Direct Option Stirs Some Skepticism

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.

Partners tend to agree: HP developed SMB Exchange in cooperation with its partner advisory councils and channel consultants to ensure the program remains channel-friendly. Even partners who weren’t consulted on the program’s development concur with the approach.

"What they’re trying to do is create market share where there is no HP presence," says Deepak Thadani, president of SysIntegrators in Woodside, N.Y. "It may provide a chance for partners to get in where they had no chance before. They’re not going after customers where customers already have a presence. Even so, if they can convert 5,000 new customers from Dell to HP, then I’m for it."

Some HP partners aren’t easily convinced. Many HP resellers say the difference between Dell and HP having a sales program that offers customer choice is that HP has built more trust among partners. Nevertheless, some partners are waiting to see how the SMB Exchange initiatives and others like it will work over time.

"I’ve never been so paranoid as I am now because it just seems like everything has an ulterior motive," says Sam Ruggeri, president of Advanced Technology Group in Hauppauge, N.Y.

Industry analysts from Gartner and IDC have endorsed SMB Exchange as a potentially effective program that will allow HP to capture more SMB market share, grow revenue and open opportunities for channel partners. They say that such an initiative is needed to control the cost of serving this market segment, while providing VARs and solution providers with fresh opportunities for services and support.

However, one analyst says HP needs to be candid about the economic realities related to the direct sales component of SMB Exchange.

"HP has to stand up and say, 'This is what we need to do to make money. If you [the channel partner] can’t accept that, then you’ll lose a supplier,'" says Janet Waxman, vice president of hardware channels research at IDC.

Dell is the most frequently referenced competitive target in the SMB Exchange initiative, but Kelly says other vendors are in HP’s sights. They include Cisco, Lexmark and Acer, among others.

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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