What It Takes to Capture SMB Market Share

By Lawrence Walsh  |  Print this article Print

HP this week launched SMB Exchange, a sales strike team designed to expand the company’s share in the $55 billion SMB market segment by converting Dell and other competitors’ customers. The initiative will offer customers the choice of buying through reseller partners or direct from HP.

The SMB segment is historically difficult for large vendors to penetrate effectively. Small businesses—or the "S" in SMB with one to nine employees—often buy IT products through retail outlets such as Best Buy and Costco. Companies with 10 to 99 employees will often buy through authorized resellers or direct market resellers. And companies with 100 to 500 employees often buy through different channels depending on the need.

What makes SMB difficult to penetrate is cost. The sales sizes by dollar amount are often smaller because these businesses buy fewer products than enterprises. HP and its partners readily acknowledge that Dell’s direct sales engine is better able to undercut HP prices. SMB Exchange will enlighten non-HP customers to the full breadth of products in the HP portfolio and also provide competitive pricing—particularly in the 100- to 500-employee range.

SMB Exchange is the latest in a series of efforts HP has undertaken to attack the SMB segment over the last two years. While HP has grown through organic sales increases and acquisitions to become the world’s largest technology company, most of the growth is in the enterprise segment. HP needs to change that to continue its growth, market analysts say.

However, earlier efforts to penetrate the SMB segment have drawn the ire of channel partners because of direct sales and competition with low-price catalog resellers. The most significant effort to upset partners was the 2008 partnership with CDW, in which HP funded a 110-person call center to call on SMB accounts.

Kelly insists SMB Exchange is different because it opens opportunities for partners while helping to keep HP financially healthy. "It’s all about getting net-new business for HP and the HP brand."

Lawrence Walsh Lawrence Walsh is editor of Baseline magazine, overseeing print and online editorial content and the strategic direction of the publication. He is also a regular columnist for Ziff Davis Enterprise's Channel Insider. Mr. Walsh is well versed in IT technology and issues, and he is an expert in IT security technologies and policies, managed services, business intelligence software and IT reseller channels. An award-winning journalist, Mr. Walsh has served as editor of CMP Technology's VARBusiness and GovernmentVAR magazines, and TechTarget's Information Security magazine. He has written hundreds of articles, analyses and commentaries on the development of reseller businesses, the IT marketplace and managed services, as well as information security policy, strategy and technology. Prior to his magazine career, Mr. Walsh was a newspaper editor and reporter, having held editorial positions at the Boston Globe, MetroWest Daily News, Brockton Enterprise and Community Newspaper Company.

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