August 2005

Interex folds up user group, yanks show

Group cancels HP World two weeks after final payments arrive; directors mum, bankruptcy takes four weeks to file

The end of the parade for the oldest user group in the industry arrived last month when Interex closed its doors with a sudden bang — a move that left HP 3000 exhibitors and users whimpering over lost money.

Some HP 3000 customers held non-refundable airline tickets and hotel reservations on July 18, the day the Interex Web site was reduced to a single page announcing the 31-year-old organization’s demise. Alternative 3000 networking events rose up to replace the annual HP show (see related story). But while thousands of users and scores of exhibitors scrambled to make some use of their San Francisco travel arrangements, hundreds of thousands of dollars in registrations and booth rentals for HP World have disappeared.

“It seems very sudden,” said Kendra DeWitt of Acucorp, a supplier of development tools to assist HP 3000 customers in migrating to other platforms. The vendor was one of several serving the 3000 market who lost their booth payments. Such vendors were trying to offset their losses by not paying invoices for advertising in the user group’s now-defunct publications.

DeWitt added that she got notice of the closure by contacting her Interex ad rep and booth sales representative, who told DeWitt “on Friday [July 15] the staff was led to the front door.”

The events seemed sudden because they occurred so near the group’s show week. Vendors’ show payments poured in just a few weeks before the closure. The user group had set a July 1 deadline for its exhibitor booth payments for HP World 2005; that date passed with no hint to vendors that group finances were so dire. A few early notices were sent to user group insiders and founding director Doug Mecham, but customers who had registered were left to learn about the user group’s crash on their own.

Former board member Greg Cagle made the earliest announcement of the show’s closing, an e-mail on the weekend before Interex posted its shutdown notice. Cagle volunteered as a co-chair for the HP World program committee.

A deal to exchange a full HP World user registration for a ticket to the HP Technology Forum was announced two days after the shutdown. Those exhibitors who do not compete with HP directly were offered discounted booth space at the HP show, to be held Sept. 12 in New Orleans.

The irony of that swap wasn’t lost on the HP user community, which had poured millions of hours of volunteering and advocacy into Interex. When HP announced last summer it would mount its own conference in 2005, Interex declined to join that 2005 event. An independent show was the best path forward, according to Denys Beauchemin, the board chairman last summer.

Interex polled users back then on that decision to go forward independently, and a slight majority said they wanted to continue on a less collaborative path with HP. Directors believed the group could survive in the face of HP’s new conference. “We’re not competing with HP,” Beauchemin said in describing HP World 2005 last year. “HP’s going to be there.”

Interex directors knew HP would “scale back drastically” its involvement in the 2005 show. Beauchemin estimated in 2004 that HP spending made up about 10 percent of HP World revenues. He also said last summer he saw HP’s involvement as essential to the conference’s survival.

“If HP were to say it wasn’t interested in going to San Francisco in 2005, then we would have an issue,” he said. HP did buy less 2005 booth space. But it had purchased a $100,000 Platinum Sponsorship for the now-cancelled show, one of four such sponsorships Interex sold.

Users and vendors worried in 2004 that an HP conference would break the bank at Interex, which has counted on its annual show for all of its profits since before the Y2K business boom. Amid a lack of solid information, 3000 customers speculated that a final payment due to the San Francisco Moscone Center forced Interex to fold its tent in mid-July, one month before its survival show.

A former Interex director who chaired the board during the 1990s said she advised the group to plan its exit well before the turn of the new millennium.

“When I left, I said they ought to have a dissolution plan,” said Jane Copeland, owner of API International. “The former Executive Director of Interex Chuck Piercey and I tried to get the board to do it — because we didn’t see the purpose of a vendor-specific group in an open systems market.”

A change in HP’s CEO post sealed the user group’s fate, she added. The arrival of Carly Fiorina shifted the vendor’s focus away from midrange computer users such as HP 3000 and HP 9000 customers.

“I think HP is probably the cause of this more than anything,” Copeland said. “As soon as [CEO] Lew Platt left HP, that was the end of Interex. Carly Fiorina wasn’t interested in a user group. She just wasn’t user-oriented. Before Fiorina, HP had one of the most loyal customer bases in the industry. She did more to kill the HP brand than anyone. She killed it in such a way that the user group’s demise was guaranteed as soon as her reorganization was in place. She didn’t want midrange systems. All she was interested in was PCs.”

Current directors did not return calls or refused to discuss bankruptcy options.

“I don’t want to talk about any of the legalities,” said Beauchemin, who held the ex-chairman’s board seat until Interex folded. “We’re trying to do this under the advice of counsel, and I don’t want to say anything out of school or get anyone in hot water. There’s no criminality involved, but you have to follow steps, especially in California. By the end of the week, everything should be clear.”

But that clarity did not appear in the weeks after the shutdown. Phone calls went unanswered, ringing through to voicemail boxes with no operator option. Exhibitors have examined their show space contracts to find a clause that might make Interex liable for all show-related expenses in the wake of the shutdown. Directors of the Interex board remain mum about the run-up to the shutdown, citing a fear of legal prosecution if they speak about issues such as bankruptcy.

Intere filed for bankruptcy with the US Court in the Northern District of California on August 11, after the printed version of this report went to press. Going out of business owing more than $4 million, the group will seek Chapter 7 protection from its creditors and customers. A hearing is scheduled for Sept. 6.

Some were stunned at the shutdown of a group so large so close to the date of the group’s annual conference. While published reports in Computerworld echoed the group’s claim of more than 100,000 members, one director confirmed that the membership definition was expanded to include anyone who’d requested an Interex publication.

Membership dues didn’t float the Interex boat anyway. Revenues from the annual conference trade show made up the biggest share of the group’s budget. Scrapping with a contending show being launched by HP took its toll.

“I think the HP conference drove the final nail in the coffin,” said former Interex board member Paul Edwards, who operates HP 3000/9000 consultancy Paul Edwards & Associates.

Vendors in the 3000 community said the fallout from the closing lands on HP’s shoulders, too.

“I wouldn’t recommend that HP let this [closing] happen,” said Rich Corn of RAC Consulting. “It’s going to reflect on them, no matter what they think.” The next day the vendor announced the layoff of 14,500 HP employees by October, 2006.

Others said the user group’s management dealt itself mortal wounds by encouraging members to combat the vendor, rather than sparking close collaboration.

“The only chance Interex had to survive so long was through collaboration,” said Duane Percox, co-founder of K-12 school software company QSS and a volunteer at the Interex Solution Symposium conferences. “If you take a combative approach it will work for a short period, but then the vendor will tire of that.”

Percox was one of several in the 3000 community who cited HP executive VP Ann Livermore’s advocacy as a reason Interex could let its users grill HP managers in roundtables. Some HP managers once had a bonus plan based on Interex advocacy survey results.

Interex had promised a “No Marketing” lineup of talks at the HP World it had to cancel. “This [closing] was an example of marketing beating the engineers,” Percox said. “People wanted stronger marketing from HP. Stronger marketing people don’t like it when you have independent user groups,” he added.