The overall outlook for the first quarter of this year looks promising, according to Baird research.
Baird's analysts -- who do regular, detailed surveys of distributors and value-added resellers (VARs) to judge the financial health of the companies that sell through the channel – said Hewlett-Packard Co. and Sun Microsystems, Inc. are both generating more interest from end users than they have for several years, and are both improving relationships with sales through the channel.
"VARs continue to attest to HP's enterprise improvements, especially in Europe," according to the report from Daniel Renouard and Frank Timons at Baird, in Madison, Wisc. "HP is among the leaders of vendors from whom VARs expect to sell more in 2007. A majority of VARs view HP as improving in servers and storage.
"We believe HP is beginning to execute better in the field, and still has room for improvement."
Much of the recent rapprochement with the channel comes from CEO Jeff Hurd, who "gave channel partners a bear hug and said 'if you're with us, you're with us; if you're not selling enough product, you're going to get fired,'" the analysts said.
Reaction of channel companies was mixed – larger companies stand to gain from HP's new stance while smaller ones stand to lose – but the overall effect has been positive.
Sun may be starting on a similar course by refocusing on its installed base and that of its StorageTek subsidiary. Part of its new strategy is to work harder at making Sun channel sales profitable for the channel. But it will be another quarter or more before sales and channel-response data will indicate if the approach is successful.