Distie cull not yet on the HP Bill

Distie cull not yet on the HP Bill

HP will not categorically deny that there is a cull of distribution numbers pending. However, the company has said that there are no plans for any such action when existing contracts expire on April 30.

Rumours have been circulating the channel in recent weeks that the closing of HP's second fiscal quarter would also mark the end of the line for some of HP's wholesale channel partners.

General manager of the vendor's personal systems group and the executive in charge of all systems and imaging distribution contracts, Tony Bill, said there was no truth to such innuendo.

"April 30 is not a significant date," Bill said.

There was "nothing sinister" in the fact that distribution contracts were only extended for six months when last reviewed in October 2002, he said.

"To say 'categorically deny' is a big call," Bill said. "I am never going to categorically deny it because things can change so quickly in this industry. The current plan of record is that we are reviewing our total channel - including distributors and corporate resellers - on an ongoing basis with a view to ensuring that the partners and structure that we have today meets our requirements going forward.

"At this stage, I do not know whether this means that we have more distributors or less distributors or different distributors or, in fact, we maintain exactly what we have got. It is too early for me to call. What I will say is that May 1 is not significant in terms of any proposed changes other than being when existing contracts are due to be renewed."

Bill said HP only extended existing contracts for six months because "we are still operating as two legal entities" from a tax and legal standpoint.

"We were hoping to be able to have a single contract to [distributors] from the new HP by the end of this [HP fiscal] half year but we weren't able to achieve that," Bill said. "We hoped we would be able to reissue in our third fiscal quarter without having two separate contracts."

HP will not have the system changeovers required to have one legal entity by April 30 and six-month extensions will again be part of the contract terms.

It was possible that HP might "bring some more [distribution partners] on" if it thought it was "missing some market opportunities", Bill said, but it was more likely "to look at reducing that number over time".

He said that he "would not foresee any negative changes" to trading terms and conditions when new contracts were issued for May 1 onwards.

For more on HP, see this week's ARN.

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