HP Steps Up To The Plate With Innovative New Channel Program

In some ways, a major change is like the start of baseball season: filled with optimism and hope that your team has the goods to go all the way. But invariably, it’s the ability to deal with the unexpected that determines the success of a given team. So, too, will it be with Hewlett-Packard’s enhancements to its PartnerOne program, which center around paying larger rebates to solution providers that attach more HP products to their solutions.

ROBERT FALETRA

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Can be reached at (781) 839-1202 or via e-mail at [email protected].

I’m excited about HP’s new program. It’s innovative and really does offer an opportunity for its partners to make more. If you haven’t already done so, you should read this week’s CRN cover story for the details.

The changes are a bit complicated. But once partners fully understand how to assess the opportunity for their own business, there is a clear path to increased margins. More important, there is no ultimatum attached. Solution providers can either choose to attach more HP product and get paid for it—or not. In the end, the solution will have to be competitively priced or the sale will be difficult to close.

According to HP executives, at the lowest of the three rebate levels, partners will earn close to the return they received under the old formula. But partners that drive more HP products will attain higher rebate levels.

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HP clearly believes this is a game-changer in the industry, and the changes are designed to increase the vendor’s standing. Let’s face it, HP’s ability to pay partners more is directly tied to its own ability to make more, and that means it is shooting for market-share gains. I think this program has the potential to drive the gains HP is looking for, and it could quickly take share from companies that do not have a product line that cuts across multiple technologies.

But this is where my baseball analogy comes in. Being a Boston Red Sox fan, I don’t just look at the New York Yankees lineup in April, I watch to see what moves the Yankees make before the trade deadline in the middle of the summer. Right now, the Sox have a much better pitching staff than the Yankees, who stack up a bit better with the bats. But any adjustments the Yankees and the Red Sox make before the trading deadline could ultimately be the determining factor come September.

Once the HP program is in place, the unknown is what the competition will do, if anything, to combat it and whether HP will adjust if necessary.

If EMC, for instance, starts to lose market share in storage, can it afford not to make changes to its own program to counter? What about IBM, which does have a broad lineup that can compete more head-to-head with HP’s offerings than EMC can?

There is always a first-mover advantage to something like this. HP may have it now, but that can only last so long.

One other real unknown is what solution providers will do with the additional margin. Will you drop it to your bottom line or price your solutions lower to win more sales? If you do the former, you make more money on the business you capture. If you do the latter, you may realize lower margins but actually make more in total dollars. But taking the rebates to the street will bring a reaction from your solution provider competitors, and ultimately this may mean no one will make more money.

The long-term impact is unknown, but HP has stepped up with an innovative approach that is worth a close look and just may force its competitors to react in kind.

Make something happen. I can be reached at (781) 839-1202 or via e-mail at [email protected].