HP direct strategy doesn't wash with resellers

HP direct strategy doesn't wash with resellers

Despite reassurances from Hewlett-Packard officials this week, the Australian channel remains in a state of bewilderment following HP's decision to enlarge its direct sales force.

Announced by the company's CEO Lew Platt three weeks ago (ARN, October 14, page 1) , the move will see the vendor's US group transfer hundreds of employees to direct sales, leaving the decision of whether to deal with resellers or HP's direct sales force to customers.

Last week, HP Australia's executive director John Bieske confirmed that a similar shift can be expected locally.

"Under the HP partnership program, we fully intend to offer a direct experience or relationship to customers who want it," Bieske said.

"With this program, we will provide more choice and flexibility, so that customers will get the best of both worlds - HP plus the channel," he said.

Explaining that "this is not a true direct model", Bieske neverthe- less emphasised that "the channel will remain the core" of HP's sales strategy.

"All customers will have the choice of either HP or our channel partners as their prime contact, enabling them to select solutions or products that best meet their specific needs.

"But, even in instances where customers decide to select HP as their primary point of contact, channel partners will be very much involved in providing solutions," Bieske added.

Double-edged stance

But in the eyes of resellers contacted last week, such a double-edged stance is destined to resonate with ambiguity.

"HP's new direction is of massive concern to us, as 85 per cent of our revenue is based on selling HP products" Jon Johnson, managing director of HP's largest Australian dealer Centari Systems, told ARN.

"At this stage, Centari knows HP will be selling some high-end net servers direct and is totally opposed to it," he added.

Yet, while HP Australia officials claim the new strategy is aimed at providing better service to large customers, the channel will be left with little room for manouevre should HP decide to follow what seems to be a current vendor trend of introducing sales strategy changes further down the tier.

Two divisions

Traditionally, HP has dealt with its customers through two divisions, Enterprise Accounts Organisation (EAO) that supports both direct and indirect sales for large accounts, and Commercial Computer Organisation (CCO) with its indirect channel model.

And, according to Bob Keers, managing director of HP's Brisbane-based dealer Kasys, it is the changes in CCO strategy that concern HP's channel partners the most. "HP has had one of the better channel strategies around, so, in terms of that, the effect on the channel, if they went direct, would be significant," he said.

However, he does not believe that a CCO tactical revamp is in store, considering that "HP just doesn't have the mechanism to sell everything through a direct model as this is where its channel partners come into play to add value".

Laurie Carmichael, managing director of HP distributor Digiland, agreed. "As long as the channel supports the vendors and assists the vendors to support their targets, it is a disincentive for them to go direct."

As a head of one of HP's largest partners, Carmichael believes that HP, as "an organisation that consults very closely with its channel partners", would give the channel "warning if they were to change their strategy".

But, as Johnson asserts, it is Hewlett-Packard who calls the shots. "What HP does is ultimately their own business and what we think is not going to make any difference anyway - that's the case with all vendors."

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