COVID-19 continues to shock global markets, affecting nearly every sector of the U.S. economy. It has exposed a weakness in business continuity plans—organizations of all sizes are scrambling to support work from home. The need for reliable and secure collaboration is paramount. Last week I wrote about the efforts by networking infrastructure and service providers to address the challenges. If interested, you can find that article here.
Recently, Cisco Systems and Hewlett Packard Enterprise (HPE) announced programs to inject needed liquidity into these initiatives to keep business connected and partners engaged. Today I would like to share the details of these programs and provide my insights into the long-term value and impact.
From my perspective, Cisco has been a standout in its response to the COVID-19 pandemic. With its WebEx video collaboration platform and security offerings, the company has taken a multi-phase approach to providing access to business continuity solutions. This week, it extended its effort further with the announcement that it is offering $2.5B in credit facilities to customers. This new program is available for customer networking projects and refreshes of $50K and higher. It allows Cisco partners to include up to 5% of the total to cover installation and other deployment services. The terms are equally compelling, including 90-day deferral of payments and an implied interest rate of 1% through the end of 2020 (with normal financing terms applied in 2021 forward). This incremental program is offered on a global basis through Cisco’s current fiscal year ending in July. For more details, visit this page.
HPE Financial Services
My firms principal Patrick Moorhead recently shared his thoughts on HPE’s COVID-19 capital infusion plan, which you can find here if interested. At a high level, HPE announced it is earmarking $2B towards a similar payment relief program, which seeks to give customers the ability to acquire new technology very cost effectively. The terms allow for the upfront payment of only 1% of the total contract value each month for the first 8 months. After that time period, companies will only have to pay 3.3% of the total contract value. Similar to Cisco, HPE is also providing an initial 90-day delayed payment structure for a range of HPE hardware, software, software appliances, services and installation packages that include networking infrastructure. For more details, visit this page.
I continue to be impressed by the technology sector’s proactive stand against COVID-19. Cisco and HPE’s latest capital infusion programs build upon their compelling business continuity solutions and expert advice. This provides an excellent opportunity for organizations to consider upgrading key networking infrastructure and deploying the latest solutions based on Wi-Fi 6 and SD-WAN that have the ability to scale to support more users and business critical applications. If there is a COVID-19 silver lining, I would point to both Cisco and HPE’s efforts to ensure business connectivity in these trying times.