Last week, Hewlett Packard has introduced its “SMB Exchange” program that aims to expand the company’s share in the $55 billion SMB market segment via a sales strike team. The initiative will provide small customers the choice of buying through reseller partners or direct from HP and also attract Dell and other competitors’ customers.

At present, Dell enjoys the supremacy in the $55 billion SMB market segment through its technology products and services, which certainly bugs the technology giant, HP. The new scheme will target non-HP customers with special promotional offers for the company’s products and services. Further, the company wants to compete with the newly formed entity after dell’s Perot acquisition, called Dell Services, aimed for SMBs. Therefore, the new strategy will design to beat Dell’s direct pricing and also sustain the customers for ‘whole life’.

Dell Services to focus SMEs market

After the acquisition of Perot Systems, Dell has been preparing to focus on the growing SMEs market with the new contestant into the IT services space called Dell Services. It will offer services on a more cost-effective “plug-n-play” approach against the traditional offerings to SMBs.

The new entity will aim on the SME segment as it will reach around $230-250 billion by 2020, according to NASSCOM Perspective 2020. Also, Indian SMEs are expected to spend $16.8 billion on technology, including hardware, software and bandwidth in next year. In the services, Dell will offer warranties and enhanced support, managed IT services, business process services, IT and business consulting.

Dell’s response towards HP-initiative

Dell has announced that it is holding the market with its services and product range, but the sector is free to choose the service provider. However, the company has not reverted on the HP’s new initiative and competitors’ practices. Ironically, HP’s new policy is similar to the Dell’s practices, in which it offers the choice to buy through partners or direct from HP.

Market Conditions

As per estimates, Dell is generating over $22 billion annually from SMBs in sales of PCs, printers, monitors, servers, storage and other IT products. Further, it is reported that through its price strategy and to lock HP resellers from penetrating accounts, Dell is hindering HP’s revenue and market share generating capability.

HP’s SMB Exchange

According to the company, the new scheme will benefit both customers as well as channel partners. Customers will now have the choice between sourcing direct and indirect from the company. The sales team will offer prospects the choice of buying products and services through partners.

Discussion

In the last two years, SMB Exchange is the recent step of HP to revitalize its approach towards SMB market. HP has become the world’s largest technology company through organic sales increases and acquisitions, and most of the growth is in the enterprise segment. Also, the research firms Gartner and IDC have stated that the new program from HP has potential to garner more SMB market share in future.

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