Education resellers are reeling following HP's decision to take its Victorian Department of Education and Training (DET) printer business direct, and claim the move has limited opportunities for the channel across the education sector.
Prior to the change, HP had bid for a place on the panel for Victorian DET business. The vendor would then give its education resellers specialist discounts on printers - known as Government and Education Gazette pricing - to sell to public and private schools.
But under a recently negotiated arrangement with DET, HP now works directly with schools to supply printer products. As a result of the change, resellers can no longer access the pricing for sales to public schools, leaving them unable to compete against the vendor for printer sales.
Fed IT director, Steve Bowtell said he had received no official statement from the vendor of the change.
"Out of the blue, HP takes all of the DET printer deal," he said. "Printers represent about $5 million a year for us - it's not a small business.
"HP's printer division has also done this with the Department of Defence in Canberra. This is a double whammy for us as we had strong business there as well."
National education manager for Commander, Rodney Con Foo, said the nature of its hardware relationship with the vendor had changed because of its increasingly direct focus.
"We can't sell HP printers to customers because our buy price is higher than its education sell price," he said. "There's no point promoting the products because they are going direct. There's no future in that for us - and we will lose that business."
According to HP, the shift to a direct sales model was the result of the Victorian DET electing to join its Enterprise Account Program (EAP). Announced last July, the scheme saw HP targeting customers that spent more than $100,000 a year on imaging and printing products.
At the time, HP said the program would be capped at 200 customers.
Imaging and Printing Group general manager for South Pacific, Rebekah O'Flaherty, claimed half of these would be business won from competing vendors.
"Back in August we worked with our partners to ensure that we were transparent and coordinated in making this change to our go to market," she said. "I can confirm that, as promised, there will be no more than 150 members in 2005 and we do not expect the program to exceed 200 client members."
While HP was dealing with DET directly, resellers could also still qualify for the specialist pricing for non-government schools on a case by case basis, according to HP.
"It is business as usual for non-government schools," a company spokesperson said. "They are treated like individual customers.
"HP partner account managers will continue to work with resellers on a case by case basis to get the best pricing."
But Con Foo said HP's shift to direct sales had pushed Commander into investigating new relationships with alternative vendors.
"It gives us an opportunity to work other vendors like Epson and Lexmark," he said. "These vendors have a 100 per cent channel model so we are keen to work with them.
"The printer decision is a precursor to the way most of the hardware market will go. This is the way HP will go to market. I think the change was inevitable."
Managing director of Victorian-based education reseller, Leading Solutions, Frank Colli, was also resigned to HP's direct hardware sales model.
"We are getting less government business now: HP has taken a slice and we can't do anything about that," he said. "Of course, we would have preferred them not to do it. We have to promote what we do well to our customers. As a channel, we hold enormous value. We have to make sure the client knows our worth."
Although HP might provide the cheapest hardware price option, resellers could still focus on offering a whole support and services package, Colli said.
Con Foo agreed, and said Commander was taking a printing solutions approach over straight product sales.
Bowtell said Fed IT had diversified its business to decrease its reliance on government contracts.
"As a hardware reseller, you're better off looking somewhere else for sales," he said.