HP Tweaks Smart Office SMB Initiative

by Timothy Prickett Morgan

Hewlett-Packard yesterday tweaked its Smart Office bundling of products and services aimed at small- and mid-sized businesses. In September 2003, HP announced the Smart Office initiative to attack the 79-million strong market for SMBs worldwide in conjunctions with its partners. Today, HP announced a whole bunch of different tweaks to its entry products to make them more appealing to SMBs.

John Brennan, senior vice president of the cross-unit and cross-platform SMB segment at HP, clarified at the company's annual conference for partners in Los Angeles, where over 1,000 partners showed up, what it is really trying to accomplish with Smart Office. HP reckons that there are 21 million SMBs in the Americas and 79 million globally, and that the aggregate budget of these SMB companies spent $531 billion in 2003 and their spending will grow at 12 percent compounded annually to $744 billion by 2007. The medium part of SMB market is comprised of 500,000 to 600,000 companies who have between 100 and 1,000 employees. As a group, when adjusted for headcount, SMBs spend more money than larger enterprises on IT and they generally do not have sophisticated chief information officers. What HP wants is to lower the cost of IT at SMBs and to take on, with its partners, the role of the CIO. This is why HP last year said it would plow $750 million into SMB initiatives as part of the Smart Office program. HP wants to energize the 210,000 partners it has and figure out some way to compete in the SMB space that is more effective--in terms of winning business and profits--than just trying to sell desktops, laptops, servers, and printers to SMBs.

That said, inexpensive, easy-to-use hardware is the first step in winning a deal at SMBs, and that is why HP will be pushing its new nx5000 notebooks, dx2000 micro tower PCs, ProLiant ML110 servers, and ProCurve 700wl switches into SMB sites. HP also announced that it will also create a version of its StorageWorks Modular Smart Array disk arrays with inexpensive Serial ATA disk drives. (HP has not said specifically when SATA drives, which are a lot less expensive than the SCSI disks used in its arrays, will be available.) HP is also rolling out Fibre Channel SAN switches from Brocade Communications and a new DAT tape drive with an autoloader and one-button backup/restore software. The all-in-one OfficeJet and LaserJet products, which include capabilities to scan, print, fax, and e-mail documents also play a part.

But HP is now going to start focusing on solutions that ride on this hardware. Specifically, SAP and HP have partnered to move SAP's Business One and mySAP into the SMB base on HP's servers. HP and SAP have been partnering to deliver trimmed down mySAP throughout Europe for two years, and now the program is being extended to worldwide.

Additionally, HP and Intuit, the provider of the QuickBooks accounting software, have announced a server-implementation of QuickBooks that will come bundled on ProLiant machines. Intuit says that the customers at the high-end of its installed base--companies with 25 to 250 employees--have needs that cannot be addressed by running QuickBooks on a PC. The server implementation will have the ability to support more concurrent users and will include more rigorous security and data protection. The pricing and launch date of this latter bundle was not yet announced, and Intuit is not signing an exclusive deal with HP for the server version of QuickBooks, which is called QuickBooks Enterprise Solutions. HP is not getting it first, since the product has been available for 18 months. But it is the first server vendor that is going to be able to prebundle it on its servers. You can bet that IBM and Dell Inc will be trying to get a similar deal.

In addition to the new hardware and software, HP is offering an online help desk called the IT Professional Help Desk (which supplies level two and level three support for customers), a service for training SMB customers to use new technology called Learning Curve, and an interesting service called ProLiant System Minder, which is a remote system administration service that HP offers to customers who do not have an administrator on site. HP also rolled out a program to protect damaged, destroyed, or stolen IT equipment called Advantage Protection Plus and a 0% lease rate extension leasing program called Smart Finance. Smart Finance was announced back in September and has been extended into 2004.

None of these announcements are earth shattering, of course, but together the represent an approach that HP can take to market with partners to get into SMB accounts. This is similar to the approach taken by rival IBM to get into SMB accounts. Neither company can affordably attack the SMB market without partners, who have a closer relationship with SMB shops than the vendors.