HP's Hurd Promises More Channel Resources, But Likely For Fewer Partners

Hewlett-Packard CEO Mark Hurd said HP will give channel partners whatever resources it takes to beat Dell, IBM and other rivals, but in the future he sees the vendor going to battle with fewer but more loyal partners.

"We are looking for aggressive help, and we'll get just as aggressive as we possibly can to go to the marketplace and win in these strategic battlegrounds," Hurd said late Monday in a keynote address to 1,200 solution providers at HP's Americas Partner Conference in Las Vegas. "We need you. We need your help. There's virtually nothing we wouldn't do short of illegal or unethical to help you go to the marketplace and win."

Industry standard servers (ISS), specifically blade servers, are a key battleground for HP, which faces pressure from IBM down from its mainframe base and Dell coming up from its PC heritage, Hurd said. To help drive HP server sales, the Palo Alto, Calif., company on Aug.1 plans to launch a back-end rebate program for ISS that will increase rebate payments to partners by about 50 percent, he said.

Hurd promised continued support to the channel plus improved operational efficiencies from HP, which he said would help HP and its partners win together. But down the road, that combination may involve fewer HP partners.

In response to a solution provider question on where he sees HP as a company in three years, Hurd said, "I hope we would be leading in most efficiency categories. I hope we are [in a] three-year evolution of the trends and strategies I have described ... and the channel, if it is not doing the same percent of business, doing more."But at the same time, I would like to see higher attach and higher loyalty indexes coming out of our channel," Hurd continued. "If that means for us to coalesce around fewer channel partners, I'd be fine with that. If you look at our aggregated list of channel partners, we almost have as many people that call themselves partners as we have employees in the company. We want to put more energy behind key partners that really want to rally behind us."

In the battle against Dell, Hurd said, "We are not that good [in efficiencies and execution], but the bad news for them is that we are going to get a heck of a lot better. And I don't think they have room to move."

Hurd noted that analysts project HP to do $91 billion in sales for its 2006 fiscal year, and that number would likely help HP pass IBM as the world's largest technology company. For decades, IBM referred to itself as the world's largest IT company at the bottom of its press releases, and if HP passes IBM for that honor, "watch the bottom of the press release," he joked.

Hurd's fighting words for the channel resonated with partners, who punctuated his keynote with frequent applause and laughter. "If he delivers on what he said, he's right on the money," said Rick Chernick, CEO of Camera Corner Connecting Point, a Green Bay, Wis.-based solution provider.

"This is the leader that we are all going to get fired up to follow," Chernick said. "What I liked was that he said he was going to keep his [management] organization in place. He likes the people he's got. Now he's going to work the partners as hard as he can to get more out of them. This guy has passion, and he's going to get the job done."

Steve Harper, president of NMGI, a solution provider in Hutchinson, Kan., said, "It's great to hear total commitment from the top to the channel, especially with the competition and market pressure we face. A year into the job, [Hurd] gets it and understands what the channel is all about."Hurd also told partners that he believes the hidden pool for increased profits and revenue is in higher attach rates of HP products. "Attach, attach, attach," he said. "Attach has a bigger impact [on profits] than share gain."

Hurd also reiterated HP's plan to hire hundreds of new salespeople to expand HP's account coverage. In accounts where an HP salesperson has regular face-to-face contact with the customer, HP has two and a half times the market share compared with accounts without such coverage.

Still, more HP direct-sales staff "is not a statement on channel direction," Hurd noted. Instead, it's an indication that HP is aggressively seeking more market share. "If we create more demand for HP, that's good for you," he said.

Hurd also promised a consistent HP message to partners. "If we tell you that we are going to do something, I don't want you always to feel you like what we say, because we'll never always agree on everything," he said. "But if we tell you that we are going to do something, [we'll] do it."

Hurd's comments show that after 16 months as HP's CEO, he has gotten channel religion, according to John Marks, CEO of JDM Infrastructure, a Chicago-based solution provider. "He's found out that the channel is a pretty powerful force," he said.0