With Capellas Gone, At least We Know The Buck Now Stops With Fiorina

Capellas wasn't CEO at Compaq Computer long enough for us to make a determination as to whether he is capable of running a successful multibillion-dollar high-tech corporation over the long haul. One thing we do know, however, is that he is capable of setting a direction and convincing his lieutenants to get in line.

At both Compaq and HP, that direction was attempting to copy Dell Computer's direct model. But HP will never be able to duplicate Dell's model because it simply isn't part of the DNA of the company. HP,and Compaq, for that matter,has always been an early entrant into new markets. Just two weeks ago, the integrated company was in New York to unveil its Tablet PC. What company was noticeably absent from that joint announcement, which included Microsoft and a host of other hardware makers? Why, Dell, of course. The reason is simple: Dell doesn't make markets. Its model is to enter a market when it is large enough and mature enough to enable a low-cost supplier to push out manufacturers with higher SG&A costs.

Companies like HP and Compaq that want to attack markets early, when margins are high, are not now nor will they ever be structured to go head-to-head with Dell. So, unless companies like these are willing to subsidize one part of the business with profits from another, it doesn't make sense to try.

This is not to say that there isn't a role for direct sales at HP. There absolutely is. It's just that the emphasis on direct sales shouldn't outweigh the opportunity afforded by indirect channels. Capellas was far too focused on direct activities and was not capable of advocating a hybrid approach, at least publicly. If Capellas believed in the hybrid model, his public statements certainly didn't reflect it strongly enough.

Carly Fiorina, who seemed to take a back seat in terms of day-to-day operations after the purchase of Compaq, is back in charge. It is no longer confusing as to where the buck stops.

Before the acquisition, Fiorina appeared to be pushing a more balanced hybrid model of leveraging solution providers as well as building a direct business. While there was conflict, it seemed to be manageable. HP, in fact, was gaining ground in terms of channel satisfaction. After the acquisition, the only clear message coming from senior managers in Palo Alto, Calif., seemed to be the direct message, and channels appeared at risk.

The combined company took too long to launch PartnerOne. Now that it's in effect, there are several significant issues that need to be addressed, not the least of which is the policy that gives HP the right to compete in an account where a solution provider isn't selling HP gear exclusively.

Now that Capellas has left, the time is ripe for HP to step up to the plate and more clearly articulate its long-term channel philosophy and fix the major issues with PartnerOne.

Based on last week's earnings announcement, it appears that HP's absorption of Compaq is on track. HP's vision as it pertains to the channel ought to be easier to explain now that there isn't a filter between Fiorina and HP top-line managers like Duane Zitzner, Peter Blackmore, Ann Livermore and others.

The channel and HP are far too dependent on each other to be feuding. Distributors, solution providers and HP all need to work together to advance the industry.

It is up to HP's senior management team to see to it that the PartnerOne assimilation settles down damn quick. We have enough challenges with the economy to be distracted by all this.

Make something happen. I can be reached at (516) 562-7812 or via e-mail at [email protected].