Dell Hits HP Hard, Saying Split Will Cause Years Of Distraction For Channel Partners

Dell ratcheted up its war of words against archrival Hewlett-Packard, blasting the company for its plan to split into two and calling the move an "uncertain strategy" that would add "instability for customers and partners."

"History has proven that spinning off a PC division from a broader IT solution provider has had material negative impact on the remaining lines of business," wrote Marius Haas, Dell's chief commercial officer and president of enterprise solutions, in a note to Dell channel partners Thursday.

Haas summed up HP's plan to split into two publicly traded Fortune 50 companies by saying HP is a "company with an uncertain strategy which will face years of distraction untangling its operations, all while adding complexity and instability for customers and partners."

[Related: Dell Partners Smell Blood With HP Split]

Haas trumpeted Dell's strategy in the 600-word letter to partners, saying Dell "customers and partners should be assured that working with Dell will remain streamlined and require a single interaction, and you will not have to navigate two companies with different compensation structures and channel offerings."

HP Monday said it planned to split into two publicly traded Fortune 50 companies, each with $56 billion in sales. The companies would be named HP Inc., which would include printers and PCs, and Hewlett-Packard Enterprise, which would include enterprise systems, software and services.

Haas stressed in his letter to channel partners that Dell offered "stability in corporate strategy, in partner programs and commitments, in ownership and leadership, and with the processes and people who you work with every day."

Haas' statement mirrored the opinion of many Dell channel partners interviewed by CRN, who say HP's split is an opportunity for them to win market share away from HP.

Bob Hazlett, vice president of business development at Glendale, Calif.-based Dell partner Lanair Group, told CRN Monday, "HP is still trying to figure out who it wants to be and they are going to drag partners through the mud trying to figure it out. … 2015 is the year of winning back market share and taking the fight to HP's front door."

Rory Sanchez, president and CEO of SLPowers, a Boca Raton, Fla.-based Dell partner, said, "HP and Dell are both great companies, but when I think of which one has the clearest vision of who they are today and where they are going, I'm going to have to say Dell."

Sanchez said Haas' note resonated with him and his business. "Granted, HP needed to do something to be better organized. But I don't know how this split could have made them more disorganized. I'm not surprised that Dell is poking a stick at HP and ratcheting up the rhetoric. HP's had its fair share of jabs against Dell over the past years about it going private," Sanchez said.

For its part, HP said the split will provide each company with its "own more focused equity currency, and investors with the opportunity to invest in two companies with compelling and unique financial profiles suited to their respective businesses."

The war of words is sure to heat up at next week's Best of Breed (BoB) Conference in Orlando, Fla., presented by CRN parent The Channel Company, during which HP CEO Meg Whitman and Dell founder and CEO Michael Dell will be holding fireside chats with The Channel Company CEO Robert Faletra.

NEXT: The Full Text Of Haas' Note To Partners

Dear Partner,

The enterprise technology industry is undergoing amazing change on almost a weekly basis, and no one knows that more than the people who work in it on a daily basis -- vendors like Dell, channel partners and our collective customers. Within the past few weeks there were many significant news cycles about IBM and EMC’s future plans, but far and away the most significant industry announcement happened on Monday when HP revealed its plan to split into two publicly-traded companies. This announcement can best be summed up as a company with an uncertain strategy which will face years of distraction untangling its operations, all while adding complexity and instability for customers and partners.

These changes makes the technology industry one of the more interesting places in business, but it also makes it one of the more challenging as customers look to a partner and vendor who can help them navigate this technology changing landscape. And now more than ever stability matters.

Dell offers this stability; stability in corporate strategy, in partner programs and commitments, in ownership and leadership, and with the processes and people who you work with every day. And soon Dell will be the only end-to-end enterprise vendor who can offer customers the breadth of product roadmap, from the desktop to the datacenter, they demand.

As a matter of fact, history has proven that spinning off a PC Division from a broader IT solution provider has had material negative impact on the remaining lines of business. For example, over that past 30 years in the technology industry every vendor that has spun off or sold their PC Division has failed to keep a successful server business. Customers want this breadth of technology from a single vendor and Dell stands by its pledge to provide them with the full range of technology products and solutions.

Dell’s commitment to the channel has increased over the past year making us more predictable and easier to do business with. And this commitment is intensifying and Dell channel is outgrowing the market by 3-4x globally. Now more than ever, Dell is the right company for your end-to-end technology needs. In fact, in a few weeks at Dell World, we will have some exciting new announcements on how partners and Dell can offer customers peace of mind through this industry turmoil.

Dell’s business today is performing very well and we are growing.

-- Dell gained share in PCs for the sixth consecutive quarter in calendar Q2, according to IDC. In fact, Dell had the fastest year over year growth among our peers in the commercial client segment.

-- Dell maintained its No. 2 share position in the global x86 server market, and for the second straight quarter and generated year over year growth in both rack and blade servers.

-- Dell was the No. 1 storage vendor in total terabytes sold (internal and external) for the first half of 2014, according to IDC.

-- Dell Software registered double-digit revenue growth, with strength in security and information-management areas, including data analytics and enterprise application integration.

-- Dell Services is the No. 1 IT services provider in the healthcare industry and has acquired significant new customers in the financial services industry.

Customers and partners should be assured that working with Dell will remain streamlined and require a single interaction, and you will not have to navigate two companies with different compensation structures and channel offerings.

Dell realizes your customers will likely have questions around the uncertainty and distractions these decisions are sure to create. I want to assure you and your customers Dell will remain the same partner with the same strong roadmap, ownership and priorities.

I look forward to seeing many of you in Austin at Dell World in a few weeks.

All the best.

Marius Haas

Dell Chief Commercial Officer and President

Enterprise Solutions

PUBLISHED OCT. 9, 2014