Channel Marker

Feb 25 2008   11:08PM GMT

Hurd to partners: HP will fix problems, but attach rates must rise

badarrow Barbara Darrow Profile: badarrow

Hewlett-Packard has logged robust growth but could do better, especially in the U.S. and in SMBs, HP CEO Mark Hurd said Monday.

Kicking off HP’s annual Americas Partner Conference (APC) in Las Vegas, Hurd (hoarse with a cold) also disputed the notion of some partners that the company wants them to be exclusive to HP while HP continues to play the partner field.  

It was clear (as if there could be any doubt) that Hurd has heard the partner complaints: a balky rebate program; lagging storage lineup; channel conflict.

Bottom line, he reiterated, is that HP partners need to sell more HP gear into their accounts. That means an HP partner who sells servers should try to sell servers plus (HP) storage plus (HP) switches. You get the idea.

HP is working to resolve these issues he said, acknowledging that the company can be challenging to work with.

“I’m not going to tell you to be exclusive [but] I also don’t want to be a loss leader [in cases] where our brand goes out in a  Proliant with someone else’s memory. We don’t make much margin on low, stripped units…frankly we created some of this problem ourselves” when HP stressed unit sales in figuring out partner remuneration.

The goal is fatter, more margin-rich solution sales. And thus HP echoes similar themes from IBM, from Microsoft, from Oracle.

All of these companies want to widen their footprint in existing accounts while adding net-new customers.

Some partners see these tactics as one-sided in the vendor’s favor, if not a one-way street

HP has grown from $80 billion in sales in 2004 to $105 billion in three years. Hurd said outside analysts expect the company to hit the $111 to $112  billion mark this year.

Sixty-nine percent of HP’s business comes from overseas, and Hurd wants to see the company increase strength in the U.S.

And the bulk of its sales has been and will remain through the channel.

But HP faces its own risks. Partners frustrated with what they see as non-competitive storage offerings signed on with EqualLogic for its iSCSI storage expertise only to see Dell buy that company and are now faced with the prospect of Dell as a vendor partner. Still, with Dell making channel friendly noise, some are disposed to give it a try.

A few partners said they had hoped HP would buy EqualLogic and are now hoping it’ll make another move on Lefthand Networks or another iSCSI player to bolster its storage.

Barbara Darrow can be reached at bdarrow@techtarget.com.

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