What Latest HP Reorganization Could Mean for the ChannelBy Michael Vizard | Print
Unification of HP PC and Printer Divisions May Not Play Out as Expected in the Channel
The good news is that as the newly-appointed CEO of Hewlett-Packard Meg Whitman’s decision to combine the PC and printer divisions shows a willingness to take on some of the company’s more intractable challenges. The bad news is that while this decision makes an imminent amount of sense from the perspective of HP, it may not reflect any customer reality that solution providers in the channel experience.
In theory, PC and printer sales should be joined at the hip. In reality, the people that buy these products in many larger organizations are completely separate or the time at which they are acquired is completely different. Theoretically, the people that buy these products usually report to the same person. They may even be the same person. But the actual decision to buy PCs and printers is usually divorced from one another if for no other reason than the upgrade cycles for these products tend to be very different. A company may buy PCs in increments over the course of any given year, while printers may not be upgraded for years on end.
HP, of course, has always been anxious to increase the attach rate between PC and printer sales. It understandably drives HP executives to distraction when customers buy an HP PC but not an HP printer, or vice versa. There are hundreds of reasons why this may occur, not the least of which is either it wasn’t in the interest of a solution provider to push both HP products, or more likely the customer wasn’t in the market for both products at the same time.
There’s no doubt that HP can save a substantial amount of money by rationalizing all the sales and marketing activities within the HP PC and printer division under HP executive vice president Todd Bradley. It’s more than likely that HP PC partners should benefit from HP putting more incentives on the table to bundle PC and printer sales. But it’s just as likely that solution providers that specialize in HP printers may suffer from a lack of dedicated HP focus on printers. That’s a big deal because when you peel back HP’s financials it’s pretty clear just how dependent HP is on the profits generated by the printer division and its channel partners.
But like most things the actual cause of the HP reorganization may not be nearly as interesting as the effect. A company’s channel tends to reflect the way the business is structured. If there is one truly unified HP business unit, then it’s possible we may see a wave of merger and acquisitions across HP’s base of PC and printer partners.
However, it’s just as likely that the unification of the HP PC and printer divisions may have no material impact on the way the channel operates. After all, the reason HP is unifying the divisions has more to do with appeasing analysts that routinely use this issue to beat HP up over shareholder value. But what everybody knows by now is that what makes sense on Wall Street usually doesn’t fare as well on Main Street, which is where most of the solution providers conduct their business. Until customers are willing to routinely bundle PC and printer purchases it may not make quite as much sense for channel partners to follow HP’s lead.