HP's Confounding New Strategy: Partners Respond

By Ericka Chickowski  |  Print this article Print

HP is abandoning its $1.2 billion investment in WebOS by discontinuing its TouchPad tablet and its smartphones, looking to sell its PC business, and buying a big software vendor for $10 billion. What does it all mean to partners?

Partners are holding their breath following HP’s (NYSE:HPQ) multiple bombshells last week -- buying software vendor Autonomy for $10 billion, looking to sell off its PC business and abandoning webOS and dumping its Touchpad tablet and smartphones. While most channel experts expect the ripple effects to travel far with these moves by HP, it is still unclear how exactly they will rock the boat within the partner community

PC Business a Bust?

The water ahead is particularly murky when it comes to a potential PC divestiture about which HP has released few details. According to Jeff Hine, channel program analyst for Enterprise Strategy Group, it partially depends on how much of the business HP will cut.

"It depends on where they decide to make the cut. Is it way down at the retail level--just the stuff in Staples and Best Buy--or does it go deeper than that?" he says. "It is hard to say right now from a channel perspective what will happen. But it would be an opportunity for resellers to reevaluate their relationships."

He believes that companies such as Dell and Lenovo may be able to pick up some market share and new partners through the market confusion that this will cast on HP. He also thinks that partners who may not necessarily depend on PCs but currently leverage their HP relationship to bundle PCs into larger server and enterprise equipment deals may see a rockier road ahead.

"To the extent that there are some folks at the low end bundling mid-range servers with large PC buys, does this impact their ability to get the adequate pricing they need to bundle those deals? Maybe it does," he says.

While the move to get rid of commoditized PCs may seem out of the blue for HP at this point, it is hardly shocking, either.  According to some partners, it was only a matter of time before the company moved in this direction.

"I think HP is a little bit late with this (PC business sale)," says David Choi, owner of Technology Express, a Bothell, Wash.-based HP VAR. "IBM sold theirs a long time ago. I'm honestly surprised HP hung onto it for so long."

Taken together with the deal for Autonomy, partners should see HP's actions as yet another sign that channel partners need to think about how to position themselves in a post-hardware world, says Michael Hall, president of San Diego-based Bravura Networks, a managed service provider.

"I think it is just another sign that things are moving to a model that is not going to be as hardware dependent," he says. "From my perspective it is a little bit of a paradigm shift for technology businesses, one that we have had to deal with. I think that some people are going to be left behind but I think for other people it is a pretty big opportunity. I don't know how HP is going to develop the channel with respect to this but I would imagine that the people that are nimble will profit and others stuck in older models may go away."

While all of this harrumphing by HP about wanting to dump commoditized hardware may make sense, Hines wonders at the consistency in logic given that even after getting rid of its PC business HP will still be suckling at the teat of its other commodity business: printers.

"There's a little bit of irony there in that they're capitulating in the commodity market and saying they're moving up and the future of our business is software and yet this company is still a company driven by printer and printer ink," Hine says.