Hewlett-Packard’s reseller channel partners
could stand to gain if the giant computing vendor merges its PC and print
divisions, as the Wall Street
Journal reports
HP is considering.

Lagging printer and ink sales industrywide have meant tougher times for the
industry overall, HP’s channel partners included, as much of those sales of
print consumables such as ink cartridges go through the company’s reseller
partners, not through direct sales.

But if HP merges the two divisions, that could set the stage for tighter
integrations and  more bundling of offers of PCs and printers—something
that would increase the total sale to the end customer and lock the customer
into buying HP consumables.

“I think we’ll be seeing more tightly packaged deals in terms of integrating
printers with PCs,” says Charles King, principal analyst at Pund-IT. “It
wouldn’t surprise me to see additional peripherals bundled with PC sales, such
as wireless network devices and other peripherals, too.”

HP could enjoy an advantage over other PC vendors in employing such a strategy
because it manufactures both the PCs and the printers. Other PC vendors
generally resell the printers of other vendors.

The rumored HP change comes as the print industry is going through what some
observers believe is a fundamental change, and not just a recessionary dip.
That’s because more people are believed to be opting out of printing and
instead storing documents electronically. If true, print sales may never
recover.

The Wall Street Journal article points out that 70 percent of HP’s profits came
from the print division in 2004, but today only 30 percent do. That’s a big
difference.

But just unifying the PC and print divisions won’t necessarily guarantee
success. When the PC division was floundering a few years back, HP under then CEO
Carly Fiorina tried the same approach of marrying those two divisions together.

“They tried this under Carly Fiorina, and it didn’t go very well because [the
head of the print division Vyomesh ‘V.J.’ Joshi] really had no interest in
running the PC division,” says Rob Enderle, principal analyst at The Enderle
Group.

This time the rumors say that HP will name the current leader of the PC group,
Todd Bradley, to run the merged group. HP CEO
Mark Hurd hired Bradley, the former CEO of
Palm, four years ago. Joshi is an HP veteran who has led the print division for
the past eight years.

“Todd has a broader background and likely could span the organizations, and it
would put him clearly in line for Mark Hurd’s job as kind of a mini-CEO,”
Enderle says.

Such a move would also likely consolidate a number of functions for the sake of
efficiency, including channel management, says Enderle.

“Large-scale printers would likely retain their unique channel attributes, but
office and desktop printer channel organizations would likely merge with their
PC counterparts over time for efficiency,” he says. “They clearly would work to
minimize disruption of the channel but might use this as an opportunity to
shift focus to channel partners who were high performance and relatively loyal
and away from those that aren’t producing and aren’t very loyal.”

But making the unification of the divisions attractive to channel partners will
be crucial to HP’s ongoing success, according to King.

“It’s imperative that the company bring the channel along if they pursue a
reorganization as fundamental as this one,” he says. “I would hope that they
have been keeping the needs and benefits of the channel in mind as they move
ahead with this. If they don’t, they are being very foolish.”