Veteran vendors are shaping up for a bitter fight to the DEATH
Where will partners place their bets? HP, Dell, Cisco or Lenovo?
Comment Distributors and resellers are witnessing some pretty turbulent times in the UK and Ireland which could reshape the industry for years to come.
HP has always been a leader but today it’s being attacked from all sides. A battle across the pond between the Silicon Valley stalwart and the likes of Dell, Cisco and Lenovo will have some pretty far-reaching consequences for UK’s supply chain going forward.
Our statistics comparing 2012 with 2013 show the overall market in various segments analysed is looking reasonably healthy. “Wireless” as a sector recorded 19 per cent year-on-year growth; printer sales were up four per cent; desktop PCs recorded 15 per cent growth; and software and services grew overall in the UK by six per cent.
HP channel sales posted modest growth of 3.8 per cent. The company is doing better in the networking space, where it’s number two behind Cisco thanks to 15 per cent growth over the period. It also recorded an expanding waistline in the “mobile” segment (six per cent). However, rivals Lenovo (50 per cent), Dell (12 per cent), Samsung (43 per cent) and Cisco (12 per cent) posted far bigger channel sales growth overall.
Dell is edging out HP by winning a lot of business with the larger resellers on racks and towers, Cisco is doing the same to HP on blades and, we suspect once the IBM x86 buy is completed, Lenovo will begin to exert pressure as well.
So what are some of the dynamics behind the changes? In HP’s case, it could be said that the company relied too much on legacy products and declining mature markets such as PCs and printers, whilst missing the boat on new trends such as tablets.
In HP’s server business, the rise of cloud technologies and the need for greener, low cost technologies have brought not only new disruptive entrants to the market, but also let some of its existing competitors in other segments pick up share. More generally, the firm is still paying for the tactical mis-step it made in August 2011 in trying to pivot away from being a hardware reliant company to one geared towards software and services.
Other UK channel players have of late really stepped up their game and are proving more disruptive, agile and capable of winning channel business than before. Cisco, for example, had an ill-advised dalliance with the consumer world via its Linksys router products and the Flip mini camcorder but realised its error, sold or killed those products and refocused on its core commercial business. The result? Cisco grew revenue from switches in the UK channel 8.9 per cent from 2012-2013.
Dell has also been successful, this time in moving in earnest from a consumer-centric brand to a firm that is trying to make a living by selling to corporate customers. It is ramping reseller accreditation programmes so that more partners can sell high end, complex solutions; it is in the process of renaming the various families of storage products brought in with numerous acquisitions; and thanks to a new storage reward programme is creating more opportunities to sell attached storage kit on the back of increased server sales.
From a marketing perspective, Dell has shifted away from branding products as low, mid or high-end and focuses now more earnestly on customer requirements. This should play well with the UK Channel.
Then there’s Lenovo, which is gearing up its channel business for the acquisition of IBM's x86 unit. The word on the street is that resellers were happy with that deal and are growing strongly with Lenovo – to the point where they’d support a move by the Chinese giant into other segments.
HP knows it needs the channel to maintain and grow its business. CEO Meg Whitman has been saying so almost from the first day she took office, and the company has been busy for a while now revamping its channel programmes to gain a competitive edge.
Competition between the major brands is going to intensify and can only be a good thing for channel partners, leading to increased opportunities. ®