Use HP’s woes as bargaining chip, Ovum advises

The continued uncertainty about Hewlett-Packard’s leadership and strategy should be used by customers to negotiate better prices and contract terms, IT analyst company Ovum has advised.

Last month’s strategic overhaul and yesterday’s report that the board of directors is considering replacing CEO Leo Apotheker after less than a year mean that CIOs should assign a "risk premium" to their dealings with HP, the company says.

"It’s certainly an opportunity for customers to negotiate discounts," Ovum analyst Tim Jennings told Information Age this morning.  

"More importantly, customers need to be looking to insert break clauses into their contracts with HP, reserving the right to exit contracts on certain conditions," he said. This is especially true of the HP’s PC business, Jennings added, which it has indicated it may sell or spin off in the near future.

"Also, customers should refuse clauses that penalise them for contract cancellation," he added.

Furthermore, if a company is negotiating new business with HP, Jennings said, it should use that as a lever to renegotiate existing contracts.

Jennings believes that uncertainty about the HP’s future will make enterprise organisations think twice about doing business with the company. "This will influence any company that is not strongly wedded to HP for sure, and it will cause disquiet even among clients that are heavily invested in them," he said.

And while the company’s share price has risen since the news that Apotheker may be replaced, Jennings believes it will be of little reassurance to enterprise clients. "Its quite suprising to see the stock price to go up," he said. "Even if the mood is that last month’s announcements were a big mistake, I can’t see that reversing them will make customers any more confident."

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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