CDW-HP Alliance: There's Conflict Ahead

Hewlett-Packard appears to be going retro with its new plan to co-fund 110 Hewlett-Packard-only CDW salespeople who will target more than 500,000 SMB accounts using leads supplied by the vendor.

	CRAIG ZARLEY
Can be reached via e-mail at czarley@everythingchannel.com.

To me, it mirrors the now-defunct Colorado Springs call center operation that had HP telesales people calling SMB accounts with little regard to whether an HP solution provider was already servicing the customer. The only difference now is that HP is paying CDW to do its bidding. What happened with the call center and what is sure to happen with the so-called CDW-HP Alliance is that CDW salespeople will call existing HP SMB customers and win over their product business with aggressive pricing. I'm not faulting CDW on this one. CDW is a big, aggressive, sales machine, and it is very good at what it does.

But two bad things happen with this pricing gambit. If business shifts from one HP SMB solution provider to CDW, HP needlessly sacrifices margins. If the HP solution provider that already owns the account manages to retain it, he or she must inevitably answer the customer's question, "How come I can buy HP products cheaper from CDW than I can from you?" And customer satisfaction takes a needless hit.

The CDW-HP Alliance, first revealed in a memo from CDW Executive Vice President Jim Shanks that was obtained by Everything Channel, is set to commence in September and be fully implemented by January.

"HP will supply the target customer list made up of companies with 499 or fewer employees," the memo said in part. "The list will be derived by comparing Dun & Bradstreet's customer list against historical sales of HP products through HP direct, HP channel partners and CDW. The result will be more than 500,000 net new customers for CDW to target. This program is designed to be wholly incremental for both parties and will give us an opportunity to better capture the 'white space' in the marketplace."

That sounds like a terrific opportunity for CDW and a minefield for HP. If HP believes it can target more than a half-million SMB accounts strewn throughout the white space and miss ones that aren't already owned by existing HP solution providers, it better check what's in the water coolers in Palo Alto.

What HP is betting with the CDW deal is that it can sell more products to small businesses using one large telesales organization than it can by better supporting thousands of local solution providers. It's lost that bet before. So great was the conflict between its solution providers and its Colorado Springs call center, HP shut down telesales to end-user customers. The only difference now is that HP will use CDW hired guns instead of its own direct salespeople.

Are you an HP SMB solution provider?
E-mail Everything Channel Industry Editor Craig Zarley at czarley@everythingchannel.com