HP to Retire Hard Deck, Consider New Distribution Plans for Advanced Products

The program has simply run its course, at least in the PC arena, said Kevin Gilroy, vice president and general manager of North America commercial channels at HP. The move to retire Hard Deck is one of several changes the Palo Alto, Calif., hardware, software and services giant is considering. Among others: a new plan to change how enterprise storage, enterprise software and Itanium-based products are distributed, a new list of "named accounts," a new procedure for handing special bid pricing and new designations for partners who develop specific expertise around designated "go-to-market" opportunities.

Of all changes for partners under consideration, none is as symbolic as the move to end Hard Deck, although its real impact to partners who sell higher-end HP products and services may be minimal. That's because the vendor is committed to "a predictable business model" that will continue to spell out for partners where and when HP intends to sell direct. Nonetheless, Hard Deck's architect, Gilroy, has mixed feelings about letting it go.

"We'd like to have a very monolithic channel strategy if we could," he said. "But the economics...in a company with the product set as broad as HP, doesn't allow for it."

While Hard Deck worked well for certain products, it simply doesn't work well for PCs, which the new HP will offer direct to whomever wants them.

Hard Deck aside, Gilroy said his company is putting the finishing touches on a variety of new ideas and goals. For example, his company is committed to increasing both direct and indirect sales, he said. In fact, he steadfastly believes that certain customers will pay a premium for goods and services from a local supplier rather than opt to buy raw goods direct from a manufacturer. One way to ensure that, he added, is to help resellers distinguish themselves as experts in certain fields. Come this fall, HP may unveil new "opportunity zones" for partners. They could be special solutions for small banking customers with less than 100 employees, for example. HP is looking at combining software from leading vertical market ISVs together with its hardware and software products and augmenting the solution with extended benefits such as uptime guarantees or extended warranties. Partners who certify on these "opportunities" could be granted exclusive territories or offered additional financial incentives, HP said.

"We are building out solutions stacks with certifications," Gilroy said. "These certifications stacks will have signal value in these solutions, which we hope aggregate the hardware to the solution. These solutions stacks or opportunity zones will be the purview of the channel. You will not be able to get this direct."

In addition to studying these offerings, HP is putting the finishing touches on its PartnerOne program, which goes live Nov. 1, and looking at additional ways to take costs out of its PC supply chain. It's working with key distributors and has hired the audit arm of PricewaterhouseCoopers to help analyze what impacts would be felt if HP changed its current go-to-market distribution strategy. Gilroy said HP will make no significant changes until it fully understands what potential impacts on customer satisfaction and market competitiveness would be felt should the company adopt new policies.

Meantime, Dan Vertrees, HP's vice president and general manager of North America enterprise channels, reports that his arm of HP's channel empire is also advancing plans to improve the company's competitiveness. The company, he said, has made strides in integration in terms of product portfolios, management teams, go-to-market strategies and field personnel. Thanks to the merger, it now has 30 percent more people to call on partners and ISVs, and twice the number of bodies devoted to working with key distributors.

With integration work behind it, HP is now ready to forward with execution plans. For example, it will soon unveil to partners a refined list of 850 named accounts in which HP personnel will assume a leadership role. Moreover, Vertrees said HP is exploring new ways to take advanced products, including certain enterprise storage products, OpenView software products and some Itanium-based server products to market. One idea: put these product through distribution the way that HP 9000 server products go through two Partner Demand Manager partners today.

For more than a year, HP has moved 9,000 products through Arrow and Avnet under its HP Integrated Partner, or HIP, program. Instead of taking title to these products, HIP companies instead focus on providing complimentary services around a product to VARs and integrators. Doing so has lowered distributors' top live revenue because they don't get credit for actually selling these machines, but it has enhanced their profitability. It has also helped HP improve its margins and offer products at more competitive prices.

"We want to provide through the HIP model a more robust product offering because of the two companies coming together. And then, we naturally are looking at and talking to others--other partners. So if we're going to expand the product line, [we're wondering should we expand the partner portfolio along with the product portfolio," Vertrees said.

The company will roll out these and other initiatives to partners in the coming weeks.