HP disties warn of price hikes

Prices on HP server, storage and networking kit could rise when planned rebate cuts for enterprise distributors that sell to the largest resellers kick in next year.

The removal of back-end margin paid on sales to top-tier Gold partners, otherwise known as named accounts, was due to be implemented across Europe from 1 November – HP's fiscal New Year – but has been delayed.

Kevin Matthews, UK and Ireland Enterprise Servers, Storage and Networking channel manager at HP, confirmed his firm is reviewing the "first tier compensation programme as a whole" and will make changes in Q2 starting February.

"We want to utilise the partnership with distributors in the mid-tier and small-reseller market, we need to do more and are looking at how we do that with the current compensation model... it's all about market coverage and growth," he told The Reg.

Disties say that they have been assured by HP that the total compensation pot will not diminish as the retrospective margin paid out on Gold partner sales will transfer to the non-named account space for businesses with SME dealers.

Irrespective of this, they warned that prices will need to rise when selling to the largest resellers as they make very little upfront and had relied on back-end rebate.

Commercial negotiations between the largest resellers and distributors are currently taking place to cut deals when the rebates are overhauled.

Matthews said he was aware of those discussions but could not influence them in any way.

Channel sources say the changes were due to be rolled out next month but were postponed as the pan-European initiative had not been "nailed" in each of the countries in the region, particularly in the UK according to one contact. ®