What's next for HP PSG partners?

PC exit plan may compel HP's partners to switch customers to rival brands

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By  Manda Banda Published  August 25, 2011

Some people are calling it the end of an era, others are heralding it the beginning of a new one, while still others speak of it as a bold move demonstrating just how the IT industry and its main protagonists have continued to innovate and evolve with time. What I am referring to, of course, is the revelations by Leo Apotheker, chief executive officer at HP, that the company is considering spinning off its $42 billion PC business.

Whether or not you like the announcement, HP plans that it will jettison its PSG business offers rivals an opportunity to gain share against the world's largest PC manufacturer.

While the HP board's decision to ‘evaluate strategic alternatives' for the PSG business is ‘not an announcement of a shutdown', if the move goes ahead, it will be reminiscent of IBM's decision to sell its Personal Computer Division (PCD) to Lenovo in 2005.

Although I can understand the main motivation for HP to go ahead with a strategic alternative to its PSG unit given the commoditisation of PCs and the general PC market remaining weak, a move to spin off its PC business will not only be a big chunk of revenue out of the $126 billion technology giant, but one that is likely to relegate HP to ‘second-class' citizenship in the IT world.

It is common knowledge that HP isn't alone in dealing with PC market malaise: Dell, Acer and others have also been grappling with it. The only winner in the PC segment that has kept a higher average selling price (ASP) in the last few years is Apple.

I do believe that the likes of Dell, Acer, Lenovo, Sony, Toshiba, Asus and others will try and use the uncertainty surrounding the future of HP's PSG business to inject as much fear, insecurity and doubt into the market as possible in an attempt to get channel partners to rethink whether they should continues reselling HP PSG products.

One area which has the potential to offer some real market share gains for HP's rivals is within commercial and enterprise sales. In my view, HP's challengers especially in the enterprise segment will try to take advantage of this situation as the company ponders the future of PSG.

For HP partners, this is a trying period for them given that the PC market is fluid. Resellers with deals on the table must be wondering whether they should switch customers to another brand or wait and see how HP evaluates its PSG options in the next 12 weeks. If HP begins to lose market share to rivals in the commercial sector, the company will be compelled to do the inevitable and that is to get rid of PSG. That in my opinion, will be the end of an era for HP as I have no doubt it will become a shadow of its dominant self without PSG.

That said, I still believe solution providers still hold the key to whether or not this shift will take place. If HP rivals want to quickly win share in the commercial and enterprise PC segment, they should immediately move to engage channel partners to help them do just that. I do believe it's the channel that will make all the difference. A little push in one direction or the other by solution providers and resellers can easily mean the difference between an account staying with HP or switching to a competitor brand. Whether PSG stays or emerges in another form, what's certain is that commercial clients will be reluctant to commit to HP's products if the future of its PC business stays murky for long.

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