Gilroy Speaks Out

"I'm extremely tired of hearing in the new HP that the channel doesn't generate demand, they fulfill it," he told a packed room of more than 350 solution providers at Ingram Micro's VentureTech Network Invitation conference here. "That's baloney."

But during the same speech, Gilroy,who warned solution providers that HP will drive its direct systems sales to offset flagging revenue,said the majority of HP executives realize the company can't effectively penetrate the SMB market without solution providers. "We do believe we get it, despite some of the feedback we're getting," said Gilroy, vice president of commercial channels at HP. "We hear you. We listen."

Solution providers, however, said HP executives will have to do a better job or they will take their business elsewhere. One major complaint solution providers voiced at the conference involved an increase of HP's direct-sales force in the lower end of the SMB market. "If the VAR's role is to sell into the SMB, then why does HP have a direct SMB group going into my market?" asked Jennifer McCadden, president of Universal Connecting Point, a solution provider based in Pittsford, N.Y. "They are killing all of our efforts because they are trying to mirror them."

Gilroy said, however, that HP is set to launch bundled solutions targeted at the SMB market that will be sold exclusively by the channel. Called Solution Opportunity Zones, HP initially will create solution bundles aimed at small banks, real estate and medical, among other verticals. The solutions will bundle HP hardware, an ISV solution and marketing and service expertise from qualifying VARs. Solution providers participating in the program will be granted an exclusive territory for their solution bundle, he said.

The other complaint by solution providers centers around disparities between the business and gold levels in HP's new PartnerOne channel program. To reach the gold level, solution providers must sell $10 million in HP products or services or have five certified HP engineers on staff,something that most VARs serving the SMB market say they can't achieve. The gold level provides higher profits, financial incentives and other benefits that give gold partners an unfair advantage, solution providers said.

"We should have all been certified as gold-level partners," said Leonard DiConstanzo, senior vice president of business development at Emtech, a solution provider in Cranford, N.J., referring to VentureTech members. "We've proven that we can effectively serve all markets, despite our size."

Solution providers grew more frustrated when Gilroy said HP's direct-sales efforts will increase. The company's PC business, he said, lost $240 million in the last quarter. It lost money in eight of the past 10 quarters, and it lost market share in nine of the past 10 quarters, he added. "We need change, and change is painful. Change is inevitable, and it will continue," he said, noting that revenue and market share of Dell Computer and direct marketers such as CDW Computer Centers continue growing in a down economy.

Gilroy, however, did say that the new HP is working on pricing governance and a neutral compensation policy among its sales force. "There are some renegades in the company," he said. "But the direct mode of HP will not have predatory pricing. We will control pricing. It will be neutral. You can hold me personally accountable for that."

Despite the beating Gilroy often takes as the messenger of HP's new strategy, solution providers said they're thankful that at least one person in the company is listening to them. "Gilroy is doing his best," said Mike Mills, vice president of OEM sales and new product development at Sherlock Systems, a Buffalo Grove, Ill., solution provider that focuses on digital technology. "If he wasn't there, we'd have no one fighting for us."