Breaking News! HP To Acquire 3Com In $2.7 Billion Deal

Earlier this week, HP rolled out an extensive yet eclectic list of new products and services for small and midsize businesses. But while the announcements may have seemed like a random collection of new stuff, you could consider them just another salvo in the giant company's not-so-secret quest to dominate the SMB market.

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That's not exactly how company execs explained things in briefings for press and analysts at the company's Cupertino, California, offices, but the message still came through loud and clear. HP is going all out to own the SMB market. The effort takes a number of forms:

1. Leveraging product lines from across the company
2. Selling on relationships, not just individual transactions
3. Addressing key vertical markets
4. All while keeping its focus on creating best-of-breed products.

The reasons behind HP's efforts are obvious: smaller companies constitute a really big technology market -- and that market is still growing. Kathy Chou, vice president of HP worldwide small and midsize business strategy, put SMB tech spending at $214 billion this year, swelling to $230 billion by 2011. Some $55 billion of that 2009 figure is in the United States.

And HP isn't getting its fair share: "The SMB market has been a position of strength for our competition," acknowledged Stephen DeWitt, vice president and general manager of HP's Personal Systems Group (PSG).

Leveraging Breadth
HP offers the broadest technology portfolio of any company in the world, Chou claimed. But the company hasn't always done a good job of leveraging that market reach to deliver value for SMBs.

"We do everything from this to that," DeWitt said, and the company is now trying turn that breadth into a more effective "portfolio play."

For instance, the event saw first-time participation from HP's ProCurve Networking group, which has not traditionally been included in HP's SMB efforts. And ProCurve is adjusting its branding to more heavily feature the HP nameplate.

The newest ProCurve switches feature enhanced HP branding.

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Transactional. Relationships. Culture.
HP is also trying for both internal and external cultural change. DeWitt said that HP is trying to change its SMB operations from a "transactional model to a relationship model" that includes lifetime relationships with customers, not just individual sales. In what seemed like a tacit admission of past sins, DeWitt added, "We don't want to make dealing with us painful."

Ouch.

SMBs consume lots of technology over time, DeWitt said, and want to be acknowledged for that. "SMBs like to be treated like enterprises. They like to be listened to. They want to be account managed."

To do that, HP is "making an effort to acculturize ourselves to the needs of SMBs," DeWitt said. It's not enough to just say "Hey, here's a new router," DeWitt added. HP needs to "simplify the way technology is consumed."

(HP is also counting on its Green initiatives to deepen its relationships with SMBs. "It's a good checkbox," DeWitt said, "and it's the right thing to do.")