HP's Channel Plan: One Step Forward, Two Steps Back

By Elliot Markowitz  |  Posted 2005-05-13 Email Print this article Print
 
 
 
 
 
 
 

Opinion: Cutting rebates for channel partners who win HP business from competitors was a bad move by the vendor. HP still needs to prove its commitment to the channel.

I am a big believer in companies having unified messages to their channel partners and end-user customers alike.

Mixed signals from different parts of an organization breed contempt and confusion. And all good intentions can wash straight down the sewer if a company is sending different messages to its VAR base.

This, in my view, has to come from the top of the food chain in any organization. The CEO must set the agenda, tone and strategy, and put in place safeguards to make sure each division sticks to its knitting.

Enter new HP President and CEO Mark Hurd, of NCR fame.

As previously noted by Channel Insider columnists, Hurd needs to build a relationship with HP's channel partners—and fast.

Partners need to know where he stands and what his channel religion, for lack of a better word, really is.

Wall Street may be happy it got an NCR gem, but that doesn't necessarily translate to channel comfort.

Keep in mind, Hurd comes from an organization that favors the direct sales approach over the channel. We'll see if this leopard changes its spots.

Click here to read more insight from columnist Pedro Pereira about HP's Hurd and his relationship with the channel.

HP and Hurd have to be channel-friendly, even overly supportive, to win over the trust of solution providers. And so far I don't see it.

Every move HP makes in the coming year and every speech Hurd gives is going to be over-scrutinized. Fair or not, that's just the way it is.

The recent changes to HP's PartnerOne channel program came less than two months after Hurd took the wheel, but he was navigating the ship at the time, so as far as I am concerned, it is on his watch.

It's like a relief pitcher taking the mound with a man on first and giving up a double.

He may not be charged with the run, but we all know if he just got the batter out, the run wouldn't have scored.

Off on the wrong foot.

In my view, HP and Hurd have already gotten off on the wrong foot.

The vendor is cutting competitive win rebates to channel partners taking business away from the company's biggest competitors.

This may be a small-margin move for some, but it sends the wrong message. Margin is margin, and don't mess with a VAR's margin.

HP needs to reassure its channel partners it is committed to them and erase all doubt, plain and simple.

Former HP CEO Carly Fiorina was always trying to out-Dell Dell and although HP does have a substantial and solid channel program, VARs I know were always uneasy about Fiorina's motives.

The channel, although absolutely critical to HP's success, was never sexy enough for Fiorina, and channel news would never land her on CNBC.

Cutting anything in terms of support, bodies, marketing programs, incentives or rebates is not the way to build trust early on.

Please don't misunderstand me, HP's PartnerOne program is very well thought-out, well-executed and extremely beneficial overall for VARs.

HP has even made some positive moves recently, such as including competitive rebates for the first time on Alpha servers and related services to help VARs sell a complete HP solution.

In actuality, including Alpha servers in this is more important than the rebate cuts, especially for those VARs focused on solution selling and not just product margins. HP gets high marks for that.

However, I am talking about the message the company is sending to its channel base.

Did it really have to steal from Peter to pay Paul at this particular moment in time?

The competitive rebate cuts were ill-timed, considering the channel will closely watch and scrutinize every move HP and its new CEO makes in the near future.

In my opinion, adding Alpha servers to the program is a strong step forward, but cutting the rebate percentage is like taking two steps back in the eyes of the channel.

In addition to being editorial director of Ziff Davis eSeminars, Elliot Markowitz is also editor at large of Ziff Davis Internet's The Channel Insider.

 
 
 
 
Elliot Markowitz Elliot Markowitz is Editorial Director of Ziff Davis Media eSeminars responsible for the editorial content of all eSeminars. Markowitz is a 14-year publishing veteran and was previously Editor-in-Chief of CRM Magazine and the destinationCRM.com website and related live events. Before CRM Magazine, he was Business Editor at TechTV, responsible for helping to manage the TV station's website as well as conducting live on-air interviews with key industry executives.

Markowitz also spent 11 years with CMP Media's award-winning weekly newspaper Computer Reseller News (CRN), where he held many key editorial positions including News Editor, Business Editor, and Senior Executive Editor. In 1999 he was named Editor of CRN, responsible for the entire editorial operation of the newspaper and in charge of coordinating its redesign and re-launch in June 2000. While at CRN, Markowitz initiated many key alliances including the Industry Hall of Fame event in Las Vegas and the annual CRN/Raymond James Conference. Early in his career Markowitz was a news reporter on Long Island for the Massapequa Post.

He holds a B.A. in journalism from Hofstra University and is a graduate of the Stanford Professional Publishing Course.
 
 
 
 
 
 

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