HP to Boost Channel Spending, Raise Margins

Hewlett-Packard this year is increasing channel incentives by more than 50 percent on some strategic product lines and bumping its channel spending by 20 percent, executives revealed June 20 at HP's Americas Partner Conference in Las Vegas.

The increased incentives, available for the second half of the fiscal year, apply to the industry-standard server business—including the recently announced HP BladeSystem c-Class—and for personal systems products and services. It nearly doubles incentives for color and multifunction printers.

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The measure is part of HP's plan to push strategic products that can pull in more of the vendor's vast product portfolio. The Palo Alto, Calif.-based vendor wants partners to boost the attach rate of HP products to solutions built on the HP brand as opposed to attaching other brands to HP-based solutions.

"Attach is what drives it for us," said Mark V. Hurd, HP's president and chief executive officer, in an address to the more than 1,100 resellers in attendance. "We want you to sell across the portfolio and the profit pool is in the attach rate."

While HP is happy with its recent share gains in PC shipments, he said, the vendor believes that attach rates have a bigger impact on overall profitability.

HP also announced plans to increase spending on channel programs and resources by 20 percent to help channel partners hunt, mine and close business.

In addition, the vendor is extending the benefits of the PartnerOne New Business Opportunity tool to all partners, allowing resellers to earn rebates for new business deals on personal systems products as well as for select ProCurve Networking deals.

Partners can begin registering new customer business deals in the desktop, notebook, handheld, thin client and point-of-sale system markets, as well as ProCurve business deals under $25,000 beginning August 1.

The idea, say company executives, is to woo new customers to the brand.

"It's an acquisition play," said John Snaider, vice president of HP's Personal Systems Group Americas. "It's an incentive to not only sell more, but to sell to people who weren't previously buying HP. That's a new customer for us and new market share."