Compaq has come up with its own variant of a Hewlett-Packard plan that allows companies to pay for computer systems based not on the systems' power but on how much they're used. Compaq announced a plan Tuesday that will let customers pay for specific levels of computing capability without worrying about details such as how many CPUs a server has, how up-to-date a fleet of PCs is, or how many hard drives a storage system contains. Parts of the plan resemble rival HP's "pay-per-use" initiative, under which companies pay for how much work their systems perform instead of how powerful those systems are. The initiative, called "computing on demand," is part of Compaq's "major shift" to offset sluggish PC sales and a slowing economy by moving away from hardware and focusing its efforts on software and services--being paid to handle the headaches of planning and running computer systems. Rivals such as HP and Sun Microsystems also are trying to make more money from services, following in the steps of services giant IBM and services-specific companies such as Electronic Data Systems. Part of the computing-on-demand initiative involves a customer option to buy computer or storage systems with extra computing power installed but not switched on. When computing demands or storage needs surge, the extra CPUs or hard disks get fired up automatically, and the customer pays Compaq for what amounts to an upgrade. Sun and HP already have similar offerings for their servers, and HP has said it intends to extend its plan to storage systems. Compaq already offers capacity on demand for its high-end Alpha and Tandem servers but will extend it to its Intel servers as well in the third quarter of 2000, the company said. Compaq is also including PCs in its plan. The company will offer a contract under which it provides a customer with Windows 2000- and Office XP-equipped desktop and portable computers, offers round-the-clock help, and brings in replacement machines every three years. Extra pricing will apply to accompanying services such as installing custom software or backing up data. Another part of Compaq's program is simply outsourcing, in which the company runs part or all of a computing operation for a customer. HP and IBM are aggressively pursuing this type of services contract. For complete business coverage, see ZDNet UK's Enterprise Channel. Have your say instantly, and see what others have said. Click on the TalkBack button and go to the ZDNet news forum. Let the editors know what you think in the Mailroom. And read other letters.