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HP channel partners, competitors weigh in on company split

Following news that HP will divide itself into two businesses, HP channel partners and competitors Lenovo and Dell look ahead to the impact of the move on the markets that HP operates in.

Less than four months ago, Hewlett-Packard Co.'s Project Smart Choice went live. Project Smart Choice was HP's way of putting itself in front of IBM customers and partners as Lenovo and IBM waited for the sale of IBM's x86 server business to Lenovo to close. While that business acquisition is now a done deal, what "smart choices" might we expect to see from HP channel partners, in light of yesterday's news that HP will split into two separate companies? And how are the company's competitors reacting to the news of the split?

As history has demonstrated, vendors make hay while the competition changes the IT landscape. Both Lenovo and Dell Inc. made brief statements to SearchITChannel regarding yesterday's announcement HP will separate its Printing and Personal Systems Group (PPS) and Enterprise Group (EG) into HP Inc. and Hewlett-Packard Enterprise, respectively.

The statement from Lenovo said: "We have no specific comment on our competitor's structural or organizational maneuvers. However, Lenovo has been continuing to gain share in the $200B PC market, and we have outgrown the market and our competitors for 20 straight quarters.

"We are confident this trend will continue, as we are focused and will continue to leverage the consolidation of this industry to grow; as we are innovative and the market can expect we will launch more and more exciting PC, mobile, enterprise and ecosystem products in the near future and in the long term; and as we are consistent and clear with our strategy, which after we close both the IBM System X and Motorola deals, will give us three growth engines – PC, Mobile and Enterprise. PC was the first engine that launched Lenovo as a global leader and now with these new engines, we will ignite our second stage rocket and drive Lenovo even higher, even faster."

Dell, on the other hand, was less subtle in making hay while HP disrupts the status quo.

Cheryl Cook, vice president of global channels and alliances at Dell, said: "Dell is singularly focused on its customers and partners and is committed to providing end-to-end IT solutions that they need. From the endpoint to the data center and cloud, customers value the certainty and predictability of working with Dell. Today, Dell is the fastest-growing integrated IT company in the world. Our strategy is resonating well with customers worldwide as they look for a stable, reliable solutions provider to meet their IT needs.

There are a lot of gold nuggets over there that haven't elegantly been dovetailed into the enterprise hardware parts of the business. I hope that HP can figure that out sooner than later.

Al Chien,
Executive vice president, Dasher Technologies

"HP's decision to break apart its business is complex, distracting and appears to benefit HP and its shareholders more than its customers, which is ultimately the wrong priority. The HP separation will be complex and it takes time to unwind the commingled businesses and customer accounts. Other large separations like this have often taken years to complete."

It seems to be an understatement that HP competitors will take advantage of the situation. "I imagine the competition will jump on the opportunity to capitalize on the uncertainty of this time," said Diane Krakora, CEO of PartnerPath, who suggested that HP figure out the split as it relates to its channel people and programs as soon as possible.

Bob Venero, CEO of Future Tech Enterprise Inc., an HP Elite partner whose business with HP is about 40% on the EG side and 60% on the PPS side, agrees with Krakora. However, he doesn't believe that the breakup of HP will negatively impact HP channel partners.

"I see it as one of those things where [the new HP Inc.] will be … focused to the PPS organization and companies that help drive PPS in their customer base," said Venero, noting that the same dynamic will be in effect on the enterprise side.

While his organization, which is based in Holbrook, N.Y., will eventually have to deal with two vendors instead of one, with the possibility that that will require more work on his part, he doesn't view it as any different from adding another vendor to the company's line card.

And, Future Tech Enterprise is already a multi-OEM partner with strong working relationships with Dell, Lenovo and Toshiba.

"We need these OEM relationships and I don't expect the breakup of HP to impact any of our existing OEM relationships," he said.

Future Tech Enterprise works with Fortune 100 through Fortune 250 companies and does tens of millions of dollars a year in business with HP, according to the Venero.

Jed Ayres, chief marketing officer at Cleveland-based MCPc Inc., an HP Platinum partner, leading systems integrator and recipient of several vendor partner awards including those from Cisco Systems Inc. and Citrix Systems Inc., said the separation of HP into two companies would result in a bolder, faster HP -- a more agile company that's also simpler to do business with.

"We think this will free up HP to make investments that it wouldn't have otherwise and also to make acquisitions that it wouldn't have done otherwise," said Ayres, adding that it frees up a lot of things for the EG, where he believes the biggest growth and upside is as well as the biggest competition, represented by companies such as Cisco and Lenovo.

In all fairness, it's important to note that MCPc is making a big investment with HP to grow its business and the vendor is MCPc's go-to-market partner, according to the Platinum partner.

That said, MCPc has a long list of vendor partners, including Dell and Lenovo, and growth with these vendors has been strong. MCPc will continue to make investments across all three vendors -- HP, Dell and Lenovo -- according to Ayres.

Dasher Technologies Inc., a 2012 HP Partner of the Year, does about 90% of its business with the enterprise side of HP and 10% with PPS. The HP Platinum partner's executive vice president, Al Chien, is bullish on the news that HP is splitting up the company, noting that each of the two new companies will gain autonomy to do what's in its best interest.

Chien wants to see Hewlett-Packard Enterprise make more of an effort to integrate its software portfolio as it becomes a more nimble and agile vendor.

"There are a lot of gold nuggets over there that haven't elegantly been dovetailed into the enterprise hardware parts of the business. I hope that HP can figure that out sooner than later," he said.

On the client side, Dasher, which is based in Campbell, Calif., also partners with Dell and Lenovo in addition to HP PPS, but Chien doesn't see the mix of the company's relationship with the three vendors changing much with the breakup of HP, although he admits that he can only see so far ahead.

Overall, the HP channel partners expressed optimism that HP has an opportunity to move more quickly and respond to market changes more quickly as two streamlined vendors, which is good for HP, for customers and hopefully for the partners' businesses.

With rumors about HP splitting up its business swirling about for several years, none of the partners was shocked by the news but rather more surprised that the day has come. Now, it's a wait-and-see time as the process of dividing the company into two independent business units unfolds.

Next Steps

Does IT stand to benefit from HP's refocused approach to PC sales?

Customers react to HP's move to create separate enterprise company

CIOs react to HP split: What took so long?

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