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Mix Strategy Best For 'New HP'

'New Hewlett-Packard' (HP) should consider a mix of its 'old HP's'' channel management strategy and Compaq's selling and channel management strategies for the best business outcomes, said a Gartner report that focuses on the likely impact of the new HP's Asia Pacific channel strategy on business partners and end users.

In recent years, HP's direct strategy and capabilities have grown in order to compete with fast growing rivals and to meet end user demands. Now, the newly merged entity must combine channel and direct strategies from two very different companies whilst maintaining the same relationships and forging new ones.

According to Gartner, while HP has traditionally held very strong relationships with the channels in Asia Pacific, this did not translate into market share success for them in some business units, particularly in the PC market.

"HP has a very healthy relationship with its business partners, as evident in the various Vendor Scorecards performed by Gartner over the past few years. However Compaq has had the upper hand in terms of market share with 6.6 percent of the total Asia Pacific PC market in 2001 compared to 4.3 percent for HP," said Martin Gilliland, senior analyst at Gartner Dataquest.

In order for the new HP's channel's strategy to succeed, HP needs to look at a combination of both Compaq's sales strategy and HP's channels strategy. At the same time, HP needs to make sure that all channel programs are aimed at business success, not just pleasing the channels.

How successful an organization fare in Asia is largely dependent on their relationship with business partners. Hence, Gartner cautioned that HP must ensure all channel types fully understand their direct strategies at a country level so as not to alienate any partners, as these strategies are likely to vary considerably from country to country.

Said Gilliland: "China, for example, will be a market that utilizes the channel quite heavily for some time because of its business culture and the geographical size of the country."

According to the report, there are other countries in Asia that do not rely quite so much on relationships and the logistics and potential return make a direct presence a very viable option.

Countries such as Australia, New Zealand and Singapore represent prime opportunities for HP to expand its direct presence. As such, channels in these countries should be most prepared to expand their service and fulfillment capabilities to make them the preferred choice over the vendor in as many cases as possible.

"Both HP and their channels need to maintain close contact with one another to ensure they understand the implementation plans as they relate to local conditions and product roadmaps in detail," said Gilliland.