Gilroy: HP Direct Effort Is Being Overblown

"I don't think it is as big a deal as people are making out of it," said Gilroy, HP vice president and general manager of commercial channel sales, in a wide ranging interview on the PC Expo show floor with CRN News Radio. "I think we are ruminating and not looking to the upside."

Gilroy said HP was "going to introduce much more services capabilities where our partners can make money off HP Services moving forward. I think when you put the whole thing together in its entirety and look at it in a holistic fashion, HP's channel is going to rock. We are going to have a great channel program"

HP has confirmed that Intel servers, PCs and notebooks will not be part of its Hard Deck channel strategy as of Aug. 1. The original HP Hard Deck program mandated that HP's sales force would target 870 named accounts on a direct basis, leaving everything else as the exclusive domain of the channel.

That changed with the HP acquisition of Compaq. The Hard Deck strategy, however, will remain in effect in the Enterprise Systems Group with higher end enterprise offerings.

HP is currently working out "rules of engagement" to assure that the server, PC and notebook product exclusions do not lead to channel conflict, said Gilroy. "We are hearing that in our feedback as we reach out to our partners, and we will be building out those rules of engagement," he said.

Gilroy said HP is also in the process of putting together solution sets with its partners that only the partners will be able to sell. HP is currently talking with a number of software makers to build out the solution sets, he said.

HP partners selling certain vertical solutions will have advantages that could include extended warranties or uptime guarantees over and above what HP itself would offer. Those "signal value" offerings will "signal to our end user customers that we value the channel," said Gilroy.

HP has not "locked down" on the criteria for the signal value programs that focus on "differentiation for the channel around solutions," said Gilroy. However, he stressed: "Those will be value that they will not be able to get anywhere else except from the channel. We are still working on the criteria for that and we are doing some research on what is the addressable market for certain solutions."

Gilroy stressed that HP's direct effort does not mean an exclusion of channel partners. "I think there has been competition against suppliers for many years," he said. "I don't think it is something that should be of enormous concern to [HP and Compaq partners although I understand it. There are going to be some places that we compete, but the more value-add that we can work with our VARs in adding they will get the price premiums, they will be able to lock those deals in."

Gilroy said that HP's direct sales team will have strict economics and customer satisfaction objectives they will have to meet. HP is also instituting a Financial Model Pricing Governance Board to assure that HP's direct pricing is not predatory with regard to its solution provider partner efforts.

"The company is committed to channels," said Gilroy. "If they weren't I wouldn't be sitting here in this job."