HP Rebate Snafus Force Exclusive Partners To Seek Alternative Vendors

Other HP-exclusive partners added that the sales goals needed to hit the rebate number, especially in storage, are unrealistic and impossible to attain.

"They are completely out of step in storage and don't have much presence in the enterprise," said an exclusive HP gold partner. "If all we do is represent HP storage, we're not going to be in the storage business, so you've got people bringing on EMC or NetApp so they can participate in that business."

One partner noted that his most recent quarterly storage growth goal was 21 percent over the year-earlier quarter and that his overall growth goals for storage, industry-standard servers and business-critical systems averaged more than 25 percent. HP estimated in November during its fourth-quarter earnings call that fiscal 2008 revenue would grow about 8 percent from $104.3 billion in 2007 to $111.5 billion. "They have an 8 percent goal and yet expect partners to do 3 times what they expect in order to get paid," said the HP exclusive Gold partner.

Jones acknowledged that in the fourth quarter, HP set some storage goals for partners that may have been too high. "But we have high goals for storage in general," he said. "Storage is a big area of focus for us in 2008, and we are going to continue to push it. If you take anything in our PartnerOne program, portfolio sales and sales growth are key."

Still, HP-exclusive partners are scrambling to adjust their strategies in light of the problems with PartnerOne rebates and what they call HP's noncompetitive storage offerings. "HP does not do well against NetApp and EMC in a competitive situation and, as a result, our HP storage business is flat," said an HP exclusive partner.

But rather than bringing on a competing storage vendor, the solution provider said he is beefing up his Cisco Systems Inc., Oracle Corp. and VMware Inc. business. "We've decided to build up complementary business rather than a competitive one with HP," he said.

But another exclusive partner said, "HP rebates and HP, in general, are becoming less and less meaningful to me."

That sentiment could well boil up among a significant number of solution providers at HP's upcoming Americas Partner Conference. With Dell, IBM and others mounting renewed incursions into HP's channel, they said HP executives need to come up with concrete answers to stem growing channel frustration.

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