IBM, HP go to direct-sales model

IBM, HP go to direct-sales model

Responding to a growing demand by commercial buyers of IT products to make the buying experience easier, Hewlett-Packard and IBM will soon sell their systems directly over the Internet.

HP will announce in June -- before PC Expo -- that it will sell its small and midsize business line of products directly on its Web site.

The change is being made because IT buyers are telling their vendors that the direct channel offers more value and fewer headaches than the reseller channel.

"The direct model provides a single point of contact on a global basis, while the reseller channel just gives you a lot of additional opportunities for problems with no offsetting business value," according to an IT manager at a Fortune 500 company.

Many IT buyers see the two-tier reseller channel as a regional solution that requires dealing with many different organisations and repeatedly covering the same issues.

It appears that IT buyers are shifting over to the direct channel in droves. According to the latest Gartner Group figures for worldwide sales of PCs, HP sales grew in the past quarter by a respectable 13 per cent over the same quarter one year ago, but Dell's sales increased by an unprecedented 49 per cent for the same period.

Although sources said HP will roll out its direct-sales program mainly to the small and midsize market, Big Blue will be rolling out its direct-sales Web site only to its largest accounts, according to a representative at IBM.

"The plan is by the end of the year to sell ThinkPads, commercial desktops, Intellistations, and servers as well," the representative said.

IBM will also emulate the Dell model by putting up customised Web sites for corporate customers with corporate pricing and order taking.

"Using the Dell model, buyers don't have to do much but monitor contract performance," said an IT manager at a major oil company in Texas.

One reseller familiar with the new HP strategy said he was comfortable with what the company is doing. According to Stephen Allen, president of Integrated Technology System, an HP reseller in New York, HP will include on its Web site a list of approved system integrators with the recommendation that they be used when purchasing goes beyond simply buying boxes.

"They are straddling two marketplaces, and the onus will be on them [HP] to explain when and why a reseller is a good idea," Allen said.

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