Wishes Come True

On the face of it, HP's message is pretty clear. Solution providers need to add value to the sale, otherwise HP will have to take the business direct in order to compete effectively against Dell. The core issue for HP is that on the supply side, it can't be as efficient as Dell so it intends to compensate for this deficiency by cutting solution providers out of sales when they have no apparent value-added role.

Now the truth is, a huge percentage of PC and server sales have limited added services associated with them. That's why we continue to see Dell gain share at the expense of other hardware companies.

But there is a significant part of the market where solution providers do add value. Unfortunately, HP is antagonizing solution providers who sell into those markets through inconsistent actions in the field, which means that the company is putting the loyalty of these solution providers at risk.

The end result of this breakdown is manifesting itself on three fronts.

First, solution providers who have customers that need systems with a lot of value-added services tied to them are being pushed toward recommending white-box or custom-system solutions,where the trusted brand is Intel two-way servers and Pentium 4 desktops and notebooks rather than HP-branded systems.

Second, brands once considered to be second-tier, such as IBM, Acer, Sony and others, are now gaining ground at HP's expense.

And third, many solution providers are beginning to equate HP with Dell, meaning that they are just as likely to give Dell their business as they are HP.

Sadly, HP's leadership appears to be unable to police its policies and frequently appears to be out of touch with events in the field. That is clearly not a situation that behooves a great company. Furthermore, it is not something that HP can afford to wait to resolve under new leadership, because by then the damage done will be largely irreversible.