Hewlett Packard Enterprise (HPE) CEO Meg Whitman told Wall Street analysts on Tuesday that the server powerhouse is poised to make channel changes aimed at shoring up its declining industry standard server (ISS) sales.
"We need to shore up core ISS rack with improvements in the channel, improvements in [channel price] quote-to-cash and more focus on the distributors and VARs for the volume related ISS rack business," said Whitman.
Whitman's comments came after HPE reported server revenue in the fourth fiscal quarter ended Oct. 31 was down 7 percent to $3.52 billion, compared with $3.77 billion in sales in the year-ago period.
The ISS rack system business is all "volume based" channel business where HPE's ability to move quicker with partners to beat competitors is critical, said Whitman."There is weakness in ISS racks; we are not executing as well as we could and we aim to fix that," she said.
Bob Venero, CEO of Holbrook, N.Y.-based solution provider Future Tech, a top HPE partner, No. 167 on the 2016 CRN Solution Provider 500, praised Whitman for speaking out on the ISS issues impacting partners. "I give Meg credit for speaking out on how the ISS supply chain is broken," he said. "The question is: can it be fixed?"
Venero said HPE has "definite challenges" around ISS channel delivery and engagement that must be addressed. "From a competitive standpoint, there is an engagement issue, not at the channel rep level, but at the HPE end user account rep level," he said.
The issues are directly impacting Future Tech HPE server sales, said Venero, with his HPE server business flat in the last three quarters, while his Dell business is growing at a double-digit clip. "Dell has a much more robust engagement at the field level with respect to aligning its sales force and partner teams with Future Tech," he said.
Venero said he expects that HPE could have an even harder time going up against the combined Dell EMC as that company brings together the two product lines under a unified channel program. "That is going to enhance the offering Dell has for its partner and customer communities," he said.
Whitman, for her part, said she likes HPE's win rate against Dell EMC. "We like our strategy of getting smaller and more focused, while they are still integrating a very large acquisition," she said.
Whitman anticipates that HPE's server business will grow at 1-2 percent next year with a focus on faster growth including high performance compute and hyper-converged systems.