HP looks to SME Net services plan

Hewlett-Packard is piloting a scheme that could cut out resellers by selling Internet services direct to small and medium-sized...

Hewlett-Packard is piloting a scheme that could cut out resellers by selling Internet services direct to small and medium-sized businesses (SMEs).

The trial, which is taking place in the US, offers Internet consulting services to SMEs via HP's online consulting business. Services are likely to include off-the-shelf Web hosting, managed e-mail and managed security services, such as those offered by Dell and IBM. HP may also offer applications and storage-on-demand.

John Bologna, worldwide general manager for online consulting at HP, was reluctant to talk about the online initiative or confirm details of the products likely to be offered. However, he did reveal that the new service would not be sold via the channel.

Dip Tanner, director with Talk Data, a UK reseller of HP and services, was not unduly worried by the prospect of the new service eroding its margins. "Unless HP is offering a total solution supporting SMEs, it will not have an impact on us," he said.

A depressed market is forcing HP and rival manufacturers to shift their focus from hardware and software to services. According to research from Gartner, the market for PC shipments in western Europe recorded its first decline with a 4% reduction over the last year. In the UK, HP saw its PC shipments plunge by 39.2%, leading to a 2.7% reduction in market share.

"In the large enterprise space, we are entering the point of saturation with services," said Alan MacNeela, analyst at Gartner's IT Services and Sourcing Research Practice. "We are not there yet but we are coming to a point of competitive saturation.

"In the small to medium-sized market space, this is where the battle lines are being drawn, where all the big services companies have not set up services."

However, some analysts are sceptical as to whether HP can succeed in selling services direct, since SMEs mainly prefer to deal with a local reseller. Steve Brazier, a director of the analyst firm Canalys, said: "SMEs want to buy services from small companies. If you are a small business, you don't want to go to a multi-billion-dollar industry for services because they won't be interested in you.

"Small businesses want to work with small businesses. Dedication and attention to detail is critical in services. You won't get this with a large business."

Clive Longbotton, service director of the analyst group Quo Cira, said: "I don't see HP making a success of this. SMEs want a local person. Lots of vendors have tried selling direct to get a critical mass of the target market."

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