HP's Attach Rate Revelry

Hewlett-Packard this week will unveil a sweeping rebate formula that will pay channel partners substantially more money for attaching more HP products and services to the solutions they deliver.

The new Attach Plus rebate program, set to go into effect May 1, signals a strategic shift by the vendor to leverage its broad product portfolio and make good on CEO Mark Hurd’s vow to “double down” on partners most loyal to HP. Attach Plus also replaces a key sales volume rebate paid only to HP’s Gold and Platinum partners and opens up attach rebates to solution providers whose annual HP revenue exceeds $1 million.

“This is probably the largest change to PartnerOne since the merger [with Compaq],” said John Thompson, HP’s vice president and general manager of the Solution Partners Organization (SPO), Americas. “We don’t see a lot of other companies that can offer the breadth of the portfolio that we do. Certainly, when we are competing against companies like Dell and others, we don’t see that they have this in their toolkit, whether we are talking about hardware attach, or services attach or software attach. This is something that is going to catch partners’ attention and incent them to sell a total package solution. Whether you are a large Platinum player or a small partner, there is an opportunity to play.”

Solution providers see the changes to HP’s solution provider compensation strategy as continuing proof that there is money behind the vendor’s promises.

“This rewards the guys who have gotten all of the certifications and done all the right things and finally places it so that we get the higher-end rewards rather than the guys who were just doing it on volume,” said Don Richie, president of Sequel Data Systems, an HP-only regional solution provider in Austin, Texas. “The [new Attach Plus rebate] is incredible. For a guy like myself who is selling a single platform, by the time I go through all the attach stuff, my back-end dollars will go up over double what they are today.”

Sam Haffar, president and co-CEO of Computex, an HP-exclusive partner based in Houston, said he expects to see a minimum increase of 50 percent in HP market development fund dollars. “Our profitability is going to go up,” he said. “This helps our whole business plan. That funding will help drive more train- ing and more salespeople.”

The HP program could cause some partners to ally themselves more closely with the Palo Alto, Calif.-based company at the expense of vendors such as Dell or EMC, partners said.

“Maybe this will change the behavior of some of the partners who are not as loyal,” Haffar said. “I know some HP partners who have Dell boxes moving through their facility. We have never had a box from Dell or anyone else come through here and we never will. Why should HP work with you if you are going in there and selling EMC and Dell?”

The new Attach Plus plan sets attach rate matrices for Personal Systems Group (PSG) products, servers, Imaging and Printing Group (IPG) products and HP Services and replaces the membership rebates paid to Gold and Platinum partners, said Tom LaRocca, HP’s vice president of Partner Development and Programs, SPO, Americas.

Solution providers said Gold and Platinum members previously were paid a monthly rebate ranging from less than .5 percent to close to 1.5 percent, depending on the product and PartnerOne membership status, on all their HP sales.

“When you pay on revenue, you pretty much treat all partners the same,” LaRocca said. “But if you’ve got partners that are driving more of an HP content and are doing that, then this says we are willing to make investments in you and are willing to treat you appropriately.”