Wednesday, October 15, 2014

Why is Hewlett Packard already lying to partners?

Hewlett Packard has announced it is splitting it's enterprise/server division off from it's consumer products division.  In this statement from Meg Whitman she claims that it will be business as usual for partners, and that nothing changes.  Unfortunately this is totally a lie.  Within days of announcing the split they also announced the fact that they were creating a set of new requirements to sell ANY HP Printer toner or ink supplies.  Partners now have to sell at least $100,000 a year in HP product to qualify to sell ink or toner supplies.  Small partners like OS-Cubed, Inc. don't do that kind of volume.  So despite a 3 company, 30 year relationship with HP and Compaq for all their products we will no longer be selling or recommending HP printers to our clients.  We won't even be able to buy supplies for the printer we own through our distributor.

Why are they doing this?  The only answer can be to drive up the cost of printer and toner to consumers.  By narrowing the competitive field for supply resale they can more closely control margins and sale prices.  By driving people to big-box stores they can push deeper discounts on the printers (many large stores sell them at a loss) because they know that their customers won't go buy the supplies at another location.

I of course can still sell the printers themselves.  But the margin on those is miniscule because, as I said big box stores sell them at a loss and make up the loss in supply sales.

I cannot fathom why HP is doing this, but it really makes me worried. I like HP, and always have. We EXCLUSIVELY sell their PCs, Laptops and Servers  and . And yet... will they now squeeze me out of sales of those products too because I'm not a high volume purchaser?  Will I be forced to find other vendors? This first move is not promising.  It's not promising for consumers either because let's face it - big box stores just don't offer the service and expertise that a small reseller can provide.

In the next 12 months we will see.  HP absorbed Compaq and there were some pretty serious disruptions when this occurred. I almost cancelled my 15 year relationship with them then, and had to escalate some issues to the vice-presidential level at HP to get them resolved. I will be watching closely and evaluating competing products, vendors and providers over the next few months.  If I see more restrictions or volume requirements on HPs part I will be (sadly) looking to change vendors. This can only hurt HP because small dealers with a lot of expertise like ours are what keep them in front of SMB clients. These clients trust us to recommend a product they can depend on - and to depend on the product we need to be able to depend on our provider - depend on them not to jerk the rug out from under us after we've been selling their product for them for 30 years.