25 February 2008
by Paul Kunert
Resellers have voiced concerns that Hewlett-Packard is extending its direct sales aspirations beyond the corporate desktop market and into the server space, particularly on the blade platform.
Less than three years ago HP unveiled plans to cut out resellers in certain corporate accounts that bought PCs and where resellers were only providing product fulfilment (MicroScope 10 May 2005).
But according to partners the vendor appears to have also turned its focus to the server market and is undercutting them to secure deals and hit its industry standard server (ISS) growth targets of ten per cent.
"This is a big worry," said one large partner, "HP is selling PCs direct and it is getting more combative in the server market. They are undercutting us on price and it does not make good business sense."
The level of HP funding in the channel, though still extremely significant, has reduced in the last five years with larger partners feeling more of a squeeze but resellers understand they need to justify their existence.
"HP does not owe us a living and we need to demonstrate value in the supply chain but it seems it is trying to hit quarterly targets and is coming into deals and diving the price by five per cent," said another source.
The level of direct sales in the ISS group is believed to be in the low teens but the direct push is more evident around blade technology, said another source. "They are becoming more combative in trying to grab share."
"I could understand it if HP was selling souped up PCs, low-end servers but blades are more of a solution sell," argued a fourth reseller who added HP needed to be careful as ISS sales were largely built off the back of partners.
HP refused to comment.
