Hardware partners slide in new HP drive

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HP has sent another three partners what it terms ‘re-alignment’ notices, in a move that channel players believed reflects a shift in that vendor’s focus away from hardware dealers.

HP has sent another three partners what it terms “re-alignment” notices, in a move that channel players believed reflects a shift in that vendor's focus away from hardware dealers.

David Booth, channel sales director for HP Australia, confirmed the hardware giant had sent three more of its Australian channel partners “re-alignment” notices that could result in those partners deciding to end their relationships with HP.

“HP has been reviewing our channel partners and we have issued notices to a number of partners on re-alignment,” he said. “I don't expect there to be any [more departures] between now and Christmas, but we can't control external factors.”

Booth insisted that no partners were being asked to leave and that no “re-organisation” or “re-structure” of HP's channel was underway. However, he said partners might decide to leave as a direct result of the HP “re-alignment” process.

HP has about 25 direct business partners, seven wholesale distribution partners, 100 indirect business partners and some 2,500 registered resellers, excluding its consumer channel. About 10 of HP's business partners focused on services. “There are some changes in motion at the moment with some of our direct business partners,” Booth said.

He would not name the partners involved or give further details of the “re-alignment”. However, “re-alignment” reviews this year had contributed to the departure of eXeed and Digiland, which Booth maintained had made their own decisions to leave. Meanwhile, another couple of partners – Daisytek and AutoDigital Solutions – had closed down.

“There is growth in services and we are working on [that] information,” Booth said.

HP expected its services channel to grow next year, a fact he put down to an improving Australian dollar, decreasing inflation and a recovering US economy.

“Next year will be a very good year for the industry,” he said. “Business confidence is ... at an all time high, given ANZ bank figures this morning [12 November], lower unemployment and some people are seeing a marginal increase in interest rates as positive as well, keeping a cap on the economy.'

However, the services growth did not mean hardware channel resources would be cut, he said.

Booth said the number of HP partners had shrunk since the merger with Compaq more than two years ago, but the basic channel structure was “very similar” to what the companies fielded then.

“From a channel perspective there isn't really a reorganisation. We continuously review our channel partners against our criteria. We are seeing some consolidation in the industry and some exiting the industry,” Booth said. “No further [channel] reviews are planned.”

Richard Maurer, data products sales manager at hardware distributor Brightpoint, said HP seemed to be prioritising its services channel over its hardware channel at the moment, and said he had thought they were cutting hardware distributors.

“When they did their [distribution] review, we were not made part of their direct distributor channel,” he said.

Brightpoint had been in discussions with HP as part of its own long-term strategy. “They were a very small part of our business but we saw them as becoming a larger part. But we still supply their products,” he said.

Other than the review, Maurer said he thought “not much had changed” in HP's approach to its partners. “We haven't heard from them at all since then,” he said.

He also said he thought the merger may have contributed to unrest in HP's channel.

“If you look at the old HP, before the Compaq merger, they were very good at working with the channel. Then when they merged with HP, there was all sorts of confusion and I think the channel suffered a lot in that period,” Maurer said.

He suggested that HP might have promised more than it could deliver in its channel relationships.

“I think sometimes the people who you work with want to deliver more than they actually can do. So, for resellers, their expectations aren't met,” Maurer added.

Steve Evans, GM for data products at Commander, said Commander's relationship with HP was already strong but was strengthening. “We see HP as a key partner -- as we do a lot of other vendors,” he added.

However, he said the feeling “if you ask around the place” was that HP was going direct and might be cutting more resellers from its books.

Commander did networking HP hardware –- such as HP SANs -- and “a little bit” of HP services, Evans said.

“However, I think [in competitive situations] that HP is getting a little bit more realistic in some areas, in coming up against people like -- dare I say it -- Dell, and helping use win good accounts,” he added.

Simon Uzunovski, marketing manager at BCA IT, which on-sells HP services, said HP was focusing more on services these days. “There's no question they are. They're putting more effort into it,” he said.

Greg Newham, GM at Alstom IT, said his company was “very happy” with HP, but Alstom IT focused on HP software. “We're their Master Distributor for software,” he said.

Newham said that his perception was that HP was focusing more on its software -- and thus its software channel partners -- than it had in the past. Alstom IT's HP revenue had grown “quite significant” this year, he said.

“From our perspective, they have been a lot more channel-centric than they have been in the past,” he said. “They have some good products ... and work to support their distributors which, historically, was not always the case.”

Although HP in some instances competed directly with its channel partners, Newham maintained the vendor was managing the situation more effectively these days. “They've taken the sting out of some of it,” he said.

Another three HP resellers, who wished to remain anonymous, said there was dissent in the ranks of HP's channel and that they believed HP was reducing its hardware distributor numbers. “They're probably afraid to talk about it,” one of the HP partners suggested.


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