HP Touts Direct PC Capabilities

Hewlett-Packard

"We saw a significant improvement in our direct business [during the quarter," said HP President Michael Capellas during the company's third-quarter earnings conference call with analysts on Tuesday. "Worldwide we shipped 18 percent of our PCs direct, including 26 percent in the Americas. More than 50 percent of our commercial PC shipments in the U.S. were direct."

Capellas said HP's Personal Systems group had an operating loss of nearly $200 million on revenue of $4.8 billion.

"One of our merger goals was to drive more of our major account business through our direct factories and improve utilization. We clearly have the installed capacity to grow, and we are ramping up our call centers," he said.

HP Chairman and CEO Carly Fiorina made only a veiled reference to Dell Computer's decision last week to recruit solution providers to sell white-box systems manufactured by Dell. She called the move "Dell's decision to upend its business model."

Capellas noted, "We've been very clear that a significant portion of our business, particularly major accounts, are going to go direct. Those parts that we've committed to go direct, we are going to push forward.

"We are working on a program to create new business opportunities for our partners and extend our share in the small- and medium-business market," he said.

Capellas was referring to new "opportunity zones" HP is developing for solution providers that will bundle HP hardware and software with third-party products to offer complete vertical market solutions.

Kevin Gilroy, HP's vice president and general manager for North America commercial channels, said an example of a vertical solution package might be one for regional banks with fewer than 500 employees. Gilroy said the program is being piloted now with several solution providers and that once finalized, the vertical solution bundles will be sold only by solution providers and not HP's direct-sales force.