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May 2000

HP studies smaller 3000 hardware channel

Resellers report 3000 division surveys them, plans to drop some

Longtime HP e3000 hardware outlets in the authorized channel are having to prove they’re worthy of retaining reseller status this month, according to reports from integrators selling 3000s for HP.

Several companies with years of experience selling the 3000 report that in April HP sent an extensive survey investigating each reseller’s hardware sales and marketing strategies. The survey is part of HP’s re-evaluation of the channel, the resellers report — information they believe HP’s Commercial Systems Division (CSY) will use to decide who gets to sell HP 3000s in the coming year.

HP did not want to comment for this story, and a spokesperson said the division might be willing to discuss the matter only after the end of May. Current hardware reseller contracts come up for renewal on May 31. Client Systems, the North American distributor for HP’s e3000 business, also declined to comment. Client Systems’ chief operating officer Mike Murphy outlined the plan, which HP is calling the “rationalization” of its 3000 channel, at its worldwide reseller’s conference in April.

Several resellers report they have been told HP’s aim is to reduce the number of authorized outlets to buy e3000 hardware. One said the plan involves making a sharp reduction in the number of integration resellers, those which do not offer software or an application for the system sold along with hardware.

One reseller who didn’t want to be named — every reseller’s contract is being evaluated this month — said he had been told HP wanted to reduce the number of integrator resellers by 90 percent, or fewer than five North American outlets. Some resellers report CSY will cut off the resellers who booked less than $500,000 in sales during the past year.

“Last year was not a good year for anybody,” said one reseller who was fairly certain they wouldn’t make CSY’s cut. “There is pressure being put on HP to put the little guys out of the loop. But the little guys know the little accounts.”

HP relies on its resellers for 80 percent of its sales, according to HP Services Solutions president Nick Earle. The percentage is even higher for the e3000, which is still working to regain the attention of the internal HP sales force.

“The single complaint I hear from every customer we go to is that they haven’t seen anybody from HP in years,” the reseller said. “They don’t even know who their salesperson is anymore. We’ll keep calling on these people, because we know who they are. I can’t see anything happening here but this being a real detriment to HP.”

Even companies who sell a large amount of hardware and do a small percentage of HP 3000 business may be cut out. Meanwhile, software providers who have sold hardware for years might be losing the ability to sell e3000s as part of their solution. CSY has been on a campaign to get ISVs to use the hardware services of regional integrators such as Logical and Forsythe. But some resellers believe relationships with 3000 customers aren’t so easily transferred.

“There are a lot of us out here with customers who have turned to us for many years for expertise,” another reseller said. “We’re not doing huge volumes, but these customers exist on the 3000 largely because we’re supporting them. You take us away, and they may not stick on the 3000.”

 


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