Channel Chief
“We’ll make partners more productive”
 CEO Mark Hurd talks about HP’s strategy for capturing market share through technology leadership, operational clout and channel relationships in an exclusive interview with Kelley Damore and Damon Poeter
You’ve got the Converged Infrastructure plan, you’ve got a strategy to sell the HP stack into the data center. But it seems like Cisco may have been making more of the public rumblings so far. We wanted to hear what you have to say about it.
Well, we just see the networking opportunity in isolation as a big one for our customers. You know our history with ProCurve. We’ve had a very successful run with it. We’ve gained a material amount of share, both in ports and in revenue. We have announced our intent to acquire 3Com, which we think boasts a set of capabilities, end-to-end that is going to be very impressive.
It’s a market with good growth in it—very high gross margins, which is the history of the prices that the current incumbents in the market charge. And we’ll be very active in the market, so we’re pretty excited about it. That’s one point. Additionally, we see in the future that what you think of today as a server, a storage and a networking device, in some instances, can be converged and leveraged. We think that’s why it’s so important that HP has IP in all three of those areas—the server environment, the storage environment and the networking environment—and the combination of those three puts us in a position that really nobody else is in.
Clearly there’s this battle for the data center. And our readers are in the middle of it. What is your message to partners with regard to exclusivity, loyalty and selling HP’s portfolio rather than pieces.
Well, I think that we have a great channel. We heavily rely on the channel. We look at them as an extension of the HP sales force. It’s always easier when you have a relationship that’s quote-unquote exclusive. But I don’t think our view is that the world has to be exclusive.
We’re very comfortable in a co-opetive environment and have been for a very long time. I think that’s one of the assets of dealing with HP. You know, we’re used to partnering in all kinds of different environments to the optimal conclusion for a customer. Because at the end of the day, we’ve got to do things that help customers do things. We choose to have the channel do a lot of that with us and for us. So I don’t see any of that changing.
Now we’re going to try to go to the partner community, as we always have, and continue to grow our channel base. We’ve had good growth in the channel every year for the past 4-5 years. We don’t expect that to change. You should expect us to continue to try to convince the channel that there are a lot of advantages to being able to leverage all of our capabilities as opposed to just one.
You mentioned servers, storage, and networking—are there any pieces within that portfolio that you feel that HP might need to shore up some more as you go forward with your data center offerings?
I think there are always opportunities. We have spent $40 billion over the past 4-5 years in R&D or M&A. So when you look at what we’ve done in terms of our portfolio, we feel our set of offerings are second to none.
You asked the question a little differently, which is: Is there anything we could do to enhance it? And the answer is that almost undoubtedly there will always be something we can do. I won’t predict for you whether there will be another set of investments along those lines. But we’ll continue to invest, particularly in R&D.
What you would need to add to your portfolio? What would you suggest VARs add to their portfolio and their skill set as they evolve?
Most customers want to affect business outcomes. So the discussion we’ve had today has been mostly about products offered. My pitch to most of our reseller partners is that when you want to, come participate with us on the largest accounts. We know the address of most of those customers, and we know who the CIO is.
The opportunity is really in the SMB environment, which is a $55 billion market in US. And the ability to translate products into solutions and to affect business outcomes is really the most compelling value proposition for a customer. So looking at markets either vertically or as solution sets is probably the most advantageous thing.
How has your opinion of the channel changed since you were first appointed CEO five years ago?
I had a favorable view of the channel coming in. I would say that I probably didn’t appreciate just the sheer breadth of it. Particularly globally. We have 1,44,000 to 1,50,000 partners of one type or another. Our industry is $1.7 to $1.8 trillion. We can address a large part of it now with our portfolio. But the only way we can get to that entire market is with tremendous support from the channel. We’ve got great relationships in the channel. I think we get great support from our partners, just great support.
Now, does that mean I’m always saying we need more partners? No. I don’t necessarily think we need more partners. There’s room for maybe a few selected partners in a few selected markets, but what we need is to make our existing partners more productive. So we’re really focused on trying to do a better job of segmenting markets where there’s opportunity. And helping partners build a plan with us to exploit that opportunity. And that means us being more disciplined, not just the partner.
Historically, we’ve basically shown up with a bag of goods and a set of capabilities and said to the partner, you know, Good luck to you. But now we want to make sure that we also say, Listen, if there’s a vertical market, a geographic market, a solution set that you’re expert on, then we can team up to get incremental market opportunity. And we want to incent that kind of behavior.
What’s your message to the partners?
I’m going to be pushing partners to go get more market opportunity. We’re putting more salespeople into US. And our sales force—let’s be clear that at HP, we know that whether we take a deal direct or take it through a partner, we’re economically neutral. Because we’re economically neutral to it—in any case, everything just goes through the channel—so our adding more salespeople is not a threat to the channel, it’s an asset to the channel.
It creates more demand. And then we’re channel neutral as to where it lands. Because you’re channel neutral, everything goes through the channel, because they add value. We want partners, obviously as you can imagine, who have more energy on HP, and we want to make it easy for the partner to do that.
We’re not overcomplicated, we bring a great portfolio of products because of our scale. But scale is a strange friend, right? It can be the great scale of the huge HP portfolio with the tremendous capabilities of HP. Or it can be, you know, it’s that big HP with a lot of people in it, you have to talk to a lot of folks to get things done, that kind of thing. And so the very same fact can be an asset or a liability. Our objective is to make it an asset.
We want partners energized, fired up, understanding our portfolio, trying to help us get to incremental markets. We want to help them sell more, and let them know that they can see us coming from Palo Alto and we want to sell more too. |