VARs Say Some Customers Just Want To Feel Special

“One thing I hate to do is go to a customer and try to break their pattern of buying,” said Rich Tear, president of CSCI, a solution provider in San Diego. Many of Tear&'s HP accounts buy desktops and notebooks on special bids directly from Hewlett-Packard and CSCI receives an agent fee for servicing the account.

HP&'s plan to cut agent fees on the bulk of its server sales Aug. 1 may give some solution providers new impetus to consider SmartBuy SKUs as an alternative. But Tear says he has no plans to shift customers from the agent model with special pricing to a SmartBuy SKU. “When an account has always bought HP product with Big Deal pricing, that sets the bar.”

He said that even if a SmartBuy SKU comes close to Big Deal special pricing, customers lose the flexibility to craft system configurations to meet their specific needs.

HP told solution providers earlier this month that it intends to cut to 4 percent agent fees on industry-standard servers that are discounted more than 25 percent below Internet list prices. The previous fee was 8 percent.

Solution providers actively involved in HP&'s Influencer Tool agent program said that more than half of their agent fees come from servers discounted more than 25 percent below the Internet list price and the revenue loss could threaten their participation in the agent program (CRN, July 11).

As a result, some said privately that they are contemplating reverting to a resale rather than an agent model and may need the lower-cost SmartBuys to keep pricing close to discounts offered through the Influencer Tool.

One solution provider who is heavily involved in the HP agent program but who asked not to be identified said he would likely go back to a resale model for some accounts. “But most of our accounts are large ones that require custom configuration and special bid pricing. SmartBuys won&'t work there,” he said.

Dan Smith, HP&'s director of U.S. partner programs, said the decision by partners to revert to a resale model would involve “frank discussions” between the partner and HP and would ultimately be decided on a case-by-case basis.

Still, some solution providers say the industry is moving past the days of uniquely configured systems to a world of more standardized models that are available for quick delivery at a low price. “Standard configurations that are prebuilt and ready to ship is what everyone wants,” said Pete Busam, vice president and COO of Decisive Business Systems, a solution provider in Pennsauken, N.J. “The industry has swung around to a position that they know if they want a bizarre configuration, it&'s not going to happen overnight.”