First Union Corp. is the first financial institution to use a Hewlett-Packard computer service that charges users in the same way that water and electricity companies price their products.
First Union executives said the pay-as-you-go model, which became available Tuesday when Hewlett-Packard launched its Superdome server, is cost-effective and will help the banking company bring applications to market more quickly.
The company was one of 16 to test Superdome for five weeks before the official unveiling.
Though First Union did not specifically test the utility-style pricing, Julie Smith, a technical analyst in First Union's information technology services, speculated that it would yield cost advantages.
"We pay for what we use," Ms. Smith said. "Before, we would have to go through a purchase process" to add computing power. "With Superdome we can just turn [extra memory] on. It can happen very quickly."
Tim Lindler, vice president of information technology operations at the Charlotte, N.C., banking company, said the utility-payment feature will let the company support new products more quickly.
"At this time, speed to market is very, very key," he said. "If there was an application that was rolled out and a customer said we need to bring it to market, with [Superdome] we would be able to meet that speed-to-market for the customer."
Mr. Lindler predicted that other technology companies would begin introducing utility-style pricing. "There will be demand not only from us as a company but from the industry as a whole. You need to find a way to control information technology costs, and this is one way to do it."
Superdome's server, which is designed to support the Unix, Windows NT, and Linux operating systems simultaneously, also offers potential cost savings, Mr. Lindler said. Normally each application requires its own server, he said.
"As more mission-critical applications come down the pipe, you are trying to roll out your products first to the customer," Mr. Lindler said. "Your infrastructure costs are going to go way up if you try to stay by the one application-one server" method.
Vernon Turner, vice president of worldwide commercial systems and servers at the technology consulting firm International Data Corp. of Framingham, Mass., said Hewlett-Packard's utility approach is "not a brand-new concept, but it's the most comprehensive" approach in the industry thus far.
"You can increase and decrease memory upon demand," he said. "Before, utility pricing allowed you to add, but there was difficulty going back down."
Superdome's architecture will help bring down information technology costs by letting businesses "run multiple operating systems and differing workloads within the same server," he said.
Volkhard Bregulla, Hewlett-Packard's general manager for global solutions development, said the company currently is charging for the Superdome service on a client-by-client basis. A permanent pricing structure will be announced in the next four to six weeks, he said.
"We have not finalized any pricing models behind it," Mr. Bregulla said. "We have some good ideas, but we need some more market verification."
