if they want to avoid the many problems of supporting today’s data flows with yesterday’s networking equipment.

So while there may be a touch of marketing hyperbole around Brocade’s claim that it is “revolutionising IT economics’ with this announcement, the underlying economic argument is pretty interesting for companies that regularly acquire other companies, experience seasonal spikes in traffic or are heavily involved in cloud-based testing and development of new applications and services. And for Brocade and its channel partners, the service offers the chance to reduce  dependency on hardware – where commoditization means margins are wafer-thin, anyway – and start to benefit from the recurring revenue and long-term, services-based relationships that a subscription model involves.

There are, however, a couple of things for would-be subscribers to bear in mind. The subscription service is only available to customers with a requirement for around $500,000-worth of equipment. Once they’re signed up, they need to give Brocade adequate notice of their intention to scale infrastructure up or down – 30 days in the case of scaling up, and 60 days to scale down. Finally, while the deal covers most Brocade products, its Fibre Channel SAN products are excluded.

That said, this is an interesting new approach that could set Brocade apart from much larger competitors, particularly Cisco and Hewlett-Packard. The only alternative that currently exists to get companies off the capital-expenditure treadmill when it comes to updating corporate networks is leasing, which tends to come with fixed-period contracts (while Brocade Network Subscription is a simple month-to-month commitment) and no option to scale down, only upwards. And in virtual server environments, or those that are headed in that direction fast, paying for network ports by subscription would seem to make good sense, because as more machines are virtualised, the more physical network ports are generally needed in the data centre.

At market research company IDC, analyst Joe Pucciarelli is happy to provide Brocade with a glowing endorsement. A flexible acquisition option like this, he claims, enables companies to add and reconfigure networking resources in shorter time frames. “As a result, IDC believes that offerings like Brocade Network Subscription will rapidly become an integral method of acquiring IT resources as organisations seek to introduce heightened levels of flexibility and variability into their network infrastructure and related capacity management strategies.”

His choice of words is interesting: “offerings like Brocade Network Subscription”. If this new service proves to be a palpable hit for the company, a legion of copycat services from other vendors will surely follow.