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HP’s Confounding New Strategy: Partners Respond

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 […]

Written By: Ericka Chickowski

Aug 22, 2011

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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.

HP’s Confounding New Strategy: Partners Respond

Ericka Chickowski

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