Q&A: HP Channel Boss Sounds Off On Cisco, IBM And Apple

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Stephen DeWitt, senior vice president and general manager, HP Personal Systems Group Americas, who oversees the Americas Solutions Partners Organization [SPO] for HP, which includes HP's PartnerOne channel program, spoke with CRN about a wide range of issues including Cisco, IBM, Apple, PartnerOne program changes and the cloud software and services opportunity. Below are excerpts from the interview.



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What is the channel program going to look like a year from now. Are you going to bring it into the 21st century with services and software?

Well services and software are massive to what we are doing and they are areas that we have been investing in and they haven't been historically the bread and butter of our business.

There are going to be a few changes. First off, we are getting more global and we are getting better at global and I think this will be good news for a number of our core distribution partners. Streamlining the process, driving more efficiency on global execution is huge.

We don't operate with Bank of America here in the United States. We operate with them in 100 plus countries and part of our value proposition is, between us and our partners, is that it is the same experience. So we have a heavy emphasis on globalization. Heavy motivation on the transformational investments.

Look, we recognize that many of our partners are privately held companies and any decision they make on investing working capital, which is sometimes a bet the company decision, they want to be sure that there is a return on that bet the company decision.

Look, four years ago, going out to the partner community and saying, 'Invest in Procurve' was a big leap because the vast majority of our partners, going back to your price argument, would come back to us and say, 'Cisco is my most profitable vendor. It is my most profitable vendor. So I don't care what you say to me.'

So if you just dropped that line on me, I know it is a really hard decision for you to invest somewhere else because your bread is being buttered by somebody else. We got that. So we had to prove to the [solution provider] community that we had the capability and the products and our own intestinal fortitude to be in the fight.

We demonstrated that and those partners that made an investment decision have far out-indexed the market [growth] and they have had a change in their profitability mix. We have seen that in a lot of our distributors. We brought partners into new growth markets that they weren't touching before because they weren't able to compete inside of the Cisco ecosystem because Cisco, like us, has a number of big partners and those big partners can dominate the landscape. So I think we drove a lot of growth.

For many of the partners, this new dialogue that we are talking, this application level, this service level, is new business for them. I can certainly speak to the client side of the business. Remember if you have been one of our PSG franchise partners, one of our elite partners in one of the verticals, your primary economics have been driven on the gross margin per transaction. And then the services offering that you can wrap around that.

Obviously on the PC side of the business, we are the top PC company on the face of the earth. We make five points of operating profit [in the PC business]. This is a tough business. It is a tough business for us. It is a tough business for our partners. And driving economics beyond the transaction, I would argue, is key to survivability. And our team has done it well. If you look at the fertile ground of applications, there is much more economics to be driven here. This is not a five point vision of a client device. This is now a sticky, tethered, applications-centric experience that should have better loyalty characteristics around it and higher margins.

Next: The Recurring Revenue Opportunity How about recurring revenue?

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