HP Split: Good Move for Channel Partners?

In confirming it will split into two $50 billion, publicly held companies, Hewlett-Packard (HPQ) said the move will make it more nimble and able to respond swiftly to changes in technology.

Maybe that’s pablum and maybe it’s accurate but still, it’s difficult to ignore that HP, in its recently concluded Q3, dropped 4 percent in its venerable printer business while busting out 12 percent PC growth. For the same period, Enterprise Group sales ticked up by 2 percent but services and software slipped by 6 percent and 5 percent, respectively.

Those aren’t exactly knock ‘em dead numbers. And, that was in a period in which HP broke an 11-quarter revenue losing streak but still suffered a 27 percent drop in net earnings.

So, it’s in that context we ask: Will HP’s monumental structural changes make sunnier horizons for channel partners?

It’s early, so opinions can (and will) change, but right now partners seem enthused by the possibilities the cleaver has brought to bear.

Let’s look at five changing factors:

• HP must detail to partners what the structural changes mean for them. As with any change, but especially with colossal upheavals, comes fear, uncertainty and doubt, or the FUD factor. HP chief Meg Whitman already is signaling the new entities—HP Inc. and HP Enterprise—will collaborate to ensure partners selling both lines don’t risk losing enablement, marketing support and financial incentives. How HP communicates those changes is equally as important as the modifications themselves.
• Will the spinoffs open up new opportunities for partners? Probably. By freeing up its consumer-centric PC/printer business from its commercial-focused enterprise operation, each should perform better unencumbered, enabling partners to capitalize on the value of both. Partners selling and supporting both product lines likely will continue to do so no matter what the structural differences.
• Will HP support become a larger issue? How HP supports the channel in pre-sales and post-sales situations will go a long way to ensuring that partners selling either one line or the other, or both, are confident the vendor has their backs. It will become increasingly important that partners understand how the changes affect their support teams.
• Synergy. Weird word, no one really knows what it means, but in this case the question is whether PCs and printer sales will prompt higher-up-the-food-chain enterprise sales, or vice versa. It’s debatable. But if HP believes there’s connections between the two new companies that partners can exploit for competitive advantages and profits, it behooves the vendor to talk about those possibilities to partners.
• What’s the play for HP’s distributors? There’s no word yet but at some point, the role HP’s distributors play in this deal has to change somewhat, also signaling that how partners interact with distributors is likely to be scrambled a bit, too. Making certain the messages are clear about benefits partners gain from working with distributors will be important.