The AT&T Inc. logo is seen past a customer and a retail sales consultant at an AT&T store in Washington, D.C., U.S., on Tuesday, April 21, 2015. Photographer: Andrew Harrer/Bloomberg via Getty Images Photograph by Andrew Harrer — Getty Images
AT&T is expanding its lineup of products for business customers that use its services for managing data centers and large networks.
Customers that want to add security features can now forgo buying specialized hardware from outside companies like Palo Alto Networks (PANW, +0.41%), Juniper Networks, and Check Point Software (CHKP, +0.81%). Instead they can use software to do the same thing, saving money and avoiding headaches, says Thaddeus Arroyo, who oversees the AT&T unit focused on large business customers.
“Once we get the basic service installed, it’s as easy as downloading an app on a smartphone if you want,” Arroyo says.
AT&T’s corporate division has been trying woo customers away from buying proprietary networking gear in favor of cheaper hardware that can be upgraded by downloading software. The push moves AT&T from just deploying and managing gear made by others on its customers’ networks to selling its own hardware and collecting recurring revenue for the applications, as well.
The new Flexware line, which changed its name from “AT&T Network Functions on Demand” last year, can already run network routing software from Juniper (JNPR, +0.52%) and Cisco Systems, security features from Fortinet (FTNT, +0.65%), and programs from other well-known network gear manufacturers.
The new security applications can provide services like firewalls to keep out hackers or filters to block phishing emails from reaching employee e-mail in boxes.
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The carrier’s latest push follows the larger trend to cut costs in corporate data centers and cloud computing facilities by relying more on software. This market is expected to grow 53% annually for the next four years, reaching $12.5 billion in total sales in 2020, according to market research firm International Data Corp.
AT&T’s pitch is that customers can spend much less with Flexware than if they bought all the dedicated hardware to connect to their networks from the same vendors. Implementing the same functions in software on generic computers is less costly overall.
AT&T (T, -0.03%) says it has sold 2,000 Flexware devices since the name change last October. The product is available in 200 countries now, up from 150 last year, AT&T said.
The participating network software companies are hoping to keep customers in the fold as the shift to cloud computing and more generic networking gear gains momentum. But it hasn’t been easy. Some of the larger companies like Cisco (CSCO, +1.89%) and Ericsson (ERICCSON) have seen sales slump for key, high-profit networking gear. In March, Cisco paid almost $4 billion to acquire AppDynamics, a leading provider of network monitoring services via the cloud.
AT&T’s bid to get customers to switch to more software-based networking mirrors its own efforts to cut costs through software in its own massive network. The carrier said 34% of its own network was software-driven at the end of 2016, with a goal of 55% by the end of 2017 and 75% by 2020.