HP enhances distribution power with ‘broadline’ strategy

Vendor increases channel availability of commercial product portfolio.

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By  Andrew Seymour Published  July 28, 2008

HP has rebuffed suggestions that there would be casualties from the Middle East distribution programme it completed last week — and instead revealed it has moved to ramp up its distribution capabilities by giving the majority of partners access to its entire commercial product portfolio.

The decision to award existing distributors a broadline contract follows requests from resellers to allow disties to stock its full product catalogue. Up to now, tier-two partners in the region have typically managed an assortment of product exhibits each.

Bernhard Isemann, Solutions Partner Organisation (SPO) manager at HP Middle East, said the exercise was carried out in conjunction with distributors. “We learnt that the main requirement from our resellers was for distributors to become what we call a broadliner — a one-stop-shop that has all our products. You won’t find an HP distributor anymore who only sells PSG notebooks and can’t offer you a printer. This is what we have done with the exercise — there was nobody cut,” he explained.

The other primary motive for revising its distribution strategy was to create a structure capable of handling its anticipated growth in the region. HP says it has used the programme to meet with partners in the Gulf, Saudi Arabia and Egypt and ensure they can scale up in terms of credit lines to resellers and product delivery.

“This now allows HP and the distribution partners to serve a $2 billion to $2.5 billion business in the Middle East per year,” revealed Isemann. “Where we are standing as of today is $1.4 billion or $1.5 billion, so this exercise was anything other than cutting back because when you build up from a $1.5 billion to $2.5 billion capability it means both sides have invested.”

Non-disclosure agreements prevent Isemann from specifically discussing the names of the distributors involved in the exercise.

Given there has not been a reduction in numbers, however, it effectively means existing partners in the Gulf such as Almasa, Emitac, Redington and Jumbo are now permitted to sell HP’s full commercial portfolio of volume products. HP’s remaining UAE-based distie Aptec, meanwhile, is understood to be taking up a value distribution role based on the vendor’s software, storage and data centre solutions. Last month Aptec announced the launch of an HP demo centre for high-end storage technology.

A value distribution partner is also expected to be named in Egypt once the new contracts officially begin at the start of August. HP, jointly with partners, will then verify the names of its broadliners to the market and clarify the territories they are authorised to serve.

One Middle East channel source said the changes should result in stronger returns for HP distributors, especially those that lacked significant aspects of HP’s commercial portfolio before: “This will give them the opportunity to build their business with HP. It is going to require greater investment from distributors and they must expect some realignment internally, but it should lead to the profit going up. The growth momentum at HP is high and they expect this to be maintained at the very least.”

Meanwhile, Isemann confirmed that KV Narayanan, who presently looks after the vendor’s wholesale business, has been formally made distribution team lead for the Middle East. He will manage a team focused purely on HP’s distributors in the region, reporting to Isemann and MEMA distribution chief Katia Nikitaido.

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