VARs Question New HP CEO's Channel Credibility

HP's top partners are questioning the channel street credibility of new HP CEO Leo Apotheker.

HP Thursday named Apotheker, former CEO of German ERP software giant SAP, as CEO, president and a member of HP's board of directors.

Several top HP partners said they were disappointed that Palo Alto, Calif.-based HP chose to hire an outsider with little channel experience rather than channel-savvy insiders such as HP Personal Systems Group Executive Vice President Todd Bradley or HP Enterprise Servers Storage and Networking Executive Vice President David Donatelli.

What's more, they said, Apotheker has big channel shoes to fill given former HP CEO Mark Hurd's tight relationship with the vendor's partners. They said Hurd's willingness to get in the sales trenches to help partners close deals with hundreds of CIO Roundtables that were held in conjunction with solution providers was a big differentiator. They question whether Apotheker will have that same channel sales drive.

One of HP's top partners, who did not want to be identified, said the news that HP had chosen Apotheker was like a punch to the gut.

Next: A Punch In The Gut?

"The bottom line is I am disappointed," he said. "I wanted Todd Bradley. He has been with the company for many years and knows the business. Why did [the board] have to go outside? I don't know what they are thinking.

"I question the Board's decision to get rid of Hurd in the first place. I have been selling HP for 20 years, and he was the best CEO -- bar none -- in supporting the channel. With Mark Hurd, we had a clear channel vision. I don't know Apotheker and I don't know what direction HP is going in. The question is: does he understand the channel and is he channel friendly?"

Another large HP solution provider, who asked not to be named, called Apotheker a poor choice to replace Hurd.

"What the hell are they thinking?" the solution provider said, referring to HP's board. "Candidly, I think it's a desperation move based on not having leadership in place and wanting to play to the stock holders. I mean, he's just not the right man for the job."

Bob Venero, CEO of Future Tech Enterprise, a Holbrook, N.Y.-based solution provider, half-jokingly wondered if Apotheker's hire was a knee-jerk response to Hurd joining Oracle or whether the HP board really believes he's the best man to help lead the company going forward.

Next: Filling Hurd's Shoes

"He will have a difficult time filling Mark's shoes," Venero said. "It'll be interesting to see. He's an intelligent guy. I don't believe he'll come in and turn the company upside down and say 'our focus is direct.'"

Gary R. Ellis, president of BPI Information Systems, a Brecksville, Ohio-based solution provider, said he hopes Apotheker will increase the channel focus put in place by Hurd, but that given SAP's big direct business, he isn't sure that will be the case.

"How well he blends with the channel is going to be something we're all going to be concerned about," Ellis said. "All of us would have loved to see a channel guy get the job. That would have been the best situation, a channel guy that was already within HP on the sales side. Or even someone with channel experience in a different industry. But coming from a direct company like SAP, there's got to be some concern because of the uncertainty of it all."

For many of HP's solution providers, Apotheker is a big unknown.

Rick Chernick, president of Camera Corner/Connecting Point, a Green Bay, Wis.-based solution provider, said he hopes Apotheker is a great pick for HP.

Next: Wondering Why HP Didn't Choose Bradley

"But today’s announcement says nothing about his channel experience or his feeling towards resellers," Chernick said. "That’s kind of my concern. I want to know his reseller take on things. I suppose it will come out in the next few days. He comes from a big, successful company. He has big shoes to fill. Let’s hope he’s the right guy."

Chernick said he would have preferred to see someone who is known as a channel-friendly executive take the top position at HP.

"I’m sure he’s a great guy and I’m sure he’s got some great skills, but I don’t know him," he said. "I want to say I’m not disappointed, but I had my pick. I was leaning towards Mr. Bradley. He’s the guy that seemed to have the best feel about the channel."

Chernick was not the only solution provider hoping that Bradley would get the nod.

"We were hoping it would be Todd Bradley, who's very channel knowledgeable," said Romi Randhawa, CEO of HPM Networks, a Fremont, Calif.-based solution provider. "I hope they do whatever it takes to keep Mr. Bradley in the organization, because he's embracing the SMB-led channel growth."

Next: Giving Apotheker A Chance To Prove Himself

Despite the concerns, many solution providers are willing to give Apotheker a chance to prove himself.

Mont Phelps, CEO of Waltham, Mass.-based NWN, one of HP's top partners, said he was not worried about Apotheker's lack of channel experience.

"That doesn't concern me," Phelps said. "I don't know him, but I am sure he is a top-notch business person. As a channel, first off, we have to earn our stripes everyday. If we are doing our job and bringing value to customers then we are going to get tremendous support. The whole channel organization is still in place."

Phelps said he sees Apotheker's limited channel experience as a "blank page rather than a black mark."

"The challenge I see is, how does he bring the strength of all of HP together and leverage it to bring great technology to the customer," he said. "It is our job to help him do that. Now that this is done we can get out of this uncertain period and focus on driving the business."

Next: Apotheker Brings New Eyes And Ears To HP

The appointment of Apotheker gives HP a fresh set of eyes and ears, said John Convery, executive vice president of vendor relations and marketing at Denali Advanced Integration, a Redmond, Wash.-based HP partner.

"And that's always a powerful thing," Convery said.

Convery said it is important to remember that even without Hurd, HP has been working smoothly. For instance, he said, Denali on Thursday night is celebrating the closing of a $3.5 million HP deal with a customer by going bowling. "The lack of Hurd has not impacted sales at all," he said.

Ted Warner, CEO of Connecting Point of Greeley, a Greeley, Colo.-based solution provider, said that, while he has not met Apotheker, it is obvious that he has the skill to drive revenue growth and bring strong ties to the software world.

"Integration of software applications and middleware to the HP hardware platform will be extremely important in the coming period of time," Warner said. "It remains to be seen what Apotheker’s stance toward the channel will be. We can only hope that he has the same passion for it as his predecessor at HP had."

Next: Moving Beyond The Shock

The choice of Apotheker was somewhat shocking to HPM's Randhawa.

"I don't know the guy, and I've been in the industry 20 years, but that could be ignorance on my part," Randhawa said. "I hope he embraces the channel. Channel is such a key part of HP's strategy. I'm not sure how big of a channel strategy he had at SAP."

Randhawa said Apotheker needs to establish confidence among HP's solution providers.

"He should come out embracing channel," he said. "Let people know who he is and what his strategy is. Lay down the plan for the channel for the next three to five years. The biggest HP growth is being driven by SMB right now, and that's all channel growth. I'm hoping he goes out and embraces that."

Next: Other Concerns

Apotheker's channel credibility is not the only reason solution providers are warily eyeing his appointment as HP's CEO.

Glenn Conley, president and CEO of Metropark Communications, a St. Louis-based solution provider, said Apotheker would be a "very good fit for HP as a global company," but worried that a global emphasis could distract HP from priorities on the home front.

"We have some fantastic networking and VoIP products which need some amplified attention from the execs at HP so that the merging 3Com products don't get lost in the recent buyout frenzy," Conley said. "Fingers crossed."

Future Tech's Venero said that HP is a very different animal than SAP.

"There's no question that Leo understands the majority of the revenue and profit associated with HP comes from channel partners," he said. "[Going more direct] would not be a move he would make at all. That said, HP already has picked out its top global 800 accounts that they want to work with directly. That's going to happen and continue to happen. Nobody is 100 percent channel-exclusive at this point."

Next: Apotheker Can Do It

Venero said he has not met Apotheker one-on-one, but he believes it will be important for HP's new CEO to reach out to its top partners and be as accessible as Hurd was and Dell Chairman and CEO Michael Dell is now.

"I look to absolutely get that," he said. "One of the first things I'd be doing to get on a path to quick success is to engage immediately with channel partners. Let them know he's the new face of HP and he's there to support us and help us grow with him. That's one of the things that Mark and Michael do. They are accessible."

Several HP partners voiced confidence in HP's board and deep channel team led by Vice President Stephen DiFranco and backed up by others like Frank Rauch, vice president, Channel Sales, HP Enterprise Servers, Storage and Networking; Kevin Hooper, Vice President, Emerging Growth Accounts, Enterprise Business Sales and Meaghan Kelley, vice president of the SMB Strategy Group.

"I've got to tell you, they are still the best company to do business with," Chernick said, "I am proud to be associated with them. I work hard for them and they appreciate that."

"All the people that built the channel and are dealing with the channel are still here," said one HP insider."Why would anyone want to screw that up?"

Steven Burke, Scott Campbell, Chad Berndtson and Jack McCarthy contributed to this story.