HPE CEO: Why ‘We Are The Market Leader Of Raising Prices’
‘We are the market leader of raising prices. And you have to. There’s no way around it,’ says HPE CEO Antonio Neri at XChange Best of Breed 2022.
Hewlett Packard Enterprise CEO Antonio Neri said channel partners should take HPE’s lead and raise prices as inflation continues to climb and demand for digital transformation soars.
At XChange Best of Breed 2022, HPE’s Neri was asked if channel partners should be raising prices due to the current state of the economy, including inflation issues likely not going away soon.
“Yes,” Neri said. “One of the reasons why HPE has delivered at this level of performance and profitability…is because we have raised prices consistently. We are the first always to raise prices. Look at Dell. They follow just like that. But they’re never the first movers—never.”
“We are the market leader of raising prices. And you have to. There’s no way around it,” Neri said.
[Related: Economic Expert: ‘Good Chance’ Of ‘Modest Recession’ In 2023]
The HPE CEO pointed to the U.S. dollar versus other currencies such as the euro and pound.
“Some of these currencies have elevated 20 percent to 30 percent. There is no way you can sustain the level of profitability unless you raise prices. Then when there is supply chain constraints, cost goes up too. So you have a cost and inflation [going up] at the same time,” said Neri.
Neri said 2022 will be the “best year ever in profitability and revenue growth” for Spring, Texas-based HPE.
“Pricing is the name of the game. It is what you have to do,” said Neri.
Channel Partners Increasing Prices
Aqueduct Technologies, a fast-growing Waltham, Mass.-based HPE partner, said the company increased its managed services price tag in 2022.
“As our software costs increase, and actually paying for talented new employees that we’ve picked up—we felt it was necessary and needed to pass that on,” said Jack Kaiser, senior vice president of sales for Aqueduct Technologies. “So we had conversations with our customers. I’d say 99 percent were very receptive and understanding of it because they felt we’re providing a good value.”
CEO Manak Ahluwalia said Aqueduct hadn’t raised prices in 2020 or 2021 in order to focus on helping keep customers afloat and thriving during the COVID-19 pandemic.
“Coming into 2022, it gave us a good opportunity to relook at our cost structure, knowing that for the last few years, we hadn’t increased rates because we’re trying to be good partners to our customers,” said Ahluwalia.
Being a trusted value-added partner and IT solution provider to customers allowed Aqueduct to raise costs without any disruption to its customer base.
“Having happy customers is what made it easier to pass on some additional costs, because they felt they’re getting value from us,” said Ahluwalia. “We’re going to have another record year this year.”
Antonio Neri’s 2023 Economic Outlook
HPE’s CEO isn’t too bullish about the economic outlook for 2023.
“The economy is going to be bad. But IT will not follow the economy as bad,” said Neri.
Neri said over the past two years, IT spending has been “significantly higher” than overall GDP growth rates. He expects the technology and enterprise markets to be “solid” next year.
“We live in this digital economy where IT plays an enormous role. What we have to do is make sure we meet the customer at the right time, and make sure we focus on what is most relevant to them. Then give them the solution and a consumption [model] that allows them to keep moving along,” said Neri.
“That’s why [HPE Greenlake] is not just a technology innovation, it’s a business model innovation. GreenLake at the core, fundamentally, is a business model innovation. The technology comes with it,” he said.
Aqueduct Technologies is bullish about HPE GreenLake’s future.
“When people start thinking of HPE now, they’re starting to think more of GreenLake being one of their lead offers as opposed to servers and storage,” said Ahluwalia. “HPE is doing a great job in marketing and selling GreenLake.”