CRN Interview: Michael Winkler, Hewlett-Packard

Michael Winkler, executive vice president of worldwide operations at Hewlett-Packard, discussed the channel and direct-sales efforts of the merged HP/Compaq in an interview with CRN Senior Writer Kristen Kenedy after the "new" HP held a press conference to unveil its product and organizational plans.

CRN: How much money will HP spend to build out its direct PC delivery system?

WINKLER: First of all, we shouldn't consider direct vs. the channel. A good part of our direct [effort is going through the channel--for example, an agent. So [we show the ability for customers to order directly, [but many times that is with an agent partner that owns the customer, gets commission on the sale, and sells support and services on top of it. A good part of our government, education and medical business is agent business, and that is called direct.

CRN: So customers would buy directly from HP's site but partners would get the commission?

WINKLER: Yes. Say you were [systems integrator GTSI. You've got an end-user customer and, as the agent, you would have that customer order directly from Compaq. Compaq will ship directly to the customer and carry the invoice, but the reseller will get a commission for selling and gets all the support business on top of that. So it's a very lucrative way to combine the direct and the channel business together. So don't think of direct like Dell direct, where the object is to take business from the channel. The object is not to take business from the channel but to grow the total market participation.

CRN: But how much money will HP spend to grow the direct-sales model that Dell has done so well with?

WINKLER: I think, frankly, that we've got all the investments already made in the supply chain and what's called the customer relationship aspects of it. So now it's the market saying how they want to deal with HP and what products they want to purchase from this environment.

CRN: Will there be one channel chief who will oversee Kevin Gilroy and Dan Vertrees, who respectively head the new HP's volume and value channel groups?

WINKLER: They will report into different individuals.

CRN: So there will be separate profit-and-loss statements for both of those groups?

WINKLER: Yes, but very strong cooperation, obviously, because we are selling a full range of products to many of our partners.

CRN: There isn't one person in charge of messages that get communicated to partners across both of the groups. Isn't that confusing?

WINKLER: I think you will find they will be hand-in-glove to coordinate their activities and their messaging to make sure we have a common face to our partners.