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HP rings in the channel changes for H2

Paul Kunert

Hewlett-Packard is scrapping Partner Development Funds (PDF), extending its rebate programme pilot and rationalising SKUs to reduce the channel's reliance on back-end margin and price more aggressively upfront.

Talking to MicroScope, Dave Poskett, director of the Solutions Partner Organisation for the UK and Ireland, said it was planning a number of changes planned to be introduced in H2 starting 1 May.

"The feedback we have got from partners in the current climate is that they want us to drive simplification and improve cash cycles," he said.

Historically, PDF has been linked to a top tier Gold partners' revenues with HP. "[But] that will go away across all business from 1 May and become discretionary MDF," said Poskett.

"We can reduce administration, look for partners that want to work with us and invest on those plans that we think give the best return," he added. HP insisted the overall pot of funds for marketing would remain the same.

The flat fee rebate model based on revenues that HP introduced in February to make compensation more predictable had been well received by the channel and helped to drive demand, the firm said.

"We have had great support from distributors and resellers to try and drive demand and we are going to extend that into Q3."

Other changes include the merger of the supplies and printer hardware teams into one unit, a new specialisation that combines both product sets and a rationalisation of the Imaging and Printing Group (IPG) portfolio.

"We are trying to get the pricing right first time and one of the things IPG will do as part of the overall simplification process is to reduce the number of SKUs we have by around 30%," continued Poskett, adding this would be staggered over six months.

HP reckons this will make bulk ordering easier and reduce the administration at distribution level to drive efficiencies.

"This will allow us to price more aggressively up front instead of having to attach rebates that impact cash cycles," he said.

The Personal Systems Group (PSG) will be introducing a new portfolio from 1 May for small business and small office (SBSO) customers with 1 to 99 seats, said David Wright, HP PSG vice president for the UK and Ireland.

"We see the overlap in requirements between the consumer and commercial markets is beginning to merge and therefore we see an opportunity of combining the two families," he said, adding Compaq brand would remerge in SBSO.

Again, this segment will see a 35% reduction in SKUs that will allow HP to price more aggressively upfront and clean channel stocks.

Last quarter, Mark Hurd, HP said it had planned to scale back inventories sitting on partner's shelves after it had been caught out by the downturn, particularly in the IPG space.

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