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HP expands online sales effort

Hewlett-Packard will use its new Business Store site to sell business PCs as well as notebooks, printers, and more.

Hewlett-Packard will unveil the second leg of its online computer sales strategy tomorrow, announcing a new site called the HP Business Store for small businesses.

The site will be used to sell the Brio and Vectra business PC models as well as notebooks, servers, printers, and more beginning June 8. The online store follows close on the heels of the HP Shopping Village site, which HP debuted last week as a way to sell its home-oriented Pavilion models.

Compaq Computer adopted a similar small-business strategy last year when it began selling its Prosignia line of computers for small and medium-sized businesses over the Web. But analysts criticized Compaq's effort, saying it conflicted with the interests of the company's huge number of traditional, "brick-and-mortar" resellers. Compaq's profit was halved during the most recent quarter as a result of diminished PC shipments.

HP obviously is cognizant of the financial difficulties at Compaq and is trying is trying to avoid the competitor's troubles. "We've done our homework," said Kim Tchang, sales and marketing manager for small and medium business at HP. About 85 to 90 percent of HP systems still will be sold through local resellers, including most of the more profitable models. HP also will beef up its push to help resellers make the transition from selling just computers to selling services such as consulting or technical support that will keep the revenues flowing.

But HP also has another fierce competitor in mind: Dell Computer, the Texas company that sells directly to customers, sidestepping altogether the worries of alienating a reseller channel. Dell has surged into the top tier of PC companies, along with HP, Compaq, and IBM, and is vying hard for the small-business segment. The PC market these days is characterized by plunging prices and increasing consolidation as smaller players fall by the wayside.

Other programs to keep the HP resellers happy include another Web site featuring reasons resellers are valuable and an advice column from a reseller. In any case, the online store is targeted at "buy now" customers who aren't likely to buy very many computers--customers who aren't profitable for resellers, Tchang said.

The online store will have several elements HP believes will make it superior to competitors' offerings, Tchang said.

For one thing, the store will offer other HP products besides computers, including printers and scanners. It also will show a price that's automatically updated as the customer changes prices.

In addition, the system remembers orders before they're placed online, allowing customers to save a configuration while considering whether to purchase or pass the order to a telephone salesperson if the customer isn't comfortable placing the order on the Web, Tchang said.

HP also will feature selected systems as part of its effort to avoid overwhelming customers with choices.

The store will have an online configurator. Systems will be built by HP's contract manufacturers, a strategy HP has been using for years and to which it credits its competitively low inventory.

HP expects a relatively large fraction of the computer deals--perhaps as much as 40 percent--to be leasing arrangements. Tchang said leasing is popular with small businesses because it allows them to get several systems at once. "Leasing is one way to do that, instead of staging different product purchases because of cash flow constraints," she said.

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