HP is keen to court the vendors of its products, as a gathering of 'preferred partners' revealed, writes Karlin Lillingtonin San Francisco
LAST TIME your company bought you a laptop, the chances are you got a lot of other stuff to go with it. A computer bag. A copy of Microsoft Office. Perhaps a key drive for some inexpensive mobile storage. Maybe an extra battery.
If you are a HP customer, the chances are you spent an additional $900 (€571) on that extra stuff, which is known in the business as "attach". The figure was cited last week by Eric Cador, senior vice-president and general manager of HP's personal systems group.
Well, not exactly just cited - it was enthusiastically offered up as a profitable enticement to sell, to a room full of 560 of HP's top third-party sales partners from Europe, the Middle East and Africa (Emea).
These partners were visiting San Francisco on HP's tab to attend its Emea Preferred Partner Conference. They are the elite corps of HP's "channel partners", ie the sales and service vendors in the "channel" - industry jargon for the real world where consumers and business customers dwell.
They are the hidden army sent out to sell. While they do not work directly for technology leviathans like HP, they are crucial to maintaining - and, the companies hope, expanding - the corporate bottom line.
"You are an important part of HP," HP chief executive Mark Hurd told them at an opening talk during which he thanked them at least half a dozen times and encouraged them to ask him anything they wanted (they did fire some tough questions at him, including one querying why they were working so closely with major partner Microsoft).
At HP, more than three-quarters of company revenue for the Emea region last year came from channel partners.
The channel partners did well too: HP paid Emea partners $300 million in backend rebate, frontend margins and market development funds. And as the Emea region is one of the company's healthiest growth markets, the Emea portion of HP's 90,000 global partners - including 36 in Ireland - are much valued at the moment.
Hence events like the one last week, which are a mix of motivating and rewarding the troops. The rewards were a tour of Alcatraz and San Francisco, a dinner cruise on San Francisco Bay and a fireworks display over the water near the Bay Bridge. The motivation came over two days of corporate presentations.
For the latter - and this is a sign of how valued the partners are - HP wheeled out the top brass, with an address and Q&A session with Hurd and a keynote from Microsoft chief executive Steve Ballmer, as the two companies further cement a standing "channel collaboration" called frontline partners.
Every presentation featured prolific thanks - but also firm appeals to work harder, sell more, and focus more on HP products and services. Hurd, while clearly grateful to the room of mostly male sales reps, was also pointed in his comments. "We're going to increase our partnership capabilities. But we want partners who can help us with our mix of product.
"We will do everything we can that is not illegal, that is not unethical, to help you win customers," he quipped. "We are committed to making you more successful. We just want the commitment to be two ways."
Ballmer likewise stated his thanks. "We think HP is very unique in terms of all the global partners we work with in its focus on the partner channel. We share a love of the partner community, but also a deep dependence," he said.
After the two big boys came a rash of motivational product and service videos, as well as presentations from various HP divisions. There was also a briefing on upcoming changes to the partner programme, presented by Irishman Seán Gallagher, director of solutions partner organisation at HP.
In particular, HP is to introduce a top tier of "gold partners". Creating competitive motivation among the partners seems to improve everyone's revenue.
The partner channel has always been important to HP. The company was taking in 70 per cent of Emea revenue through the channel when it bought and merged with Compaq in 2002. For the next couple of years, HP focused on the merger rather than on aggressive sales, Eric Cador said in an interview.
But Dell was proving a formidable competitor with its direct-sales approach. Despite pressure to go direct-sales only - "the feeling at the time was that the channel would never succeed," says Cador - HP decided to pursue a mix of direct sales and indirect channel sales.
"But we also had to restructure the channel to make it more efficient," he adds.
From this emerged the preferred partner programme.
HP appears to have made the right bet - it has overtaken Dell as the leading computer manufacturer and channel sales have gone from flat to 15 per cent growth over the last three years.
Given the hard push to encourage partners to sell HP solutions, why not have preferred partners sell HP only?
"They're entrepreneurs and they run their own businesses," he says carefully. "We're not pushing to have exclusivity. But we are giving them the tools to let them grow faster with HP."
