Reply to post: It still doesn't sound like a smoking gun...

Autonomy did count some hardware sales as marketing costs, ex-finance bod tells High Court


It still doesn't sound like a smoking gun...

... accounting for hardware as marketing costs.

I'm not from a sales or accounting background (so excuse my ignorance), but to me if the end customer is paying for a solution, and it's provided as an appliance (software + hardware), and your end goal is to get the end customer to pony up for a software subscription (subscription-model income), then I can see the logic in running the hardware as a loss-leader - you make the product cheap to adopt, but the recurring subscription costs eventually net you the profit over a longer term. I could understand the hardware being sold as "marketing costs", effectively it's a promotional deal on the longer-term revenue you're hoping to net and does carry a short-term cost to the business.

HP had similar appliance product offerings at the time (Arcsight etc), would be interesting to know if they worked on a similar model as Arcsight appliances were software bundles on rebranded HP tin (usually Proliant servers). That's before you get to HP's SOHO printers where the printer is sold at a loss and they make their profit via proprietary consumables (ink cartridges)...

Even if you assume HP didn't use their hardware as a loss-leader for similar products, this still smacks of a fundamental lack of understanding of Autonomy's revenue stream (or more likely, they just assumed it was categorized in the same fashion as their own sales and didn't bother to check).

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