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HP charging for firmware updates is shortsighted

HP has decided that going forward it will only provide firmware updates to customers who have a valid warranty for their equipment which normally means purchasing a support agreement or HP Care Pack.

hpfw

The server market is a tough one with low margins. IBM has decided they can’t be bothered and have flogged their x86 business to Lenovo. HP has been going through a tough time recently with widespread redundencies and is obviously under pressure both to get a handle on costs and increase revenue so is looking to ensure it can extract maximum extra value from its hardware sales.

HP’s announcement says:

This decision reinforces our goal to provide access to the latest HP firmware, which is valuable intellectual property, for our customers who have chosen to maximize and protect their IT investments. We know this is a change from how we’ve done business in the past; however, this aligns with industry best practices and is the right decision for our customers and partners.

Our customers under warranty or support coverage will not need to pay for firmware access, and we are in no way trying to force customers into purchasing extended coverage. That is, and always will be, a customer’s choice.

This is a shortsighted and misguided change which will hurt HP and is certainly not the “right decision” for their customers and partners.


Firmware

HP is a hardware company, not a software company at least when it comes to servers and networking. HP may see firmware as software “valuable intellectual property” but customers view firmware as something only necessary to run the hardware they’ve purchased. HP makes great hardware but it doesn’t have a great track record with its firmware particularly with its HP Blade System chassis components. Many serious firmware bugs and numerous incompatibilities have caused untold issues for customers. HP is getting better with their more integrated and regular Service Pack for Proliant updates but there’s still work to be done. HP OneView is a great enhancement to simplify hardware management replacing the terribly unwieldy and bloated HP SIM but it only supports newer HP servers. As firmware is really only there to enable you to run hardware, customers are more interested in having firmware that is stable than introducing new features, especially with server firmware. The change means its now your responsibility to pay for HP to fix bugs in its original code it shipped to you.

Virtual Connect you may say is a different creature. Yes, you certainly want firmware updates to fix bugs but HP is actually adding more features to their chassis switching via firmware such as the additional features with Virtual Connect 4. The thing is HP has sold its networking gear in the past with the promise of a lifetime warranty. Not any more?

Support

HP is undoubtedly trying to cut down on 3rd party support companies that sell HP server support themselves to companies. These 3rd party companies may purchase a real HP support agreement for one of each type of server and have some spare parts on hand and then offer support themselves for far less money than going directly with HP. HP could crack down on these companies by changing the support terms or even better provide more cost effective support options themselves. Enterprises generally do have support agreements in place so HP likely thinks it won’t be causing any issue with their prized high paying enterprise customers but this isn’t correct.

Big customers

hps

Enterprises do generally purchase support for most of their servers for normally 3 years but plan to run those servers for more than 3 years, say up to 5. For the extra 2 years some companies are happy to support themselves from their own stock of spares as this saves them money and they have a bunch of now older servers that they are retiring but can be harvested for spares to keep the 4-5 year old servers going. So, technically, these servers will not be able to have their firmware updated for 2 years but that’s not going to happen anyway. As the enterprise customers still have other support contracts for their newer servers, they will be able to download the firmware anyway so HP doesn’t gain anything. How carefully is HP going to audit which server models you have valid support contracts for and is it only going to allow you to download firmware for server models with valid contracts? Well, most of the firmware for the various components are shared between multiple models so you will still be able to update the array controller for your out of support BL460 with another newer server model with the same array controller model. HP doesn’t gain anything. SMBs and home users don’t have the budget for expensive support.

Smaller customers

SMBs generally rely on their VARs to handle support so are not going directly with HP. There are quite a few home users with file/media servers or labs which can get fairly complex and they certainly aren’t paying HP for any maintenance. Servers are sometimes released that don’t support certain features or OSs which are added later with guess what, a firmware update. You may purchase a new Nic card for a server which would require a firmware update to be recognised and would have to pay HP for support to be allowed to do update the firmware. Next time you buy more equipment for your home lab, are you going to head straight to HP? Once you are already thinking twice about your investment in HP at home, what will your thoughts be about investing in HP in the office? If you do work for an enterprise with a support contract and also have a lab at home, you will just use your work login to download firmware for home. HP doesn’t gain anything.

Fallout

HP firmware will start appearing on Torrents with the associated corrupt and infected files which may work their way back into the enterprise.

Nobody’s going to be buying much kit on eBay if they don’t already have access to future firmware so people aren’t going to be buying any HP kit in the first place thinking they will sell it on eBay in a few years and offset the cost of some newer HP gear. Own goal, HP.

HP has announced this with the heading “Customers for Life”, I think they will find it will be “Customers for current contract” only.

Dell doesn’t charge for firmware, Cisco servers don’t need a service contract to get UCS server firmware. You do need a Cisco support contract for firmware for routers and switches but these generally aren’t updated often and how many switches do you have in your organisation compared to servers?

I understand HP needs to make money where it can and has the right to charge for whatever it wants but when something was free and you start charging for it, you better have a good reason. Don’t sell it to me as “the right decision for customers” and then predict I’ll be one of your “Customers for Life”. With virtualisation it is far easier to switch server hardware vendors without even having to shut down your VMs, customers are no longer as tied to their hardware vendor as they were. This change gives customers another hurdle to jump over to support their systems without giving a single benefit in return.

Shortsighted, HP.

Categories: Flex-10, HP Tags: , , ,
  1. July 2nd, 2014 at 09:54 | #1

    I agree entirely Julian and too would be surprised if HP make significantly more money out of it. It seems like an idea from some accounts department who is far removed from customers and the field…

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