IBM Boosts Rebates For Wins Against HP

IBM applied the first salvo when it said it was doubling rebates it pays to VARs for winning new business in HP accounts. Dan Fortin, IBM's vice president of business partners for the Americas, told some 500 IBM solution providers attending Avnet Hall-Mark's IBM Business Unit's annual partner conference in San Antonio that the vendor plans to increase the rebates for competitive wins against HP to 10 percent from 5 percent. The rebates, slated to run through the end of the year, are for "takeouts or for going into [an HP] footprint," he said.

"As hardware margins get tighter, anything that adds incentive into new SMB competitive wins certainly helps," said Thomas Mullen, vice president of CMA Consulting Services, a solution provider in Latham, N.Y.

Fortin said IBM already pays 10 percent for competitive wins against Sun Microsystems, but in the past, the Armonk, N.Y.-based vendor had paid only 5 percent for HP wins. IBM also will begin paying 5 percent rebates when special bid pricing is involved in the competitive wins, he added. Previously, IBM didn't pay any competitive rebates when special bid pricing was involved.

HP executives attending Arrow Electronics' SBM Division's annual PowerTrain conference in Colorado Springs, Colo., were quick to respond.

"We have a 15 percent rebate for selling into IBM, which is stackable with MDF and our Elite programs," said Dan Vertrees, HP's vice president and general manager, enterprise partners Americas. "A partner can get up to 27-and-a-half points off by selling into an IBM account. They're still only one-third where we are."

HP, Palo Alto, Calif., said it is revamping its enterprise sales-force strategy to boost sales through solution providers. As part of the plan rolled out at PowerTrain, HP will assign 20 to 25 end-user accounts to each enterprise sales rep, including those within the 775 named corporate accounts HP deals with on a direct basis. But the bulk of the accounts will be in the midmarket, where VARs take the lead.

"[Sales reps] must make sure they get close to the right go-to VARs," said Bill Weaver, HP's vice president and general manager of U.S. Western region sales. "With 20 to 25 accounts, you can't have an intimate relationship. You gotta have the VARs."

Both vendors also vowed to increase service revenue for solution providers. HP plans to add at least four new services SKUs that the channel can sell at the end of September and hopes to launch the program Nov. 1.

"We have been using third-party folks or companies that don't resell products," said Larry Trichel, director of channel services for HP Services. "We want to take it straight to partners who have already gone through the education and certification process."

Mike Borman, vice president and general manager of IBM global business partners, said IBM also hopes to figure out how to more than double IBM's service revenue through partners. "It's an untapped potential," he said.

Steve Tepedino, president of Avnet Hall-Mark, said the distributor's IBM Business Unit is working to build stronger partnerships with IBM Global Services. "IGS clearly has the right attitude toward partnership, but we haven't gotten everything right yet," he said.