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October 14, 1998

HEWLETT-PACKARD TO SELL PCs DIRECT BY END OF MONTH

By CBR Staff Writer

In a response to user frustration with its indirect sales channel, Hewlett-Packard Co CEO Lew Platt said yesterday that his company would add hundreds of direct sales staff and begin selling products over the web by the end of the month. Speaking at the Gartner Group Symposium in Florida, Platt said he was concerned that many users were unable to place orders and, if they could, HP was increasingly unable to deal with them. I have heard this comment from customers who are frustrated in trying to deal with us and I have certainly heard it from industry analysts, Platt admitted, I think one of the reasons that we’re a little harder to deal with than some of the other companies is that we have a large part of our product going through the channel, two thirds of our revenue comes from the channel. Platt said because of that, up until now, HP hasn’t had a pure model, direct or channel, but some kind of hybrid model. And some of our customers have been caught in the hybrid, he said, But I have heard you and will do some changes. Platt said HP’s priority from here on in would be to put more feet on the street. He said HP was in the process of adding several hundred people right now, some of whom will be drawn in from the current management team, and putting them into a direct, customer facing position. Starting this month, he said a range of products, including PCs, will sell directly on the web, and be directly shipped to customers. Just a year ago we only sold certain products, PC for instance, through the channel and our direct sales force was disallowed from dealing in them, Platt said, They should have done an introduction to a channel partner and this was frustrating for customers. From today the direct sales force is incented to talk to customers about those products. Platt added that HP, who in the last couple of weeks has made significant cuts to its workforce, expects to grow at an average annual rate of around 15% for the next couple of years. He said the heyday of 20% or more annual growth was over. When you get to be a company our size, to achieve that kind of increase you’d have to grow by more than the size of a Cisco every year, and about a Sun.

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