Hurd on the Channel Street

Although Hewlett-Packard at the moment is riding high thanks to strong
international and consumer sales, company Chairman and
CEO
Mark Hurd acknowledged at the company’s annual partner conference a much
bleaker picture when it comes to sales of IT equipment into corporate accounts
in the

United States.

According to Hurd, about 69 percent of the company’s sales are generated
from overseas markets. And of the remaining 31 percent, a huge percentage of
those sales in the United States come from consumer PC and printer sales, which
means that sales of enterprise computing products in the United States is a
relatively small percentage of the company’s overall business.

Hurd acknowledged this state of affairs during his keynote speech at the
partner conference being held in Las Vegas Feb. 25-28 by imploring the company’s channel partners to expand HP’s
reach, particularly in the SMB (small and midsize business) market in the

United
States, to help HP grow market share in what
increasingly looks like a significant economic downturn. "The

U.S.
is a place we have to win," said Hurd.

Is HP showing signs of desperation? Read Sara Driscoll’s blog here.

The
CEO said it’s imperative for HP to
gain share in the coming year given the likelihood that that industry will see
a decline in enterprise hardware spending. In particular, customers are
delaying server upgrades because they are seeing higher server utilization
rates on existing systems thanks to the adoption of virtualization
technologies, while at the same time customers are trying to reduce the amount
of raw dollars allocated to hardware infrastructure.

This double whammy creates an extremely difficult scenario for HP, which is
relying on channel partners to grow its share of the enterprise computing
market in the face of tough competition from not only
IBM,
Sun and Dell, but also from an increasingly vibrant white box server market. In
addition, Hurd conceded that HP’s ongoing missteps in the storage space have
made it difficult for HP partners to make headway against rival vendors.

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Hurd seemed to acknowledge all this by tempering his usually tough talk
about partner loyalty. While he stressed that HP still prefers to do business
with partners that attach a lot of HP products to any given solution, he was
more conciliatory to solution providers that found it prudent to sell products
from other vendors alongside HP products.

Nevertheless, Hurd said he will continue to bristle over the issue of
solution providers choosing to sell HP products at a loss as part of an overall
solution that includes third-party products sold at a higher margin at the
expense of comparable HP products.