At the start of 2006, Hewlett-Packard was recovering from a fratricidal war between the company and its solution providers that had many people wondering whether the company had the will to not only compete with Dell but even survive.
But while storms raged all around HP, the one man who stayed calm in the center was John Thompson, who as much by personal deeds as corporate action restored the channel’s confidence in HP.
According to Thompson, the key actions taken by HP to help quiet the rebellion included opening more customer accounts to solution providers and focusing more of HP’s efforts on being competitive with Dell in the small and midsize business space. With those measures in place, HP was then able to persuade a significant portion of its solution providers to embrace a controversial channel attach program that rewards solution providers for selling more HP product in any given deal.
While not warmly embraced by everybody, the channel attach program has become the foundation for a consistent approach to the channel that emphasizes profitable sales over just market share gains at any price. For example, under Thompson’s tenure HP significantly cut back on call center sales that customers frequently used to undercut solution provider pricing on the same products.
For most hardcore HP partner loyalists, the attach rate program is welcome because it provides a consistent experience from HP in terms of how the company goes to market with solution providers. But others complain that it still provides too many incentives for HP salespeople to try to take deals direct under the guise of needing to increase the percentage of HP products in any given deal.
Nevertheless, Thompson, who was recently promoted to general manager for workstations with HP’s Personal Systems Group, says the results speak for themselves, with HP recording 12 consecutive quarters of profitable channel sales while at the same time taking market share back from archrival Dell.
“The most surprising thing about the HP channel in 2006 was how quickly they were able to adapt to the new attach program,” said Thompson. “As a group, they well outperformed our expectations for the program.”