HP acts to hike up its storage prices

Hewlett Packard has forced another wave of price hikes on its channel after it used the 1976 Resales Prices Act for the second time to prevent its storage products being sold at a loss.

Distributors were summoned to a meeting with HP last week where they were warned that they would risk losing their contracts if they sell HP storage kit below cost.

The revised contracts, which came into effect on 12 May, forbid HP partners from giving discounts of more than 32 per cent on tape and 37 per cent on optical storage.

HP first used the 1976 act two months ago to prevent its market-leading printers being sold at a loss.(PC Dealer, March 26).

One source said: ?This is typical HP. If you don?t comply you risk withdrawal of marketing funds, non-supply or even loss of contract.?

Grant Morgan, product manager at Ideal Hardware, said: ?I completely agree with HP?s objectives. Dealers will undoubtedly feel a little disgruntled but I doubt it will affect their profitability.?

Discounts have been as high as 36 per cent on tape storage prior to the ruling, as distributors have sought to compete against one another in order to keep up with their contractual obligations on volume.

One distributor said: ?It has been very difficult to keep making money on [HP?s] storage kit. As long as everyone complies it will be OK.?

Adrian Lawson, UK marketing manager for information storage at HP, said: ?We bought all the wholesalers in last week to explain loss-leading to them. It has been well received.?