The 'HP-Only' Way?

HP’s Attach Plus rebate program may well equate to the “HP-only” way for a significant number of solution providers, especially smaller VARs serving the SMB space.

HP is betting its money on atach rates—not just sales volumes. And the value proposition for VARs is straightforward: Bundle more HP content into a solution, and you’ll get more rebate money. Potentially a lot more. Some solution providers that have plugged their current sales and attach rates into the Attach Plus matrix expect to see their rebate money more than double. Others say they’ll about break even with what they were getting from their old volume-based rebates, but they see significant upside by clothing more of their HP system sales with HP options, services and software.

HP, too, has chosen to spread the wealth to hundreds of smaller VARs that were shut out of rebate money reserved for solution providers with annual HP revenue that topped $10 million. Attach Plus, which replaces the volume-based rebates paid only to Gold and Platinum partners, kicks in for VARs whose annual HP sales top just $1 million. Smaller VARs that have been selling, for example, Kingston memory or a ViewSonic monitor with an HP system now have some incentive to use HP-branded monitors and memory.

HP CEO Mark Hurd has been browbeating VARs that lead with the HP brand but populate HP systems with other vendors’ peripherals and options. Of course, the reason VARs do that is because HP’s options, especially memory, are wildly overpriced and a tough sell in the price-sensitive SMB market.

Attach Plus, coupled with more realistic pricing from HP, could be a game-changer for SMB VARs, and many will have to at least ponder whether HP-only makes sense in certain aspects of their business.

Is all this going to lead to a legion of HP-exclusive partners? I don’t think so. Solution providers are smart enough not to recommend solutions solely to reap more back-end dollars from a vendor. But it will force most HP solution providers to at least examine clothing each HP system sale with as much HP content as possible, which in itself is a huge victory for the vendor.

Do you think the HP-only way would work for you? Contact me via e-mail at [email protected].