HP Rebate Snafus Force Exclusive Partners To Seek Alternative Vendors

But another HP Gold partner said that strong growth can hurt a VAR, because, over the past two years, HP has replaced product sales rebates with ones tied to sales growth. Partners that have a great year one year might not see growth rebates the next, he said. "When you have a blowout year, that's fantastic. But what happens the next year when you do not have a blowout year? If you don't grow year over year, you don't get the growth rebates. That could translate into a 5 percent to 7.5 percent drop in our gross margins, and that's hard to make up," the partner said.

But Brady Flaherty, a principal with Altos Technology Group, an HP-exclusive partner in Sacramento, Calif., said, "We're hitting all of [our rebate and growth] numbers so you're not going to hear a complaint from me. It's just icing on the cake and HP wants to reward their top partners for pushing that barometer. Altos has to grow percentagewise faster than HP because we are a small, $100 million company. HP isn't perfect, but they are better than most."

HP partners say a move in December to increase rebates by expanding Growth Accelerator to include HP Services and a new Data Center elite designation did little to solve PartnerOne problems. Growth accelerators were added to the PartnerOne program in March 2007 and were designed to pay partners added rebates for hitting and exceeding quarterly growth targets in specific product categories. Moreover, Growth Accelerators are stackable with Attach Plus rebates.

Another HP Gold partner said HP has told him that the added Growth Accelerators could double his rebate money. "My reward for being a multidisciplined HP-exclusive partner is that I have twice the money at stake in an unpredictable rebate program," he said. "If I hit on all of the goals, I could probably hit the jackpot, but nobody knows what that jackpot is. Last quarter, my rebates went to almost nothing even though I had a great quarter. HP rebates in the past were several hundred thousand dollars a year to my company, and right now I have no predictability of getting any of those."

Another HP-exclusive partner, who asked not to be identified, said simply, "We are spending time managing those dollars instead of selling."