Reality Check: HP is 10 years too late

For those readers who may not have noticed, I've been away for the last couple of months recuperating from a motorcycle accident. Following two operations, my left arm is healing nicely, thank you, especially important because I'm a southpaw.

Strangely though, while my body was healing I thought maybe my mind was left in some postoperative fog, as I had the weirdest feeling I'd awoken in the late '90s.

How else to explain the news stories coming out of Hewlett-Packard?

According to CNet reporters Dawn Kawamoto and Tom Krazit, HP is planning to modernize its online sales infrastructure and logistics systems in order to create an online direct sales Web site that can compete head-on with Dell. It seems their source was a member of the board of directors.

What I find amazing is that these high-level plans hatched by the current board of directors and, I assume, C-level executives comes almost 10 years after every reporter worth his or her salt filed almost the exact same copy about HP and Compaq.

My pain-killer grogginess aside, it is in fact 10 years later, and here HP is, still trying to sort the direct vs. indirect sales conundrum. As Josh Greenbaum, principal at Enterprise Applications Consulting, tells me, HP is "insanely sensitive about its PC strategy to the point that they were willing to break the law."

That is to say, HP is still pursuing a strategy -- dominance in direct sales -- that is as out of date as the systems it intends to revamp.

I may not have an absolute knowledge of what the enterprise buyer wants, but it does seem pretty apparent to me that the PC and its channel -- direct or indirect -- is irrelevant. Are companies still worried about ticking off the channel by going direct? That train has left the station. The relevant strategy for the new century should be focused on the aftermarket service model. PCs -- as it is apparent to everyone but HP, it seems -- are a commodity.

Who can do best job in servicing the hardware, is the question, not which channel executes the sales order.

"Look at Dell, they don't have the best track record for service," Greenbaum says.

In fact, when it comes to servicing large companies, the indirect model delivers more personal and localized service, Greenbaum believes.

Frankly, very few companies have the breadth of products that HP can boast of, and yet the products still remain siloed for the most part -- with printers, and PCs and servers, and service to all intents and purposes separate entities within the company.

HP management should be more embarrassed about its need for a "direct sales strategy" than the lame attempts it went about to find the leaker.

Instead of trying to emulate Dell's online sales genius, HP should be creating and selling a comprehensive hardware and software strategy.

Instead of hiring a Dell executive, as HP did earlier this year, it should hire an IBM Global Services guru who knows how to sell the company, not the product.

The real irony: HP is doing so well using retail and the indirect channel that it may soon overtake Dell in worldwide PC sales. The paranoid reaction to the disclosure of a stillborn strategy says a lot about an old-school company whose management can't seem to shake off the past.

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Ephraim Schwartz

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