HP Moves to Improve, Protect Its Support Business

Hewlett-Packard announced Thursday that it will roll out an improved services support program as well as a policy change that could impede the growth of third-party support providers.

The new support services, which will be deployed over the next 12 to 18 months, are to use “advanced automation and mobility technology to resolve client problems quickly, proactively and with minimal disruption.”

Other aspects include a new support portal and around-the-clock remote monitoring that “automates diagnostics and notifications for HP and multivendor products.”

The improvements will lead to lower cost of ownership and less downtime for customers, HP said.

In addition, HP will “limit access to the company’s intellectual property over the next 12 to 18 months to warranty and support agreement customers,” according to a statement. The move will allow HP and its authorized partners to help make the improvements “while aligning HP’s intellectual property protection practices with industry norms.”

During that same time frame, HP “will be comprehensively reviewing all of [its] current IP practices in order to ensure that warranty and support agreement customers of HP and [its] Authorized Support Partners receive a differentiated, entitled experience, realizing the full benefits of HP’s intellectual property investments,” a spokeswoman said in a statement.

Overall, “HP is locking down its existing support practices,” said Ray Wang, CEO and principal analyst with Constellation Research, via e-mail. “In the past, they were much more free with the sharing of support IP.”

For now, HP’s announcement primarily affects hardware support, as only a small fraction of its business comes from software. However, newly appointed CEO Léo Apotheker has expressed a desire to grow the software business substantially.

HP and other hardware vendors have been facing a growing threat from third-party maintainers in the past couple of years, said IDC analyst Matt Healey.

Therefore, the announcement’s roots likely predate the arrival of Apotheker, who faced a backlash from customers over a support pricing increase during his tenure as CEO of SAP.

The global economic crisis and subsequent job losses in the past couple of years helped boost the market for third-party maintainers, as many qualified technicians ended up out of work, Healey said. “So what do they do? Put their house in foreclosure, or work for a third-party or put out a shingle?”

Third party maintainers have some advantages over HP in the form of lower overhead and an ample supply of used equipment, he added. “They don’t have to build the same parts depots HP does.”

Now, “HP is saying if you want someone to just swap out parts, that’s OK … But if you want access to all the things we think makes HP better than a third party, you have to pay HP,” Healey said.

HP’s move could rankle groups like the Service Industry Association, which filed an appeal with the U.S. Department of Justice last month, claiming that Oracle’s hardware support policies are anticompetitive.

The SIA expected HP’s announcement, the organization’s executive director Claudia Betzner said via e-mail. “This is just another attempt to limit competition on an already existing market by HP.”

The SIA has created a bill of rights that among other things, calls for support for “transferable special purpose software licenses; “open competition for hardware service (break-fix)”; “reasonable access to microcode and firmware”; and “secondary market and original parts.”

Thursday’s announcement by HP also comes in the wake of the landmark US$1.3 billion award granted to Oracle last week in its corporate-theft lawsuit against SAP. Oracle sued SAP in 2007, claiming its now-shuttered TomorrowNow subsidiary had illegally downloaded support materials and software in order to provide third-party support for Oracle customers.

On balance, HP is making both a reactive and proactive move, said Wang of Constellation Research. “It’s defensive because the Oracle suit shows them how they will need to protect themselves from potential third-party support and legal liability. Proactively, this will help them drive long-term support and services revenues, which often make up the most profitable parts of the business.”

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris’s e-mail address is Chris_Kanaracus@idg.com