HP to reach out to smaller businesses

CEO Carly Fiorina will announce the strategy at a Sept. 18 event in Washington, D.C., according to sources familiar with the company's plans.

As part of the announcement, HP is likely to tout the approach of making technology simple enough to appeal to businesses that aren't big enough to have an IT staff, while making the gear professional enough to allow small businesses to compete against larger rivals. It is a strategy that Gateway and others have used in the past in trying to sell technology to smaller businesses.

HP is also likely to announce new products and services designed specifically for smaller businesses, sources said.

The move by HP follows other recent efforts to improve sales. In May, the company outlined an "adaptive enterprise" strategy for large businesses. Last month, HP launched nearly 160 new consumer products. The company is under pressure to improve sales in its PC and high-end computer businesses, both of which posted wider-than-expected losses last quarter.

In addition to the task of wooing customers to HP gear, the company faces somewhat of a turf battle with its own resellers when it comes to small business sales.

Prior to its merger with Compaq Computer last year, HP had targeted only its largest business customers for direct sales, relying on its resellers to sell many types of servers and storage to small and midsize businesses. Compaq, on the other hand, already had a direct sales effort for smaller businesses.

Since the merger, HP has continued to sell most of its gear toward such customers through resellers, while at the same time continuing and in some cases expanding the direct effort begun by Compaq. The result has been a difficult balance for the company.

Last year, for example, HP targeted small and midsize businesses through a specially tailored catalog. Although the catalog was geared toward boosting direct sales, HP noted that customers had the option of ordering gear either from HP or through a reseller. The company is likely to mention its partners prominently at the Sept. 18 event, noting the important role they play while it continues its own direct sales efforts.

In adopting some of Compaq's tactics, HP abandoned a strategy, known as the "hard deck" approach, in which only customers of a certain size were approached directly by HP for many projects such as storage and servers.

In recent weeks, HP has placed a new executive in charge of its small and midsize business effort--John Brennan, who was formerly vice president of corporate strategy and development. HP recently placed former Compaq server executive Mary McDowell in Brennan's old spot.