HP may reduce direct sales

Hewlett Packard is considering scaling down its direct sales business in a bid to improve profitability, according to a source close to the company.

Hewlett Packard (HP) is considering scaling down its direct sales business in a bid to improve profitability, according to a source close to the company.

The move comes at a time when the firm is promising increased support to its channel partners, but follows the resignation of David Cullinane, chief director for partner business.

HP has also delayed employee pay rises in an effort to raise $140m following poor financial results in its last quarter.

Company sources have revealed that signs have been posted throughout the company's US headquarters reminding employees that they could help the company save up to $50,000 by turning off their computers when they left for the Christmas holiday.

Kevin Kearney, HP's channel marketing manager for western Europe, admitted that direct sales had been poor, but said he was unaware of a move to cut them altogether. "I would hope that it would be an added challenge to improve them," he said.

Chris Jones, senior analyst at Canalys.com, said HP should admit that its direct business is a disaster and concentrate on its strengths. "Most indirect companies' vendors have experimented with direct sales because of the success of the Dell model, but they have all failed. In Europe, it has been even worse. It frustrates channel partners because conflict cannot be avoided," he explained.

"HP should be willing to accept the mistake it has made, but after investing millions in global advertising there is too much pride to swallow in a direct cut," he added.

First published in Computer Reseller News