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NEWS ANALYSIS: Loyal HP resellers face customer uncertainty

NEWS ANALYSIS: Loyal HP resellers face customer uncertainty

“No one gives up market share easily and it certainly won’t be me” - HP's Janice Cox

Specific details relating to the fate of HP’s $US41 billion Personal Systems Group (PSG) business still remain unclear at this stage, but resellers are maintaining their commitment to the vendor no matter what transpires.

However, the announcements and lack of in-depth details have left many resellers dealing with customer uncertainty surrounding the future of the PC brand.

In August, HP discontinued operations for webOS devices, specifically TouchPad tablets and smartphones. It also said it was exploring the possible spin-off or sale of PSG.

“We’re HP’s largest PC reseller partner in Australia and the very real concern for us is customers and their uncertainty that this whole announcement has created,” Data#3 managing director, John Grant, said.

“We’ve seen concerns, the need for explanation and clarity, and we’ve been doing our best on HP’s behalf and with HP to allay those concerns, but there’s not a lot of information.

“You can’t tell me it’s a good thing that customers have this uncertainty. No one can tell me it’s a good thing that HP has walked away from what was seen as an ambitious, but credible strategy. No one can tell me it’s a good thing to be potentially sitting here for another 12 months while something actually happens to their business. I can’t see any good news in this.”

Grant said he was unconvinced a spin-off would be the end result.

“I think there will be other eventualities that might occur, and we just need to see what happens as the water flows under the bridge,” he said.

“We’ve got the possibility of a spin off, possibility of a trade-sale. Either way there’s a $US41 billion business that’s got to keep going in some fashion. But with the absence of the WebOS strategy, product roadmaps are a bit confusing for customers, particularly when they’re being confronted by the mobile environment that we’re seeing today and the players in that.

“What HP has to do now in the PC business is move and accelerate as quickly as possible to the next stage of its PC business.”

Corporate Express general manager of IT solutions, Ahmed Latif, said there was an opportunity for HP to be a more nimble and independent organisation.

“Are we worried or putting the breaks on our HP business? No we’re not. Are we monitoring it? Yes we are,” Latif said. “People from HP have been more than willing to come out and have face-to-face discussions with us to give us their views of what could happen.

“I feel whatever the outcome is, we’re going to be able to work with it in the whole partner community.”

Klikon Solutions director, David Abouhaidar, said he wasn’t concerned at this stage and it was still business as usual. “It hasn’t affected us a great deal. It has affected some customers, but I believe HP has taken the necessary measures in place to ensure that those customers have been spoken to and reassured of their commitment,” he said.

Synnex Australia, CEO, Kee Ong, said it will take time to understand exactly what HP want to do, but at this moment it’s business as usual.

HP PSG vice-president South Pacific, Janice Cox, said the situation was currently being reviewed, but the likely outcome is that it would be spun off into its own entity.

“We can be more nimble and agile in the market place and we can see it will allow more flexibility in not only the direction that it goes in, but also the development of products,” Cox said.

“HP has done this in the past very successfully with the company Ajilon in 1999. Some of our competitors have spun off all different parts of their business over the years, so we anticipate that will be a really great outcome for our business because we can then focus on purely the transactional product and we stay at the forefront of innovation.”

Support, no matter what transpires

Despite the uncertainty, the vendor reiterated to the channel that it will be supported no matter what transpires.

“We are 100 per cent committed to our resellers as we have been for the last 25 years. They have always been a key part of what we do and that will continue,” she said.

Cox has received positive feedback from HP’s large resellers about its business intentions and reiterated it is still business as usual with PSG, and it will continue to be aggressive in the market. HP currently holds the largest share of the PC market in Australia and globally.

“We pulled in all the key HP partners together on the day following the announcement and they’re giving me feedback saying it makes sense what we’re doing and having a spin off would be a positive thing,” she said.

“We will continue to make PSG, not only the number one PC vendor in the world, but across A/NZ. No one gives up market share easily and it certainly won’t be me.

"We’re still winning significant pieces of business in the market.”

IDC PC analyst, Amy Cheah, said concerns were rising on the long term future of the PC market given negative statements touting the “death of PCs” and major players selling off their PC arm.

But HP’s announcements were more likely to dampen vendor confidence in the sustainability and profitability of the PC business rather than consumer confidence, she said.

However, the uncertainty around the HP PSG unit’s future creates a huge opportunity for competing vendors to capture new market share.

“They may look to tie up relationships with disgruntled HP channel partners and employees, undercut HP’s pricing to capture consumers’ wallet share and key retailer partnerships,” Cheah said.

She anticipates consumer-centric vendors such as Apple, Acer and Toshiba will likely take advantage of consumers’ weakened confidence in the HP brand and persuade them to switch brand allegiance. In the commercial space where sustainable partnerships are valued, Dell and Lenovo will likely benefit as clients turn to these vendors for the assurance of long-term support and services.


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