Rubbernecking Delays

But woe to those who stare too long at the mess on the road rather than focusing their attention on the immediate safe-driving requirements at hand. With that in mind, it's worth considering the real business issues facing the next Hewlett-Packard CEO.

While HP's printer business remains strong, companies such as Ricoh, Brother, Okidata, Samsung and Xerox are nipping around the edges. So, while much of HP's competitive attention is focused on the Dell-Lexmark alliance, it's time to focus on a broader array of companies that aspire to usurp the crown jewel.

Next up is the core PC business. With the merger of the PC and printer business, it's clear HP is trying to increase attach rates across PCs, printers and displays. But in the SMB space, the company's convoluted effort to ape to Dell's direct model has created a disaffected set of partners that no longer want to be advocates for HP. They take HP business when and where they can find it, but they don't go out of their way to make a difference. So, HP's primary goal for 2005 should be to inspire that channel before the likes of Acer and Toshiba make HP's impact there irrelevant.

Meanwhile, HP's server and storage business is a mess. After an embarrassing failed ERP implementation, enterprise solution partners selling servers and storage couldn't even fill orders, never mind generate demand. Now, with Dell driving server pricing down and IBM committed to crushing EMC at any expense to HP, this is a life-and-death struggle.

And in services, HP has made it clear that in order to gain a presence in a market sector where it has no footprint, the name of the game will be to drive average selling prices through the floor at everyone's expense.

Most executives at HP seem oblivious to the profitability issues that all these factors represent to VARs. It's that very lack of understanding at the executive and board levels that has led to this all-too-public accident that ultimately will only serve to tie up channel traffic for months to come.

Where do you think HP should concentrate its attention? I can be reached at (516) 562-7477 or via e-mail at [email protected].