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 Channel Futures

Business Models


Hardware as a Service: Growing Up or Growing Old?

  • Written by Joe Panettieri 1
  • November 22, 2011

When Google announced Chromebook price cuts a few hours ago, it was the latest inflection point for MSPs trying to figure out hardware as a service (HaaS). Yes, the HaaS market has had its share of hits. But HaaS has also had its share of setbacks in recent years.

HaaS allows VARs and MSPs to earn recurring monthly revenues from a variety of hardware — netbooks, notebooks, PCs, servers and more. But every time the HaaS market seems to be moving forward it also seems to take a step back.

On the upside, companies like CharTec have made a living promoting HaaS to MSPs. Many of the engagements involve storage appliances that generate recurring revenues. And in the storage market, providers like Axcient and Zenith Infotech (among many others) have offered on-premise appliances as part of a monthly recurring revenue opportunity to channel partners. Those offerings aren’t exactly positioned as HaaS, but some folks could argue that the solutions are HaaS-driven.

Managed print services can also fit the HaaS description, since many deployments involve leasing or financing agreements with ongoing contracts for consumables (ink and paper). Moreover, hosted unified communications sometimes fits into the HaaS discussion, especially if customers pay for their desktop phones and dial-tone as part of a flat monthly fee.

Rethinking Our Enthusiasm

So far, so good. But when we launched MSPmentor in 2008, the HaaS buzz seemed to be much louder. A lot of readers thought HaaS may eventually dominate their business. MSPs, so the theory went, would become total IT service providers, including hardware as part of a flat monthly IT fee to SMB customers.

Among the trends we misread: The rise and evolution of netbooks, tablets and Google Chromebooks. Back in 2009 and 2010, numerous cellular service providers offered netbooks for free as part of a monthly broadband/mobile-wireless contract. We thought that would be a big long-term trend. But the netbook craze fizzled out when Apple’s iPad redefined the mobile user experience.

Fast forward to 2011, and MSPmentor believed Google Chromebooks had a chance to redefine the HaaS market. Google’s so-called Chromebook for Business and Education effort allowed customers and students to purchase Chromebooks and cloud-related services for roughly $20 to $30 per month. But now that Google’s partners are slashing Chromebook prices, I  get the feeling that the devices aren’t selling.

Another limiting factor for HaaS: Some MSPs became nervous about the market back in 2010, when N-able Technologies filed suit against MSP on Demand, a HaaS provider, over alleged fraud. That case apparently remains in a North Carolina court. A judge on Nov. 2 apparently asked all parties in the case to file a status report on or before Nov. 18, 2011. We’re checking in with our sources now for any potential updates.

In the meantime, HaaS remains a growing opportunity on many fronts. But will the HaaS market ever regain all that buzz from 2009 or so?

Tags: Cloud Service Providers Digital Service Providers MSPs VARs/SIs Business Models

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2 comments

  1. Avatar Alex Rogers November 29, 2011 @ 4:34 pm
    Reply

    Joe,

    I guess you must not have received enough of me at IT Nation Huh? Let me quickly explain in a few sentences what makes HaaS Successful for MSP’s to sell. Probably first and foremost is the ability to sell on everything else the MSP has to offer and not concentrate on the Hardware. By placing all the emphasis on the value of your offering and actually tying down what each one of your included services solve for the client you build a much bigger case for the prospect to choose you over the competition. That is the real reason a prospect will choose your Managed service offering, not because you are giving them some free hardware. HaaS Is just thrown in at the end of your presentation as a “Oh by the way I went ahead and replaced that old Beige Server you had with something that will carry you on for the next three years….” Make Sense? You totally discount the hardware as just another added value.
    With the proper discovery, presentation and factual examples of how MSP offerings are going to solve challenges, cut cost, or make life easier for the prospect; they are already bought into the offering long before they even knew the Hardware was included.
    The companies that fail or are just getting by selling HaaS are the companies that just concentrate on a monthly payment of the hardware and by doing that they have just jumped in a ditch with every other finance and leasing company. Remember what makes a MSP stand out from the competitors is a proper offering where all five officers of a company can place a different perceived value on a different percentage of the agreement. Man we could totally do a pretty kick ass webinar on this. Take Care.

    -Alex
    CharTec LLC

  2. Avatar Joe Panettieri November 29, 2011 @ 4:50 pm
    Reply

    Alex,

    I can picture you waving your arms with educational emotion as you wrote this. Ironically, I wrote a somewhat related blog on managed services pricing about two hours ago… the whole idea of letting customers place “different perceived value” on each piece of the managed services agreement (rather than offering customers and itemized cost list).

    Definitely agree on that point.
    -jp

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