HP Touts PartnerOne, Goes on the Offensive

"Since Sept. 4, 2001, we've been on the defensive," Milton said. "Now, we're on the offensive," added Milton, who went so far as to call Dell Computer "scum suckers."

That kind of competitiveness permeated the two-day partner event, during which approximately 90 HP executives, including CEO and Chairman Carly Fiorina, spoke to more than 800 partners about addressing their needs and improving HP's channel business. However, it was HP's distinct and unmistakable competitive focus that highlighted the show. Fiorina and others lined up Dell, IBM and Sun Microsystems, took aim, and fired away with barbs and blasts unlike partners have seen from HP in years if ever.

In her keynote speech to open the event, Fiorina took shots at both IBM and Dell. IBM, in particular, served as her foil. The HP chief contrasted her company from IBM, arguing that HP's approach to partnering, computing infrastructure and solutions were superior to IBM. And with HP Services now competing with IBM Global Services more than ever, Fiorina scorned IBM's focus on what she called "high-end process consulting." She argued that HP Services partner-centric approach to IT integration and outsourcing was better. "IBM may be a company of consultants, but first and foremost HP is a company of inventors and engineers," she said. "IBM is a company defined by what it wants to be all by itself and what it can do its way for others. HP is a collaborator, a partner by strategy, by personality, by choice."

Fiorina also didn't pull any punches in talking about PartnerOne and HP's efforts to improve the company's image with the channel. She and other HP executives delivered some details about the new program, the central aim of which is to provide a single, predictable system for all partners. "I know there's been uncertainty around our channel programs, and perhaps even some uncertainty about our commitment to our partners. I hope not, but I'm realistic enough to know that perhaps some of you have had that concern," Fiorina said during her keynote. "PartnerOne is a simplified, all-encompassing program, taking what used to be 40 different programs and aligning them around a single program."

In addition, Fiorina and her lead channel executives said PartnerOne will put a greater emphasis on rewarding partner performance and demand generation. To that end, HP introduced new rebate programs for Linux servers and HP OpenView infrastructure management software, as well as an HP Authorized Services program that allows solution providers to sell branded HP "Care Pack" services for Proliant server customers. HP officials also say the company is keeping its named account system from the former Hard Deck program to prevent channel conflict with HP direct sales. Milton said that after the Compaq merger, the number of named accounts grew from around 800 from the original HP to as high as 1,500, but HP decided to shrink the number to 850 combined named accounts for HP's direct sales.

One of the most crucial developments for the HP channel was the possible addition of a new partner level to compliment the Platinum, Gold and Business Partner levels. Kevin Gilroy, vice president and general manager of commercial channels for the Americas at HP, said the company was exploring the creation of another partner level for smaller partners that have trouble meeting Gold and Platinum status requirements, and said that HP would have a definitive answer by May 1. Another important component for PartnerOne, Gilroy said, was pricing. HP officials say the company has brought down pricing on hardware items that previously ranged between 20 to 30 percent higher than Dell. "We believe that we have the right scheme in place now to offer competitive pricing for partners," Gilroy told VARBusiness.

HP partners at the event liked what they heard, especially from Fiorina, who's presence at the two-day event spoke volumes considering that other vendor CEOs have chosen to skip their partner events or simply show up on a satellite feed for a few precious minutes. Many solution providers, however, complained that they are still waiting for better execution in the field.

Despite the skepticism from solution providers and uncertainty around PartnerOne, partners are more optimistic about HP's future. HP's future is looking brighter. A year ago, HP appeared to have been backed into a corner by its three primary competitors, as IBM, Dell and Sun did their best to throw as much dirt on HP as possible. In fact, Dell took the top spot in PC market share from the new HP for exactly one quarter, but Fiorina recaptured the crown in the most recent quarter. HP is now looking to exact some revenge on its foes.

One front that will be crucial in the war against Dell will be printing and imaging. HP executives have rolled out the most ambitious strategy in the company's history to build the company's channel business for its highly lucrative Printing and Imaging Group. Currently, 97 percent of that business goes through partners, but much of that revenue is generated through retailers and direct distributors, not VARs and solution providers. HP is hoping to change that by better educating partners on adding value on everything from HP's new portable printer to digital cameras.

Rich Raimondi, vice president of U.S. Commercial Business for HP's Imaging and Printing Group, criticized Dell's partnership with Lexmark, calling it "Dell-Mark," and said HP would differentiate itself by having a better relationship with the channel. "Lexmark made their bet with Dell because they feel that the channel wasn't enough," he told VARBusiness. "Our greatest strengths in this business are our reach with partners and our innovation."

HP executives clearly took the gloves off during the company's first major partner even since the Compaq merger. In addition to Milton's remark about Dell, and other HP executives poked fun at Dell's TV. persona "Steven," after the actor who portrays the popular pitchman was recently busted on a drug possession charge. "Michael Dell is going to get busted, too, in the printer business," Raimondi said during a general session speech.

HP executives also saved some venom for Sun Microsystems, calling chief executive Scott McNealy a "loudmouth" and harping on Sun's recent woes. "I will personally not rest until I put the last nail in Scott McNealy's coffin," said Jack Novia, senior vice president and general manager of HP Services, Americas. Milton went a step further, announcing HP's "Project: Misery," a reference to the popular Stephen King novel where a psychotic fan imprisons a best-selling author and proceeds to hack off the writer's limbs.

Aside from black humor and potshots, the company also dispelled some myths and misconceptions about HP's supposed slide in market share and losses to the competition. HP officials repeatedly rolled out numerous market share studies from research and analyst groups such as IDC that showed HP as number one in servers, Linux, Windows and external storage systems.

While the merger isn't entirely finished, the worst appears to be over. Now that public doubts and fears, shareholder battles, and declining market share issues have cooled, HP is using its own merger as a selling point. The message: "We pulled off the biggest technology merger and integration project of all time, so imagine what HP can do for you." Fiorina said during her keynote that the U.S. Department of Homeland Security has met with HP officials seeking advice on how the company integrated Compaq during the difficult merger.

Fiorina pledged that HP will offer the best return on IT investments and focus on cost-saving solutions. She added that HP wants to be the number one infrastructure partner, and its strategy of combining servers, storage systems and HP OpenView software is a powerful proposition. The channel-friendly rhetoric was strong at the event, and it's clear that HP is betting big on partners to help the company return to past glory. Fiorina thanked partners for sticking by HP during a tumultuous two years, and exuded a confidence this week that was nowhere to be found during that period. If the saying is true that whatever doesn't kill you makes you stronger, then the new HP is also likely improved and poised for success.