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SMBs—small and midsize businesses with fewer than 500 employees—will spend
about $55 billion on technology products and services each year, and the lion’s
share of that belongs to Dell. And that doesn’t sit well with rival
Hewlett-Packard.

HP officially unveiled SMB Exchange, a concentrated sales team that will
target non-HP customers with special offers for products and services. The goal
is to match or beat Dell Direct pricing and convert these companies to HP
“customers for life.”

“It’s a take-no-prisoners strategy, and we’re going after this market
segment aggressively,” says Meaghan Kelly, vice president of SMB Channel
Strategy in HP’s Americas Solution Partners Organization.

Dell declined to respond to the HP initiative, saying that it doesn’t
comment on competitors’ practices.

Ironically, SMB Exchange will employ a tactic that’s well-worn by
Dell—giving potential customers the choice to buy through partners or direct
from HP.

“It’s important for HP to set up ways for the customers to buy the way they want,”
Kelly says.

By HP’s estimates, Dell generates about $22 billion annually from SMBs in
sales of PCs, printers, monitors, servers, storage and other IT gear. HP’s
share of the $55 billion market segment is about 20 percent—or $11 billion. HP
says its revenue and market share generating capability is constrained by
Dell’s ability to undercut prices and lock HP resellers from penetrating
accounts.

The direct elements of SMB Exchange are not designed to cut HP’s resellers
and partners out of business. Kelly and John Hood, vice president and general
manager of SMB Exchange, say the sales teams will always offer prospects the
choice of buying products and services through partners. But the customer will
have the choice of sourcing direct and indirect.

“It will open tremendous opportunities for channel partners for higher-value
services and support opportunities uncovered by SMB Exchange,” Kelly says.

“This is an inclusive strategy,” Hood adds.