Try listing all the products in the Hewlett-Packard Co. portfolio. On second though, don’t bother; there are tens of thousands of unique items. Even the major categories — PCs, networking, storage and printing — have too many products to note. And the company is betting its future on developing greater capabilities and value in cloud computing, security and Big Data.
It’s of little wonder HP believes its partners and the general channel community don’t know all that the company does or what it’s capable of. In an article following last month’s HP Global Partner Conference in Las Vegas, Americas channel chief Stephen DiFranco told Computer Dealer News that HP has to do more to let the channel know all it has to offer.
“They don’t know all we do,” said DiFranco. “We need to do more to get the product message out.”
Allow Channelnomics to respectfully disagree with Mr. DiFranco. The HP story is well known — the company has operated in and around the channel for the better part of the last 30 years. Its partners have built strong, mature practices around respective domains. In fact, HP dominates relationships among the top 1 percent of the channel.
The challenge facing HP isn’t that the channel doesn’t know everything it does, but rather that the channel isn’t selling enough of HP’s products and services.
Since the summer of 2011, HP has been trying to regain its footing. The TouchPad tablet debacle, a series of strategic management missteps and years of under-investing in business development have conspired to nearly kill the vaunted company. Ever since, HP — under the direction of CEO Meg Whitman – has been trying to restore stability and return to growth.
The most recently quarterly results showed nearly all major divisions lost year over year and quarter over quarter sales. However, the losses weren’t as bad as HP and analysts expected, so most everyone scored it a win. Storage, servers and especially PC sales are down. And while software shows promise, HP continues to struggle with going to market with its Autonomy acquisition.
HP shook the confidence of partners to their core, and they sought alternatives to insulate their businesses from disruption. This is why companies such as Lenovo Group, EMC Corp. and Cisco Systems Inc. have gained at HP’s expense.
DiFranco added, “We’re one of the few manufacturers that plays across a broad enough product line that a VAR could literally build their entire business around us. A part of our product strategy is to make sure a VAR has the ability to complete a system with HP and have enough products to be successful. We design our lineup to enable franchise partnerships. I don’t think everyone ever thinks of it that way.”
That’s patently untrue, particularly in the HP universe. Among HP’s largest partners – Fusion Storm, MSI, Presidio, Logicalis, to name a few – are well-established practices in networking and storage. Cisco and IBM Corp. have “franchised” partners too; look no further than Dimension Data for Cisco and Sirius Computer Solutions for IBM. HP isn’t alone in the thinking, but it is behind, as rivals have spent the two years building partners with defined technology practices and virtual channel networks of interlocking partners that create the net-effect of a franchise.
Problematic for HP and vendors like it is that partners now have choice where they hadn’t before. Solution providers can choose hosted, cloud-based and homegrown products to complete their systems. Solution providers are earning more off their own IP than their vendor products; while this is great for the health of the channel, the lack of profitability on the resale of vendor products destroy the tradition incentive for loyalty.
In other words, solution providers don’t necessarily need vendors to demonstrate value and generate profits.
This doesn’t mean that the rest of the channel is as mature as Dimension Data or Logicalis. Better than 90 percent of the channel doesn’t have truly defined specialization or business-technology practices that resemble the types of solution providers HP is thinking about. And, while security is a well-defined market and cloud computing adoption in the channel is increasing, Big Data remains relatively untapped by any channel segment.
What solution providers need is guidance on the emerging market opportunities and how to penetrate in a meaningful and sustainable way. In this regard, HP is doing a tremendous job. Its regional centers of excellence are providing partners with resources that help develop this new technology practices. And HP does have a tremendous program for helping partners develop solutions that fit their customers’ needs.
Vendors are experiencing tremendous disruption by the influx of services that challenge their legacy hardware, the availability of low-cost technology that competes with their core offerings and new business models that make partners less dependent on them for profitability and viability. These challenges aren’t exclusive to HP; it’s affecting all the major vendors. Telling solution providers what products you have isn’t enough; vendors like HP need to re-establish their value and partner imperative to remain engaged in the channel of increasingly independent solution providers.
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