HP Cuts Agent Fees


Vendor plans to invest savings into PartnerOne program


Hewlett-Packard plans to cut the fees it pays to solution providers through its agent referral program, channel executives said.

The biggest impact will be felt in non-named accounts, in which HP partners will receive 5 points for desktops and 8 points for servers and storage products, channel sources said. Previously, they received 6 and 10 points, respectively, for products bought directly from HP through a solution provider's referral. The 12 points partners receive for CarePacks will not change.

For HP's 850 named accounts, solution providers will receive 2 points for desktops and 5 points for servers.

The fee cuts are slated to go into effect Nov. 1, and the savings will be directed into HP's new PartnerOne program, said Kevin Gilroy, vice president and general manager of HP's North America commercial channels. The agent program is not part of PartnerOne, he said.

"We want to reinvest those savings into getting our price points in line and increasing our market development funds in support of PartnerOne," he said. "These are trade-off decisions that are difficult to make. But we want to increase our demand-generation capabilities, and we want to invest in the PartnerOne marketing programs at a deeper level."

Solution providers who qualify for gold- or platinum-level status in HP's PartnerOne program also should receive extra benefits to make up for losses in the agent referral program, according to channel sources. However, only about 500 of 15,000 HP partners will qualify at the gold or platinum level, the sources said.

Partners in HP's GEM program,government, education and medical solution providers,will be most affected because much of that business goes through the agent program, according to channel sources. Few commercial channel solution providers participated in the agent program, sources said.

HP plans to launch the PartnerOne program on Nov. 1, but some solution providers believe HP is too committed to selling direct.

Harbour and Associates is still waiting for a 12 percent agent fee on a $4,000 order from June, said Anthony Harbour, president and CEO of the Richmond, Va.-based solution provider.

"I have a copy of the online receipt, but [HP can't find the order and they can't tell me if I will get anything," Harbour said. "It doesn't surprise me they may be cutting [the fees. Most resellers will turn thumbs to HP. If they want to sell direct, then [they should sell direct. If it's a hassle to deal with the referral program, we'll just sell something else," he said.

"We still love HP, we love Compaq servers, and we have so many of our customers that we've moved into [HP and Compaq. It will be hard to move into anything else," said John Gunn, president of ISG Technologies, a Salina, Kan.-based solution provider. "Our preference is still to sell HP, but we're going to do what we have to do to stay in business. Our big fear is that HP starts going after more and more accounts direct,instead of the top 500, maybe it will be the top 2,000."

Gunn said he recently was surprised to learn that one of his customers, a health-care facility in Wichita, Kan., is on HP's list of named accounts.

"It's a nice-sized account for us, but there's no way a hospital in Wichita is one of their top accounts," he said. "We brought HP into that customer. Those have been good deals for us. If [HP wants to work with the channel, they've got some work to do."

A large East Coast solution provider, who requested anonymity, also said one of his health-care customers is on HP's named accounts list, despite having fewer than 10 seats. "I don't know how they can say these are named accounts," he said.

In addition, HP is changing the way it distributes market development funds. As of Nov. 1, solution providers must kick in 40 percent of their own money for a marketing campaign to receive HP funds, Gunn said.