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Dell, HP To Resell Surface Pro, Partners Stunned By Direct Sales Assault

Dell and HP partners were stunned by a deal that turns Dell and HP into Microsoft Surface Pro device resellers, putting them in direct competition with the channel.

Dell and Hewlett-Packard solution providers Tuesday blasted a deal that turns Dell and HP into Microsoft Surface Pro device resellers, putting them in direct competition with the channel.

"This is a direct assault on Dell and HP channel partners," said a frustrated top executive for a national enterprise partner that works with all three vendors. "I am shocked. I would think those manufacturers would want to keep the focus and the momentum on their own Surface-like devices. It suggests a disconnect between the Dell and HP channel organizations and their enterprise service organizations."

The top executive, who did not want to be identified, said the deal is sure to push his company into a stronger relationship with laptop behemoth Lenovo.

"Dell and HP have some explaining to do to their loyal channel partners who have been very focused on selling their mobile products and the enterprise features those products bring to the market," said the executive, noting he was blindsided by the deal. "Where is the heads up, Dell and HP? We will definitely re-evaluate our partnerships with Dell and HP as a result of this announcement."

Microsoft Vice President Yusuf Medhi, who oversees global marketing for Surface Pro, Windows, Hololens and Lumia phones, announced the new Microsoft "Surface Enterprise Initiative" in a blog post Tuesday morning that also touted extended Surface Pro partnerships with system integration giants Avanade and Accenture. The blog post featured videos from both Microsoft CEO Satya Nadella and Dell Founder and CEO Michael Dell.

"I am pleased to announce that we will be selling Microsoft Surface Pro and Surface accessories on Dell.com and through our large commercial sales organization," said Dell in the video. "We will be starting here in the United States in October and rolling it out globally wherever Surface is sold in 2016."

Dell also plans to sell the Surface Pro on its Dell.com/work direct sales business website along with Dell services including Dell Hardware Warranty, ProSupport with Accidental Damage Service, and Configuration and Deployment Services.

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Dell would not comment when asked to respond to partners who view the Surface Pro deal as Dell competing directly with its partners.

Hewlett-Packard Vice President Mike Nash, for his part, touted HP's ability to resell Surface Pro in a blog post Tuesday. Acknowledging HP's position as the number one commercial PC maker, Nash said customers have told HP they want the company to sell and support Surface pro 3.

"To respond to this set of customer needs, we are excited to announce that as part of the Surface Enterprise Initiative with Microsoft, we will be offering the Surface Pro 3 through the HP direct sales force," wrote Nash in the blog post. "Independently, we will also be offering a new set of HP Care Packs designed specifically to help customers to plan, configure, deploy and manage in enterprise environments. We also plan to offer some mobility workflow transformation tools and services that will be available next year."

HP and Dell have both introduced a wide array of 2-in-1 hybrid products that go head-to-head against the Surface Pro 3. Those include the Dell Venue 11 Pro 7000, a 10.8 inch tablet that features a keyboard, starting at $699 and HP's Elite x2 1011 G1 Ultrabook/tablet with an 11.6 inch screen powered by a Intel Core M 5Y71 processor with a keyboard, priced at $1,629.

Nash conceded that the deal begs the question: "Does this mean that HP won't be offering detachable products in the future?"

"Well, as you know we have products like the HP Elite X2 1011, HP Pro X2 210, HP Pro X2 612 and HP Pavilion X2 that recently launched," wrote Nash. "And while I am not here to announce any new products today, I can suggest that you continue to watch this space."

Both HP and Dell said their partners will not be able to source Surface Pro from them.

"Considering that both Dell and HP are extremely channel focused one would wonder if Microsoft is mandating that Dell and HP can not distribute Surface Pro to their own partners," said a top channel executive, who did not want to be identified. "I will guarantee that is the case."

The CEO for a large national enterprise partner, who carries HP and Dell products, said the deal is a clear sign that Microsoft views HP and Dell as enterprise solution providers rather than laptop or PC manufacturers.

"Dell's heritage, in particular, is to sell direct," said the executive. "We live in a heterogeneous world and when you sell direct you have to supply a full solution which requires more than one logo on the box. The whole thing to me sounds like a victory by press release. These companies do it all the time. So they have a partnership. Who knows how much value is there for the customer. Someone had a dream it will work and therefore they put out an announcement. Microsoft has done this for years and often nothing comes of it."

Carl Gersh, director of sales and marketing for Synergy, a Miramar, Fla.-based solution provider, said he sees the deal as just another sign of the commoditization of endpoint products in a bring your own device (BYOD) to work market. "The future of IT is all about the services," he said. "It is all about building systems that have the flexibility and agility to accommodate any endpoint on any connection, anywhere and deliver the apps and data they need. This is just another indication that as commodity products go to consumers more it is all about solution providers like Synergy providing IT services to those devices. Endpoint hardware is a commodity market. We sell endpoint hardware as part of an overall solution but our focus is on the data center as opposed to endpoints."

Matt Brown contributed to this story.

PUBLISHED SEPT. 8, 2015

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