HP rivals continue attacks on uncertain PC business future

CannonIf there was any doubt that HP’s rivals are taking advantage of perceived weakness in HP’s PC business as it awaits a decision from the company’s boards on its fate, consider the stones slung this week by two of its biggest.

Both Dell and Cisco have taken high-profile swings at HP in efforts designed to create additional fear, uncertainty and doubt around its PC business and to boost their own offerings in the hearts and minds of HP customers and partners.

Michael Dell used his keynote at this week’s Oracle OpenWorld event to predict that the splitting of HP’s PC business from enterprise hardware (servers and storage would remain with “HP proper”), will necessarily lead to raising prices on those enterprise offerings.

Partners hearing Dell’s argument could easily nod their heads, thinking back to HP’s logic in the Mark Hurd era for keeping everything under one roof. In fact, many partners probably recall the vendor’s 2010 Americas Partner Conference, where then-CEO Hurd pulled out the easel and pen (as usual) to illustrate how having PSG got him better prices for computing products across the board, resulting in competitive benefits for both HP and its partners across nearly all of HP’s hardware-centric businesses. The message from Hurd was clear: Better together.

It begs the question of what happens to those Huridan economics if HP does spin off PSG as a separate entity. If the company retains the HP brand and close ties to its parent, could it maintain those precious points of margin? Dell is betting that it can’t. And even if it does, a few months of additional unanswered fear, uncertainty and doubt in the marketplace can’t hurt for Dell, right?

Meanwhile, an internal memo from Cisco has generated a lot of press, predicting that HP partners could be in for a world of hurt if HP spins off the PC business– that such a move would result in weakened margins and a diminished HP brand. The networking vendor speculates a spinoff could see margin drops of between two and five per cent. If correct, that would mean that HP would either have to take the hit (not easy to do in the already margin-challenged PC arena) or raise prices (not easy to do in the price-conscious PC arena).

In a letter accompanying the report produced by Cisco’s strategic marketing team, Cisco sales chief Rob Lloyd urges Cisco’s sales team to take advantage of “the confusion in the marketplace around HP.”

Should I stay or should I go?

Dell and Cisco are just the latest HP foes to lick their chops at the opportunities created by the FUD around HP in the wake of an admittedly poorly communicated major strategic shift. A good part of that effort is aimed at HP’s customer base –to create uncertainty and dislodge HP where it enjoys status as vendor of choice.

But a lot of that effort is also being aimed at partners – particularly by Dell, which is casting itself as a company that’s committed to the PC market and to its partners in the long-term. Oracle channel chief Judson Althoff has also hinted that the company is looking to lure HP partners into its own ranks.

Other PC vendors are also courting HP partners – one could hardly blame Lenovo for pouncing on this as an opportunity after the FUD-storm it had to navigate through after the IBM PC business was sold to what was then a little-known (in North America) company hailing from “big bad Communist China.”

Offering a balanced and contrarian view, Channelnomics’ Larry Walsh acknowledges that there are challenges ahead for HP’s business regardless of what the company decides to do with PSG, but raises valid points about the dangers of switching go-to vendors. It provides a great bit of context on what to consider before dumping HP (or any vendor partner) in favour of an enticing new party.

There’s a lot more to consider than whatever short-term frustrations and FUD might be making PSG challenging to work with at this moment. That’s not to say it’s something you shouldn’t consider doing – just that it’s not something you should do without consideration.

Keep your ear to the ground. Sound out your fellow solution providers, your distributors, the various (and necessarily partisan) vendors in the space, and most importantly your customers. Be ready to address customer concerns about HP’s future in the PC business with facts (the business will continue and will likely continue to bear the HP brand, PSG remains one of the biggest and most profitable PC businesses around) or with alternatives from HP’s competitors. Or both – ultimately, it’s the customer’s choice.

How has the uncertainty around HP’s PC business impacted your business? How has it changed how you work with HP? Sound off in the comments below and let us know. We’d love to hear from you.