October 2003

Outlets for the 3000 are trying to deal in October, but discounts were scarce

Customers might have been careful about buying HP 3000s during the last month of HP’s sales effort, but some of the official channels were trying to create deals on the system. Cerius, a North American reseller, reports that it is attempting to find extra discounts on the system on a deal-by-deal basis, but it needs to present justification to HP for lowering the price on HP 3000s. The transaction between HP and the reseller involves increasing the reseller’s discount points, something that many of the regular HP 3000 outlets don’t have much room to negotiate with. It’s hard to believe that HP would be cautious about any business transaction that could help the company show revenue growth, one of HP’s most closely-watched signs in the stock analyst community. But apparently the 3000’s ability to help HP’s sales totals doesn’t impact discounts for the system very much.

Discounting to the 3000 resellers looked like an option that might be more easily extended to larger resellers, according to Pivital’s Steve Suraci. “There are no incentives that we have seen other than what was previously in place,” Suraci said. “We’ve got a standard discount from HP, and we discount that further on our end. We’ve always been somewhat aggressive when competing with folks like Logical, who have a bigger discount than we do. I’d don’t think we’ve any more aggressive in the last month here. Since HP’s not giving us any more, we can’t give very much within our business model than we already are.”

For customers who haven’t bought an HP 3000 in awhile, the normal discount off HP’s list prices for systems is about 20 percent, according to Suraci, “unless it’s HP selling it.” HP can get aggressive on selling 3000s “if they trip over a deal,” said Pivital’s sales manager Jack Harbaugh. But the HP direct sales force for the 3000 has largely been dismantled by now, leaving customers to seek out resellers to help with purchases during the last month.

Cerius noted that HP might be open to a bigger discount, to be passed along to the customer, in special circumstances. “We have been putting together one-off discounts for our customers, with special pricing from HP,” said sales manager Kirk Olson. “They are being very selective in offering these prices, and we have to go through a justification. It isn’t public knowledge so I can’t give specifics. It really depends on the particular customer.”

The price reduction will always include the standard HP Trade-Up credits, which can run as high as 15 percent for a recent server being traded in, as well as HP Investment Protection credits which customers can apply to future purchases of HP-UX systems — either PA-RISC-based, or Itanium 2 systems — during the next three years. HP reported that these credits are 50 percent of the 3000’s purchase price for HP-UX systems purchased during 2004, 45 percent for systems bought in 2005, and 40 percent for HP-UX systems in 2006. At no time can these credits make up more than 50 percent of the target system’s price, though. Customers have until January to register their N-Class purchases for these investment credits, by visiting the HP Web site at (h20024.www2.hp.com/csy/2698/investmentprotection) and then faxing a copy of their sales invoice to HP at 408.447.4848.

Even those sites that have made the jump to the N-Class HP 3000s might need to do some purchasing with what’s left of October, according to HP and its resellers. The supply of extra processors for these 3000s doesn’t fall off those HP price lists on Oct. 31, but some N-Class sites don’t have the right chassis to install the CPUs that HP continues to sell through October, 2004. Revision A and B chassis, used in the N-Class servers purchased before September 2002, won’t work with the CPUs HP is selling. An upgrade to the older chassis is available from HP, according to Alvina Nishimoto of the company’s Migration Center.

Nishimoto also said that customers who are using the company’s loaner program — where an HP 9000 sits alongside HP 3000s that are being migrated — will do best just to keep the HP 9000, rather than convert their HP 3000s to 9000s. HP offers a buy-out option for this migration loaner, which Nishimoto said is a better deal than converting an N-Class server to an HP 9000. “The remarketed N-Class is pretty much totally non-existent,” Nishimoto said at HP World. “It’s just too much of a value to turn it into an HP 9000.” While this message had an obvious punchline — buying a new N-Class was a good investment — it also spoke to the value of acquiring an HP 9000 in the current marketplace compared to the value of an HP 3000. Only one of those two systems is in limited supply as a new item, according to HP and its resellers.


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