In line with CEO Carly Fiorina’s edict that HP needs to grow by increasing sales into existing customers, the vendor is locally hoping to erode the whitebox PC market by strengthening ties with resellers already selling other HP products.
Channel marketing manager, David Booth, said the vendor was looking to formalise its relationship with a network of about 2500 resellers who bought some HP products through distributors but had “no direct engagement” with the vendor.
“We’re expanding our second tier,” Booth, said.
HP had already been in touch with “a thousand” contacts, he said.
About half of the dealers contacted had been “very interested” in joining HP’s registered reseller program, Booth claimed.
HP was positioning itself as an “alternative to whitebox”, he said. “Small resellers will sell clone PCs and HP printers – we’re saying ‘you’re already selling our product, do you want to become a registered reseller’.”
HP was putting together programs aimed specifically at dealers who were already sourcing products such as printers from distributors.
The company hoped to leverage that existing relationship into PC sales, Booth said.
The strategy was to convince resellers to “move the emphasis from whitebox clones to branded HP product” by offering an aggressive price point, warranty and the reliability of a branded product, he said.
While the combined HP/Compaq dominate PC sales, the lucrative whitebox marketshare was a plum target, according to Booth.
“In Australia, about 30 per cent of PC business is attributed to ‘other’ – we’re not just competing with the big boys,” he said
HP’s recent pricepointing efforts had made the vendor competitive with whitebox PC prices, Booth said. the company was supporting the move with product-based and brand building advertising.
The whitebox market, however, has proved a tough nut to crack in the past, according to Ingram Micro MD, Steve Rust.
“HP along with other vendors, and particularly IBM, have been trying to break into whitebox for a while now," Rust said. "The opportunity is there, it’s just proven not to be easy.”
Vendors were also seeing whitebox builders encroaching on their territory, Rust said.
An example was Optima’s recent announcement that it would build its own whitebox notebooks.
With the whitebox market “going from strength to strength”, HP would need to convince both end users and resellers of the benefit of its branded kit, Inform analyst, John Sleijpen, said.
In May, Inform’s report on the PC channel sales for the Q1 2003 showed that trade brands held 15 per cent of the market; other (largely OEMs) made up a further 11 per cent.