HP shakes up its channel

HP shakes up its channel

HP today announced it will drop Brightpoint (formerly Australian Portable Technology) and Alstom IT as distributors of its desktops, notebooks and handheld products as part of its long-awaited channel realignment, and a further 20 direct resellers may be forced to purchase through the remaining six distributors.

The personal systems group (PSG) has retained four broad-based distributors, Ingram Micro, Tech Pacific, Digiland and Dicker Data, and two specialist parties, Express Data for enterprise solutions and Lynx for storage solutions, in the hope of offsetting recent price wars in the HP channel.

On the imaging and printing side of the business, former HP sub-distributor Synnex has emerged victorious from the ruckus and will join Ingram Micro, Tech Pacific and Digiland in distributing hardware only to the low end of the reseller channel and "unserved markets".

Partners were informed of the vendor's decision in one-on-one briefings with Tony Bill, HP's PSG general manager, and Rebekah O'Flaherty, HP's general manager, imaging and printing group, earlier today.

The partners were presented with a series of options on how they may procure product from the various distributors. According to Bill, each distributor has formulated a program designed to lure former tier-one partners, the value for disties being the additional pass-through margin on stock.

"There is a significant amount of revenue that's being realigned through distributors," said Bill. However, information detailing changes to current rebates and other terms and conditions will not be released until November 1, the official start date for HP's new channel program, PartnerOne.

Unconfirmed speculations indicate that former direct partners bringing new accounts to HP might receive rebates of up to 8 per cent and will have to deliver more than $10 million in product revenue in order to maintain their status as business partners.

According to Bill, the realignment process was based on partners' ability to deliver market coverage and penetration, their market share, specialisation and continued viability. O'Flaherty stressed that a more efficient distribution system necessitates a degree of "agnosticism" about where partners obtain stock from.

Bill also addressed rumours that HP Australia would mimic the direct strategy being undertaken in the US. He said that while a direct business unit is being formulated, it will be targeted at Top 200 companies where channel partners "aren't addressing every opportunity on behalf of HP". Bill still expects his business partners to deliver more than 50 per cent of PSG's business.

The program, inspired by the Compaq model and some harsh lessons from Dell, will allow HP to leverage on the strength of direct economies and will have three components: direct, agency direct, and partner direct.

Full coverage of the announcement and the channel's reaction will appear in ARN's October 9 edition.

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