Partners: HPE's New SMB Hyper-Converged Appliance Is Set To Drive Recurring Revenue Cloud Services Growth

Solution providers see the new ProLiant Easy Connect EC200a hyper-converged hybrid IT appliance from Hewlett Packard Enterprise (HPE) as a cloud services recurring revenue game changer.

In fact, HPE partners say, the new product, being sold via one- and three-year subscription plans starting at less than $10 per month, per user, will accelerate their move to the recurring revenue strategic service provider cloud business model.

"This is going to kick our recurring revenue model into high gear," said George Hefter, co-founder and president of TCT Computer Solutions, a Kennewick, Wash.-based solution provider. "It's a game changer for us to drive consistent revenue and an even bigger game changer for SMB customers, who can now easily budget for their IT. Customers no longer have to budget $20,000 every time there is a major upgrade. Having HPE stand behind us is going to broaden the appeal of the recurring revenue model. This is a brilliant solution from start to finish."

HPE's McLeod Glass talks about the opportunity around HPE's latest SMB Hyper-Converged Appliance.

Hefter said he sees the new subscription model as key to saving SMB customers with older technology from server failures. "We see so many customers in this segment using 12-year-old servers because they dread the cost of upgrading to new servers," he said. "As a result, they end up using old servers well past their design life, which ends up in catastrophic failure."

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With hyper-converged servers reshaping the data center landscape, the ProLiant Easy Connect EC200a may well be the first hyper-converged appliance built from the ground up for small businesses, including remote offices.

The new Xeon-based server appliance, unveiled Wednesday and shipping starting April 28, features a managed services software platform from British software maker Zynstra that is aimed at helping partners and customers avoid the hassle of security patches and updates in a subscription model. The on-premise appliance is managed and updated through the cloud.

[Related: Channel Co. Exclusive Research: Strategic Service Providers Are Driving A New Era Of Business Outcome-Based Cloud Services Growth]

The Easy Connect model provides partners the option of backup and disaster recovery as a service with the ability to wrap in their own service offerings, including security- and vertical market-based offerings.

Hefter, who has already been working with software maker Zynstra, Bath, England, said he sees a huge market in the form of small franchises that are looking to standardize on a managed cloud server platform. "The small franchisees are the sleeping giant for this technology," he said. "This gives them the same hardware-software capabilities of the big guys in a cloud-manageable platform."

The new appliance represents a breakthrough for partners attempting to drive recurring revenue services with a server platform, said Kevin Torner, a principal and executive vice president of Erbs Technology Solutions, a Cedar Rapids, Iowa-based solution provider and HPE Gold partner.

"The game changer is having this all wrapped up in one nice neat bow -- all from HPE -- as opposed to putting together products from seven different manufacturers and wrapping it into a managed services bundle, which is what we have to do today," said Torner. "This is the first time I have seen a full managed services server solution for the SMB customer."

Erbs plans on wrapping in some of its own managed services along with backup and disaster recovery as a service from the platform. "I'm excited by the opportunity from what I have seen so far," said Torner. "I'm looking forward to having my team get their hands on it."

What's more, Erbs, which is also an HP Inc. Platinum partner, will also look at combining the EC200a subscription server with a device-as-a-service offering from HP Inc., said Torner.

Erbs plans on running its own business on the ProLiant Easy Connect EC200a as a means of putting the product through its paces, said Torner. "You have to eat your own dog food," he said. "This is a great solution for us. At the end of the day, we too are an SMB."

Douglas Grosfield, the founder and CEO of Five Nines IT Solutions, a pioneering Kitchener, Ontario-based strategic service provider that has attracted widespread attention, said he sees the new offering as a mark of the "innovation" that HPE can deliver on its own as an independent company. "They have come out with something that sounds really cool," he said.

The beauty of the Easy Connect EC200a hyper-converged appliance is that it offers the best of both worlds -- on-premise and off-premise -- a true hybrid IT optimized solution, said Grosfield. "This fits into the fastest-growing part of the market, which is hybrid IT," he said. "Kudos to HPE for allowing customers to put some eggs in the cloud and some on-premise. That is a recipe for success."

Grosfield said he is excited to see HP helping more partners embrace the strategic service provider business model. "This is a refreshing approach from HPE," he said. "In the past, HPE was so focused on the enterprise that they missed out on the SMB market."

The initial Easy Connect platform includes the latest Microsoft server operating system, Server 2012 R2, with Active Directory and Azure integration for single sign-on -- allowing users to single sign-on to any Azure application, including Office 365. Zynstra will provide the automatic update to Server 2016, currently in beta, and expected to be available in the third quarter.

HPE sees the Easy Connect recurring revenue model as a big competitive advantage versus competitors. "The business model is not something that is easy to do," says McLeod Glass, HPE vice president and general manager, tower servers and SMB solutions. "HPE as a channel company has been able to put together this model so partners can deliver an OPEX-based solution. This is differentiated from anything else in the market. There is not another solution that delivers the level of integrated IT. We are standing behind our partners' managed services providers business with this product."