HP's Whitman Era: Partners Should Proceed with Caution
If Hewlett Packard paid its channel partners the way it pays its ousted CEOs, solution providers would be sitting on sacks of money. Leo Apotheker, whom HP rather unceremoniously announced has been ousted after 11 months on the job, is getting a $25 million golden parachute, according to published reports.
Not bad. It’s certainly enough to retire on. However, it raises the question of how much you have to screw up, doesn’t it? I mean, the guy gets fired and still walks away with 25 million bucks.
If HP rewarded partners in this way for under-performing, selling one or two PCs yearly would be enough to cash in. But we know that’s not how the real world works, and CEOs a lot of times don’t appear to live in the real word.
But the reality of HP’s situation right now is the vendor has to contend with a partner network that has been rather unsettled over the past year by decisions out of Palo Alto. High on the list, of course, is the recent announcement that HP plans to divest itself of its PC business.
That’s a pretty big deal because legions of partners built businesses around selling HP desktops and notebooks in years past, and even though many have shifted their focus to services for reasons of profitability, the PC business remains important to them. For some partners, PCs are a loss leader for other business such as storage, software and services.
HP’s decision to can its tablet PC, the TouchPad, a mere six weeks after launching it, also caused consternation in the channel, making partners wonder just what the hell was going on. Was HP’s management on the ball? Did the company really know what it wanted to be? What unexpected move would come next? Partners had lots of questions.
And it certainly didn’t help that partners never got the warm fuzzies for Apotheker, who many felt lacked an understanding of how to deal with the channel. Apotheker’s predecessor, Mark Hurd, had made some missteps when he first took the company’s reins but he quickly endeared himself to partners after saying and doing the right things.
Partners weren’t the only ones who had doubts about Apotheker, a former SAP executive. Wall Street greeted his appointment as CEO with its clearest method of showing disapproval – by sending the stock downward. He then proceeded to confirm the concerns about him with 11 months of puzzling decisions and questionable moves.
Though usually a channel darling, HP has had its troubles with partners in the past. Just think back to Carly Fiorina’s reign, when the vendor bought Compaq and embarked on a direct-selling campaign that had partners fuming. Despite a stellar start, Fiorina’s star had dimmed by the time she left, to be replaced by Hurd.
Now starts a new era, as former eBay CEO Meg Whitman takes over. HP’s board wasted no time disclosing her appointment as Apotheker was shown the door. Is there something in Palo Alto’s water that’s causing HP decision makers to make rash decisions?
I don’t want to cast aspersions on Whitman, even if her political endeavors thus far have been as successful as Fiorina’s. (For the uninitiated, that is a reference to Whitman’s failed campaign for governor of California and to Fiorina’s unsuccessful campaign for a U.S. Senate seat for the same state.)
But the fact is that Whitman has a track record of running businesses focused on consumer sales. How that translates to running the world’s biggest technology company, which relies on partners for at least half of its business, remains to be seen. While partners have the right to be optimistic about Whitman’s appointment, since there is no love lost for Apotheker, they should temper their optimism with caution.
Whitman, whose performance toward the end of her tenure at eBay has been criticized, has her detractors. Among them is Roger McNamee, a partner at Silicon Valley investment firm Elevation Partners, who told the New York Times: "The notion that HP can be fixed by adding a celebrity chief executive is laughable."
Ouch! Perhaps the criticism is premature. We’ll see.
Partners, meanwhile, should get vocal about what they expect from HP and do all they can to make sure the vendor understands their needs and helps them with opportunities. HP’s new channel chief, Mark Parrottino, has his work cut out for him. Hopefully he and Whitman will do the right things to put partners at ease, and that includes spelling out the plan for the sale of the PC business and how it will affect partners.
Otherwise, uncertainty is bound to drive partners to HP competitors. Partners won’t have golden parachutes a la Apotheker if they leave HP, but what they will care about is finding firmer ground to stand on.
Pedro Pereira is a columnist for Channel Insider and a freelance writer. He can be reached at email@example.com.