HP storms ahead with small-business plan

Unfortunately, a real storm--Hurricane Isabel--is getting in the way. The meteorological threat has prompted the shutdown of the federal government Thursday in Washington, D.C., where the HP launch was scheduled to take place. Not ones to let Mother Nature thwart their efforts, however, HP's top executives decided late Wednesday to go ahead with a scaled-back launch for the company's "smart office" initiative.

HP has been seeking to use a Washington, D.C., conference celebrating the 50th anniversary of the Small Business Administration as the backdrop for a major push to get more dollars from businesses with fewer than 1,000 employees. HP CEO Carly Fiorina, who was planning to appear with President Bush at an SBA breakfast on Thursday, instead plans to attend that event and HP's Washington press conference via satellite.

The push is of vital importance to HP, which has seen its recent sales and earnings fall short of expectations amid weaker results from its high-end computing and PC units. Small and midsize businesses already account for $21 billion of HP's annual revenue, though much of that is sold through resellers.

With its new efforts, HP is trying to meld its network of local dealers with its own service capabilities. One such offering calls for HP and its resellers to share the support duties for gear sold through resellers. Although any plan that calls for HP to encroach on its resellers' territory is risky, analysts say HP is trying to make sure it treads lightly.

"It does seem from the discussions we have that they are being very attentive to that," IDC analyst Ray Boggs said.

Much of HP's pitch centers on new services that aim to give companies better support for their tech gear. With one of the new services, HP is paid a monthly fee to provide technical support to companies for all their high-tech gear, both HP and non-HP.

Another program, being tested in partnership with Alcatel in France, allows a small business to pay for their PCs, telephone gear and telecommunications service for one monthly fee.

Boggs said the integrated approach has some appeal for smaller companies. At the same time, he said it is unclear whether companies are willing to pay more than a modest premium for such services. "That's a tougher call," he said. "If it's going to cost me a 20 percent premium, I'll go a la carte."

HP is also launching what it calls the Integrated Work Center and Desktop Access Center--two devices that combine a PC, flat-panel monitor and telephony gear.

Finally, HP is trying to offer more information to its smaller customers, through things such as its online support center and a European vendor forum. For the latter, HP is teaming with Microsoft, Symantec, Vodaphone, SAP and Intel to offer joint products and services for the small and medium business market.

The small-business pitch comes after two other targeted efforts by HP. The first was HP's "adaptive enterprise" push aimed at large businesses. The other was last month's pitch to consumers.

In all, HP says it is pouring $750 million into coming up with new products and services for small and midsize business. HP--and other companies such as Gateway and Dell--sees the small and midsize business market as an attractive area given current weak spending by large corporations, Boggs said.

"If you look at growth, small and medium (businesses) have continued to grow even as larger enterprises have scaled back," Boggs said.

At the same time, Boggs said, such businesses have historically proved tough to serve, given that their needs are high and the amount each business spends is relatively modest.

"Because of what they are paying, you can't have a sales engineer living with these guys for three months," Boggs said, noting that is something one might see in a large enterprise deal. "You really have to deliver remarkably high levels of sophistication. You have to make sure the tech is relatively bullet-proof."