Cold Shoulder?

"We're really happy with [the success of Hard Deck in our Enterprise Services Group product sets, in printers, and in services and consulting," said Kevin Gilroy, HP's vice president and general manager of North America commercial channels. "On the PC side [though, we're not there yet. It isn't clear to me whether Hard Deck has helped us capture market share and improve our profitability. In the year that we've had the Hard Deck strategy, we saw gains everywhere except for PCs. We are still trying to figure out whether Hard Deck is the optimum strategy for the PC business."

Gilroy stressed that no final decisions have been made on changes to Hard Deck but said it is growing more difficult to have a monolithic channel strategy in an $80 billion company.

But solution providers say excluding PCs and possibly NT servers from Hard Deck adds uncertainty to what was once a well-defined strategy. "Solution providers felt positive about the HP-Compaq merger because the communication has consistently been that the Hard Deck strategy would prevail," said Chris Ferry, vice president for U.S. East at Technology Integration Group, San Diego. "A modification of this type means Hard Deck is not prevailing; it means that it disappears."

Added Mike Cox, executive vice president of sales and delivery at US Logical, Schiller Park, Ill.: "When [Hard Deck is gray, it's at its worst for the customer, the reseller and the direct-sales force. There's a lot of confusion, frustration and extra costs [for everyone."

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What's more, excluding some products from Hard Deck creates problems when selling complete solutions, especially if NT servers fall outside of the program, Cox said. "One of the strengths of the [HP-Compaq merger is that customers buy NT platforms, they buy Unix platforms, and they interconnect them," he said. "To be able to own the market below the Hard Deck for only part of the total solution would be difficult. If we are excluded from the marketplace for a piece of an HP solution, it may drive us to sell someone else's platform in providing the total solution."

Other solution providers agreed that pulling industry-standard servers from Hard Deck is of most concern to them. "Servers impact me more," said John DeRocker, senior vice president of sales and marketing at Nexus Information Systems, Plymouth, Minn. "When we're shifting our business to solutions, PCs don't affect us that much. Even if they decide to go completely direct on the PC business, all that means to me is losing 5 points. I'd rather make 20, 30 [or 40 points on storage and security."

Still, the evolving Hard Deck strategy appears heavily influenced by Compaq's former PC channel strategy. Under Hard Deck, HP named about 900 large enterprise accounts it would target on a direct basis, while leaving everything below the Hard Deck as the exclusive domain of the channel.

Compaq's Partner Engagement Principles, however, named about 400 direct accounts but never included a pledge not to sell direct outside of those accounts.