HP Channel Partner Programs--Channels of Distinction ************ VAC-A01.GAL ************ ..picturea:\vac\VAC-A01.GAL,65535,49151,1,37,13, This customer slide pitch is to be used for recruiting new HP Channel Partners or presenting new VAC programs to current Channel Partners. The slides are geared for Channel Partners within the Americas and not worldwide. The presentation is directed at HP Channel Partners whose solutions will run on HP Computer Systems Organization's (CSO) products. The target audience is ISVs, SIs, VARs, OEMs, distributors, DAR, CWRs, and master VARs. There are over 80 slides within the presentation. The pitch has been designed modularly so you can pick and choose appropriate slides and customize the presentation. The slides are formatted into sections A-I (e.g., VAC-A01.GAL) that consist of overview slides followed by detail slides. There are several anchor slides so that you may insert HP's product slides and IMpact program slides. An Appendix Section houses HP-confidential slides that can assist you in the presentation but are not to be given to Channel Partners. The slide set does not include CPO's strategy or products. .PA HP's Program for HP Channel Partners ************ VAC-A02.GAL ************ ..pictureA:\VAC\VAC-A02.GAL,65535,49151,1,37,13, The presentation discusses six main topics: o The Commitment Section (Section C, slides VAC-C01 - 13.GAL) contains quotes from top management, results of HP's rating from VARBUSINESS magazine, and percentages of HP business leveraged through indirect channels. o The Infrastructure Section (Section D, slides VAC-D01 - 17.GAL) describes the field sales organization, VAC Marketing Center, and sponsoring entities that support channels. It also outlines each marketing sponsor (Americas Industry Marketing, GSY, CSY, WSG) target markets, and applications areas. o The Flexible Relationship Section (Section E, slides VAC-E01 - 09.GAL) defines leveraging, reselling, and two-tier reselling channel relationships. o The Financial Incentives Section (Section F, slides VAC-F01 - 21.GAL) covers the economic benefits for each Channel Partner who teams with HP. o The Marketing Programs Section (Section G, slides VAC-G01 - 15.GAL) lists various marketing programs that communicate, develop, and promote HP Channel Partners. o The Product Value Section (Section H, slides VAC-H01 - 03.GAL) describes CSO products available to Channel Partners and HP's strengths (company, products, industry). Sections B and I are the Introductory and Summary Sections, respectively. The Introduction Section gives a brief summary of HP's programs, industry terminology comparisons, and HP's Channel Partner definitions. The Summary Section recaps this slide (VAC-A02.GAL) and bullets the main presentation points. Under the Appendix Section there are two HP confidential slides: HP Sales Rep Compensation Program and Financial Highlights Recap for leveraging and reselling Channel Partners. The two slides should not be copied and given to Channel Partners. Use them to discuss how HP SRs are given incentives to work with Channel Partners or as your reference tool to recap HP's Channel Partner compensation program. .PA Introduction ************ VAC-B01.GAL ************ ..pictureA:\VAC\VAC-B01.GAL,65535,49151,1,37,13, Introduction ------------ There are seven slides in this section that briefly explain what Channel Partners expect from an indirect channel program, Channel Partner terminology used by major hardware vendors, HP's Channel Partner definitions, and what Channel Partners receive when they team with HP. .PA A Program for Success ************ VAC-B02.GAL ************ ..pictureA:\VAC\VAC-B02.GAL,65535,49151,1,37,13, HP's channel programs meet the needs of Channel Partners, and--in comparison to DEC, IBM, and Sun--HP is the easiest company to do business with. .PA Channels Terminology Comparison ************ VAC-B03.GAL ************ ..pictureA:\VAC\VAC-B03.GAL,65535,49151,1,37,13, To help the new Channel Partner with HP's terminology, this slide has been developed to show corresponding terminology within DEC, IBM, and Sun. The information is in two parts and continues on the next slide. .PA Channels Terminology Comparisons (cont.) ************ VAC-B04.GAL ************ ..pictureA:\VAC\VAC-B04.GAL,65535,49151,1,37,13, .PA HP Channel Partner Definitions ************ VAC-B05.GAL ************ ..pictureA:\VAC\VAC-B05.GAL,65535,49151,1,37,13, HP Channel Partner Definitions (cont.) ************ VAC-B06.GAL ************ ..pictureA:\VAC\VAC-B06.GAL,65535,49151,1,37,13, These slides list definitions of HP Channel Partners. More detailed descriptions will follow under Sections E and F. .PA What You Get as an HP Channel Partner ************ VAC-B07.GAL ************ ..pictureA:\VAC\VAC-B07.GAL,65535,49151,1,37,13, By teaming with HP, the Channel Partner has the opportunity to work with the number one company (products, customer service, and standards- based computing), to select from a broad range of products, and have access to a variety of indirect channels programs. With HP's strengths and the Channel Partner's vertical market expertise, HP has the greatest opportunity to provide end-user customers with the best solutions in the market. .PA HP's Commitment to Channel Partners ************ VAC-C01.GAL ************ ..pictureA:\VAC\VAC-C01.GAL,65535,49151,1,37,13, Commitment ---------- HP's success in indirect channels is based on our ability to partner with third-party vendors that have expertise in various vertical markets. This section provides quotes from Franz Nawratil and Lew Platt who each express HP's need to extend beyond our single organization to provide customers with total solutions. Excerpts from VARBUSINESS magazine show HP's #1 rating for the past five years over our competitors, the survey categories in which HP received first place, and a quote from the Annual Report Card Review. The pie charts are designed to show HP CSO's historical success with the indirect channel and its forecast for continual success with a projected growth of 22 percent CAGR in the next five years. .PA HP Business Positioning ************ VAC-C02.GAL ************ ..pictureA:\VAC\VAC-C02.GAL,65535,49151,1,37,13, Franz rallies behind diverse channels because they allow HP products to be delivered to all types of businesses, from the very large to the very small. This quote was extracted from his October 1991 speech entitled "Changes, Channels & Churning on the Way to the Information Age." .PA HP Business Positioning (cont.) ************ VAC-C03.GAL ************ ..pictureA:\VAC\VAC-C03.GAL,65535,49151,1,37,13, This Lew Platt quote was taken from the July 1992 UniForum Monthly magazine. The title of the article is "From Measurement to Computing." In the interview Lew was asked, "What results do you expect from the workstation-reseller program you are starting?" The quote above is his response. This quote indicates HP's current indirect sales volume and its anticipated growth over time. .PA Indirect Channels Strategic Focus ************ VAC-C04.GAL ************ ..pictureA:\VAC\VAC-C04.GAL,65535,49151,1,37,13, VMC's vision is to own the greatest mind and market share of our Channel Partners; therefore, our mission is to develop and deliver the best channel programs that are competitive and profitable for HP and our Channel Partners. .PA HP Computer Systems Organization's Channels Strategy ************ VAC-C05.GAL ************ ..pictureA:\VAC\VAC-C05.GAL,65535,49151,1,37,13, o HP's use of indirect channels allows our products to be sold to individual users, small or large businesses, and niche markets. o Leveraging Channel Partners include independent software vendors (ISVs) and systems integrators (SIs) that jointly sell their solutions with HP's direct sales reps. Resellers include SIs, value-added resellers (VARs), and original equipment manufacturers (OEMs) that sell to end-user customers. o Two-tier Channel Partners include distributors, franchisors, and master VARs that buy products from HP for resale to second-tier resellers (distributor-authorized resellers [DARs] and franchisees) that sell to end-user customers. Sometimes OEMs buy their HP equipment from two-tier Channel Partners. o Within a two-tier structure the first tier handles pricing, equipment availability, integration capability, training, support, tools, marketing, financing/credit, and the recruiting of second-tier resellers. Second-tier resellers are responsible for delivery, end- user customer satisfaction, and added value. (Note: This slide does not include CPO strategy.) .PA HP's Indirect Channels Structure ************ VAC-C06.GAL ************ ..pictureA:\VAC\VAC-C06.GAL,65535,49151,1,37,13, HP's commitment to Channel Partners is demonstrated through the various groups that interface with them. The Channel Partner sales account manager (field sales rep) is responsible for recruiting and promoting, VAC marketing develops and implements various channel programs, and the sponsoring entity provides industry marketing expertise. Indirect channels are a cost-effective method for HP to have the broadest market reach, which gives individual users or large businesses the convenience of buying standard products from an array of sources. .PA HP's Sales Force Deployment ************ VAC-C07.GAL ************ ..pictureA:\VAC\VAC-C07.GAL,65535,49151,1,37,13, This slide shows how HP deploys its sales force and how HP depends on its Channel Partners' expertise and added value to penetrate customer accounts. o Within the field:      The Industry/Account Management team (red) sells into named accounts in selected strategic industries. HP EUSRs team with HP Channel Partners to leverage total solutions (hardware, software, service/support) into end-user customer accounts.      The Territory Management team (blue) sells into accounts (non- named accounts) within a geography. They also team with HP Channel Partners to leverage total solutions into end-user accounts.      The Channel Partner Sales Account Manager (green) manages HP Channel Partners as an assigned rep or as a telesales rep. o ISV, SI, and VAR sales reps team with HP EUSRs to target selected strategic accounts. o HP depends on ISVs, SIs, and VARs to provide vertical market expertise to the sales process. o SIs supply custom solutions and project management services. o OEMs sell independently of HP EUSR. The OEM's end product reflects the OEM's identity rather than HP's. OEMs determine their target accounts/markets which may parallel HP's geographic and named accounts. o HP EUSRs pass leads to DARs, CWRs, ISVs, VARs, and SIs. o DARs and CWRs may sell into major accounts and geographic accounts. .PA HP's Account & Channel Strategy ************ VAC-C08.GAL ************ ..pictureA:\VAC\VAC-C08.GAL,65535,49151,1,37,13, This slide is an overall graphic of HP's account and channel strategy. o Account management of specific named accounts in strategic industries is handled by HP industry/account SRs who team with Channel Partners to leverage total solutions (hardware, software, service/support) into named, end-user customer accounts. o Channel Partners are managed by Channel Partner sales reps who provide direct support or telephone support from HP's Telesales Center. The management criteria is based on sales leveraged by the Channel Partner. o All Channel Partners are associated with HP through direct contractual agreements or, in the case of DARs, through certification. .PA HP's Success Depends on Yours ************ VAC-C09.GAL ************ ..pictureA:\VAC\VAC-C09.GAL,65535,49151,1,37,13, This pie chart expresses the importance of indirect channels to the overall success of HP's business. The chart includes CSO business sold through indirect channels worldwide. o "Direct" includes HP EUSR sales. If CPO products were included, Channel Partners would account for 59 percent of HP's computer sales. HP's commitment is paying off! .PA HP's Success Depends on Yours (cont.) ************ VAC-C10.GAL ************ ..pictureA:\VAC\VAC-C10.GAL,65535,49151,1,37,13, Indirect channels will continue to increase HP's revenue share. By 1996, indirect channels are expected to grow by 22 percent for a total of 60 percent. The 60 percent includes a 45-percent growth for resellers and 15-percent growth for leveragers (ISVs and non-reselling SIs). This chart is CSO business only and includes worldwide sales. (Note: CSO's worldwide revenue for 1991 was $3.4 billion and is projected to double to $6.4 billion in 1996. In 1991, 51 percent of the $3.4 billion was generated by HP's direct sales, 12 percent by leveragers, and 37 percent by reseller channels.) .PA HP Rated #1 of Major Computer Vendors ************ VAC-C11.GAL ************ ..pictureA:\VAC\VAC-C11.GAL,65535,49151,1,37,13, This slide shows VARBUSINESS magazine's rating of HP against DEC, IBM, and Sun. The annual survey reflects HP's superior VAR program ratings from 1988-92 over our leading competitors. VARBUSINESS surveyed VARs in two groups: VARs with over $2 million and VARs with under $2 million in revenue. The bar graph reflects survey results of VARs over $2 million; however, for VARs under $2 million, HP scored 7.15 compared to DEC's 6.90, IBM's 6.74, and Sun's 6.55. .PA 1992 VARBUSINESS Survey ************ VAC-C12.GAL ************ ..pictureA:\VAC\VAC-C12.GAL,65535,49151,1,37,13, This is a delineation of the categories that allowed HP to receive our overall 7.46 score. VARBUSINESS surveyed VARs in two groups: VARs with over $2 million and VARs with less than $2 million in revenue. This list reflects survey results of VARs over $2 million; however, VARs under $2 million ranked HP first in product breadth, product quality, and end-user support. o The under $2 million VARs placed HP ahead of DEC, IBM, and Sun in 10 out of 18 categories. o The over $2 million VARs placed HP ahead in 15 categories. o HP had 13 first place wins overall, IBM had 2, and DEC and Sun did not finish first in any category with either group. .PA Why Choose HP? ************ VAC-C13.GAL ************ ..pictureA:\VAC\VAC-C13.GAL,65535,49151,1,37,13, This slide contains further testimony of VARBUSINESS magazine's impression of HP according to HP VARs surveyed. .PA HP's Infrastructure for Channel Partner Support ************ VAC-D01.GAL ************ ..pictureA:\VAC\VAC-D01.GAL,65535,49151,1,37,13, Infrastructure -------------- This slide lists infrastructure and the responsibilities of HP sales, sponsoring entities, and the Value-Added Marketing Center for HP Channel Partner support. .PA HP Organizations and Functions ************ VAC-D02.GAL ************ ..pictureA:\VAC\VAC-D02.GAL,64586,49151,1,37,13, Each of the three groups within the circles will be discussed in detail. This slide reflects the team work between field sales, VAC Marketing Center, and the sponsoring entity. Each group provides a level of marketing expertise to give full support to Channel Partners. .PA CSO/Americas ************ VAC-D03.GAL ************ ..pictureA:\VAC\VAC-D03.GAL,65535,49151,1,37,13, This is the CSO/Americas organizational chart. It indicates assigned industries reporting to field industry sales: o Bob Sudkamp has aerospace, electronics, automotive/heavy equipment, and federal government industry groups o Jerry Tartaglia has process manufacturing, financial services, oil and gas, distribution, transportation, packaged goods, and chemical and pharmaceutical industry groups. o Bob Stringer has telecom, utilities, media, and publishing industry groups Territory and Channel Partner management teams report to Clark Straw. Two industries, state and local government and education, also report to Clark's organization. Alan Nonnenberg is the Channel Manager and has responsibilities for channel marketing programs. .PA CSO/Americas--Geography ************ VAC-D04.GAL ************ ..pictureA:\VAC\VAC-D04.GAL,65535,49151,1,37,13, CSO/Americas--Industry Sales/Discrete Manufacturing ************ VAC-D04A.GAL ************ ..pictureA:\VAC\VAC-D04A.GAL,65535,49151,1,37,13, .PA CSO/Americas--Industry Sales/Process Manufacturing & Financial Services ************ VAC-D04B.GAL ************ ..pictureA:\VAC\VAC-D04B.GAL,65535,49151,1,37,13, CSO/Americas--Industry Sales/Telecom ************ VAC-D04C.GAL ************ ..pictureA:\VAC\VAC-D04C.GAL,65535,49151,1,37,13, .PA Target Industries ************ VAC-D13.GAL ************ ..pictureA:\VAC\VAC-D13.GAL,65535,49151,1,37,13, Americas Industry Marketing group has marketing programs for each of the industries listed in this slide. HP sells into named accounts within these industries through its direct channel (HP EUSR) teaming with Channel Partners. HP has leveraged many systems within each named HP industry, thus generating a loyal customer base. HP has and will continue to develop Channel Partner relationships to leverage additional sales within each of these industries. .PA INSERT FIELD ORG CHART HERE ************ VAC-D05.GAL ************ ..pictureA:\VAC\VAC-D05.GAL,65535,49132,1,37,13, .PA Channel Partner Account Manager ************ VAC-D07.GAL ************ ..pictureA:\VAC\VAC-D07.GAL,65535,49151,1,37,13, The field is responsible for: o being the primary contact for the Channel Partner o tracking and administering contracts within HP o promoting Channel Partners locally o conducting local seminars o promoting Channel Partners to customers and within HP o being the primary owner of Channel Partner recruitment and management .PA CSO/Americas Channels Program ************ VAC-D08.GAL ************ ..pictureA:\VAC\VAC-D08.GAL,65535,49151,1,37,13, This is an organization chart of channel marketing under Alan Nonnenberg. .PA VAC Marketing Center ************ VAC-D09.GAL ************ ..pictureA:\VAC\VAC-D09.GAL,65535,49151,1,37,13, VMC administers and tracks the PSP program. It provides comprehensive and industry-leading channel marketing programs: o HP News Network (HPNN) o advisory councils o IMpact program o PSP program o conferences and events VMC also manages and develops indirect channels: o Distributor program management o CWR program management o ISV, VAR, and SI program management .PA Computer Systems Organization ************ VAC-D10.GAL ************ ..pictureA:\VAC\VAC-D10.GAL,65535,49151,1,37,13, The sole purpose of this slide is to present a generic view of a CSO organization that supports HP Channel Partners. The group or divisions could be WSG, CSY, or GSY (each of these organizations' org charts are more complex than the simple illustration given above). Within the CSO group each division's marketing unit provides product marketing and indirect channel marketing. The sponsoring entities identify which Channel Partners to recruit, provide account support, and promote Channel Partners to industry/account (red) and territory (blue) sales reps. .PA Sponsoring Entity ************ VAC-D11.GAL ************ ..pictureA:\VAC\VAC-D11.GAL,65535,49151,1,37,13, A sponsoring entity provides the above functions from the Workstation Systems Group (WSG); Systems and Servers Group that contains CSY, GSY, and CCSY; and Americas Sales/Marketing that contains Industries Marketing. Sponsors define the HP target markets and align Channel Partners into them. Sponsors also: o identify Channel Partners for recruitment o develop annual comarketing plans with the field o create industry awareness programs o generate training and sales tools (overall market) o launch industry lead-generation programs o leverage new HP technology within Channel Partner market segments o represent Channel Partners to HP end-user customers at factory visits .PA Target Industries--GSY ************ VAC-D14.GAL ************ ..pictureA:\VAC\VAC-D14.GAL,65535,49151,1,37,13, GSY targets a subset of industries targeted by the Americas Industry Marketing group. GSY also targets corporate applications. GSY's core industries are manufacturing and telecom. Its leveraged industries are retail, financial services, and corporate applications. HP has and will continue to develop Channel Partner relationships to leverage additional sales within each of these industries. .PA Target Industries--CSY ************ VAC-D15.GAL ************ ..pictureA:\VAC\VAC-D15.GAL,65535,49151,1,37,13, This slide lists strategic target market segments for the HP 3000. CSY's objective is to develop and recruit a competitive portfolio of high-quality Channel Partners to support HP 3000 business strategies. CSY wants to grow current Channel Partners and recruit additional mainframe applications to enable easy migration for customers to the HP 3000. HP has and will continue to develop Channel Partner relationships to leverage additional sales within each of these industries. .PA Target Applications ************ VAC-D16.GAL ************ ..pictureA:\VAC\VAC-D16.GAL,65535,49151,1,37,13, Unlike the other two divisions, WSG targets application areas rather than target industries. The slides list strategic applications for HP's workstation Channel Partners. Many of the application areas cross over multiple industries (i.e., GIS applications are strategic for state and local government and can also be sold into retail, telecom, education, and federal markets). HP has and will continue to develop Channel Partner relationships to leverage additional sales within each of these application areas. .PA HP's Industry Marketing Presentation ************ VAC-D17.GAL ************ ..pictureA:\VAC\VAC-D17.GAL,65535,49151,1,37,13, If industry marketing programs will be discussed, replace this anchor slide with that slide pitch. .PA Flexible Channel Partner Relationships ************ VAC-E01.GAL ************ ..pictureA:\VAC\VAC-E01.GAL,65535,49151,1,37,13, Flexible Relationship --------------------- This section defines HP's various indirect channels: ISV, SI (non- reselling and reselling), VAR, OEM, CWR (independent, franchisor, and franchisee), distributor, master VAR, and DAR. (Note: CSO Channel Partners are those partners whose solutions are delivered on CSO platforms: HP 3000, HP 9000 Series 800, HP 1000, HP Apollo 9000 RISC and Motorola workstations, X Stations, and hardware and software products associated with these platforms. These slides do not include the channels within CPO.) .PA HP Channel Partner ************ VAC-E02.GAL ************ ..pictureA:\VAC\VAC-E02.GAL,65535,49151,1,37,13, We have examined HP's company and product strengths and our commitment to indirect channels. Now it is time to examine what HP expects from a Channel Partner. HP teams with companies that adhere to the attributes listed in this slide. .PA Types of HP Channel Partners ************ VAC-E03.GAL ************ ..pictureA:\VAC\VAC-E03.GAL,65535,49151,1,37,13, Summary of HP Channel Partners: o Leveragers' value-added software or services may be essential to the selling of HP systems in particular end-user accounts. Leveraging Channel Partners also include reselling SIs or VARs acting as ISVs. o Reselling Channel Partners are either one-tier, selling directly to end-user customers, or two-tier, reselling HP equipment to second-tier vendors that sell directly to end-user customers. o OEMs can purchase HP products directly from HP or from two-tier Channel Partners. o DARs purchase HP products from distributors or master VARs and resell to end-user customers. Definitions for each Channel Partner are outlined in slides VAC-E04 - 08.GAL. .PA Leveraging Channel Partners ************ VAC-E04.GAL ************ ..pictureA:\VAC\VAC-E04.GAL,65535,49151,1,37,13, Leveraging Channel Partners market their solutions with HP SRs. o ISVs and non-reselling SIs are referred to as leveragers because their added-value software or services assist in selling HP systems. ISVs develop and market computer software products and associated support services that are used in conjunction with HP's products. Leveragers' application software can be standard or customized. Leveragers' software products can include databases and 4GLs. o Conversion specialists provide conversion services and associated support services that may be used in conjunction with HP's products. o SIs team with HP to develop custom software solutions in response to customer specifications. A custom solution is an integration of hardware, software, and project management services that an SI uniquely designs for a specific project and does not offer for general commercial sale. HP provides the HP products directly to end-user customers. Leveraging Channel Partners may team directly with HP EUSRs or with HP's two-tier Channel Partners to leverage HP sales into end-user customer accounts. .PA Reselling Channel Partners ************ VAC-E05.GAL ************ ..pictureA:\VAC\VAC-E05.GAL,65535,49151,1,37,13, VARs sell standard or customized solutions to end-user customers. VARs can conduct business in any market with any size customer. Even though VARs typically resell HP equipment to end-user customers, they can act as ISVs when customers choose to acquire equipment directly from HP. SI customers are either government (federal, state, local) or part of private industry. An SI assumes one of three roles with respect to HP for a given project: o prime contractor or lead systems integrator--The SI buys HP products required for a specific project from HP and resells them to the customer under the terms of a SI Project Agreement or HP Purchase Agreement. o subcontractor--The SI provides all deliverables to HP under a subcontractor agreement for each project. o software supplier--The SI and HP supply their respective project deliverables under separate contracts. OEM customers are typically outside HP's identified markets and industries. Independent CWRs have direct relationships with HP and end-user customers. .PA Two-Tier Reselling Channel Partners--CWRs ************ VAC-E06.GAL ************ ..pictureA:\VAC\VAC-E06.GAL,65535,49151,1,37,13, o The first-tier CWR is a franchisor that has headquarters location, national focus, and provides affiliation/distribution to a franchisee. o The second-tier CWR is a franchisee that is an authorized outlet of the franchisor. The franchisee CWR has a restricted area (major trading area) in which to sell workstations. Also, the franchisee CWR must provide local direct customer support. CWRs have access to multiple third-party software solutions that are horizontal or vertical in scope. CWRs have direct contractual agreements with HP to sell a minimum of $250 thousand per year and to train their SRs and SEs on HP workstations. .PA Two-Tier Reselling Channel Partners--Distributors ************ VAC-E07.GAL ************ ..pictureA:\VAC\VAC-E07.GAL,65535,49151,1,37,13, o A distributor is a first-tier HP Channel Partner who has a regional or national focus. Distributors may have multiple sales offices, maintain substantial inventories, and provide complete infrastructure to DARs. o A DAR is a second-tier Channel Partner authorized by HP to deal with a first-tier distributor from which it purchases its equipment and receives all marketing support. A DAR does not have a direct contractual agreement with HP, but it is certified by HP. A DAR's marketing focus may be regional or national. A DAR's value-add provided to end-user customers includes vertical software application expertise, a high degree of technical skills, and customization. VARs and OEMs may purchase equipment from distributors or from HP. Distributors and the equipment they resell is listed on slide VAC- E09.GAL .PA Two-Tier Reselling Channel Partners--Master VARs ************ VAC-E08.GAL ************ ..pictureA:\VAC\VAC-E08.GAL,65535,49151,1,37,13, A Master VAR ensures broad availability of a basic solution capability to a set of captive second-tier resellers. Master VARs' value-added products that are resold to DARs usually include software. Master VARs provide unique marketing and software pass-through. Master VARs and the products they resell is listed on slide VAC- E09.GAL. .PA CSO Two-Tier Channel Partners ************ VAC-E09.GAL ************ ..pictureA:\VAC\VAC-E09.GAL,65535,49132,1,37,13, This chart reflects the current distributors, franchisors, and master VARs and the products they resell to DARs and CWRs. .PA Financial Highlights ************ VAC-F01.GAL ************ ..pictureA:\VAC\VAC-F01.GAL,65535,49151,1,37,13, Financial Incentive ------------------- This section covers the financial highlights for each Channel Partner. .PA Financial Highlights--ISVs ************ VAC-F02.GAL ************ ..pictureA:\VAC\VAC-F02.GAL,65535,49151,1,37,13, Upon shipment, ISVs receive the lesser of 7 percent of the net HP systems ordered or 30 percent of the software sold. Three percent of net hardware value is applied to co-op fund first and the balance in cash. o Compensation is given if the application software is at least $6,000. o Minimum annual hardware leverage must exceed $250 thousand. o Maximum annual compensation payable is $250 thousand. o Compensation is available only on computer systems products. o If multiple ISVs are involved, compensation is shared in amounts proportional to the price of each software package. ISVs need to apply for all leveraged compensation. Reimbursable co-op activities include: o marketing and promotional activities      print advertising      signage      direct mail and sales literature      trade shows      radio advertising      public relations resources      yellow pages advertising      telemarketing      promotional merchandise      sale incentives      special requests      customer seminars and open houses      sales videos, electronic media, and television and cable advertising o business development activities      marketing and business consulting      HP manuals and documentation services      HP demo/development units and HP service and support      training and conferences ISVs are eligible to apply for lease/bundled financing. Channel Partners that have their products highly rated by a sampling of their end-user customers may be eligible to pass on the benefits of HP financing programs to their customers. Channel Partners can rent rather than purchase demo/development systems at the rate of three percent of the HP list price per month. This allows them to have use of the latest HP technology at exceptionally low rates. The minimum rental time is six months. .PA Financial Highlights--Conversion Specialists ************ VAC-F03.GAL ************ ..pictureA:\VAC\VAC-F03.GAL,65535,49151,1,37,13, Conversion specialists are non-resellers. Upon shipment, specialists receive six percent of the net HP systems purchased. The first three percent is applied to co-op fund and the balance in cash. o Maximum payment per conversion is $50 thousand. o Sales to the U.S. Government are not eligible. Specialists need to apply for all leveraged compensation. Reimbursable co-op activities include: o marketing and promotional activities      print advertising      signage      direct mail and sales literature      trade shows      radio advertising      public relations resources      yellow pages advertising      telemarketing      promotional merchandise      sales incentives      special requests      customer seminars and open houses      sales videos, electronic media, and television and cable advertising o business development activities      marketing and business consulting services      HP manuals and documentation      HP demo/development units and HP service and support      training and conferences The ISV is given six percent of the net HP system revenue if 1) the ISV has a current software license with a customer covering competitor's computer system and 2) actively assists HP in replacing the competitor's system with an HP system. In this case, no new software revenue is necessary as evidence to secure incentive compensation. .PA Financial Highlights--VARs ************ VAC-F04.GAL ************ ..pictureA:\VAC\VAC-F04.GAL,65535,49151,1,37,13, VARs are compensated for both reselling and leveraging (VARs acting as ISVs) activities. Leveraging VARs are compensated for a qualifying system sale based on the lesser of 6 percent of the net selling price of the hardware or 30 percent of the software sold. For VARs acting as ISVs, three percent of net hardware value is applied to co-op fund first and the balance in cash. IMpact accruals (three percent of previous month's net shipments) will automatically be credited to VAR accounts each month. Reimbursable co- op activities include: o marketing and promotional activities      print advertising      signage      direct mail and sales literature      trade shows      radio advertising      public relations resources      yellow pages advertising      telemarketing      promotional merchandise      sales incentives      special requests      customer seminars and open houses      sales videos, electronic media, and television and cable advertising o business development activities      marketing and business consulting services      HP manuals and documentation      HP demo/development units and HP service and support      training and conferences VARs are eligible to apply for lease/bundled financing. Channel Partners that have their products highly rated by a sampling of their end-user customers are eligible to pass on the benefits of HP financing programs to their customers. Channel Partners can rent rather than purchase demo/development systems at the rate of three percent of the HP list price per month. This allows them to have use of the latest HP technology at exceptionally low rates. The minimum rental time is six months. .PA Financial Highlights--SIs ************ VAC-F05.GAL ************ ..pictureA:\VAC\VAC-F05.GAL,65535,49151,1,37,13, SIs are compensated for both reselling and leveraging (SIs acting as ISVs) activities. Leveraging SIs receive seven percent on the net hardware as long as the ratio of solution/service to HP products is one to one. For SIs acting as ISVs, three percent of net hardware is applied to co-op fund first and the balance in cash. IMpact accruals (three percent of previous month's net shipments) will automatically be credited to SIs accounts each month. Reimbursable co- op activities include: o marketing and promotional activities      print advertising      signage      direct mail and sales literature      trade shows      radio advertising      public relations resources      yellow pages advertising      telemarketing      promotional merchandise      sales incentives      special requests      customer seminars and open houses      sales videos, electronic media, and television and cable advertising o business development activities      marketing and business consulting services      HP manuals and documentation      HP demo/development units and HP service and support      training and conferences Channel Partners can rent rather than purchase demo/development systems at the rate of three percent of the HP list price per month. This allows them to have use of the latest HP technology at exceptionally low rates. The minimum rental time is six months. .PA Financial Highlights--OEMs ************ VAC-F06.GAL ************ ..pictureA:\VAC\VAC-F06.GAL,65535,49151,1,37,13, Financial Highlights--Francisors ************ VAC-F07.GAL ************ ..pictureA:\VAC\VAC-F07.GAL,65535,49151,1,37,13, .PA Financial Highlights--Distributors ************ VAC-F08.GAL ************ ..pictureA:\VAC\VAC-F08.GAL,65535,49151,1,37,13, .PA HP Channels Qualification Criteria ************ VAC-F10.GAL ************ ..pictureA:\VAC\VAC-F10.GAL,65535,49151,1,37,13, The financial highlights section covered what Channel Partners get from HP. This section outlines the qualifications Channel Partners must meet to get those benefits. .PA ISV ************ VAC-F11.GAL ************ ..pictureA:\VAC\VAC-F11.GAL,65535,49151,1,37,13, Even though there is not a minimum volume commitment to become an ISV, to receive compensation there is a minimum leverage requirement of $250 thousand. Additional details of the ISV compensation program are in the DFI slide set, marked JSW1-4, that was distributed at the June 1992 sales conference. Copies can be obtained from Phil Enliss' group. A qualifying product may include any standard product option or customization of a standard option. Software sold by an ISV to its parent company, division, or majority-owned subsidiary will no qualify for fee payments. The ISV will be paid a fee for a qualifying system sale by HP if the sale meets the following criteria: o The ISV makes a direct sale or license of standard software package to a specific end-user customer for use on an HP computer system. o HP makes a direct sale, lease, or license of a qualifying HP computer system to that end-user customer. o HP makes a direct sale, lease, or license of a qualifying HP computer upgrade to that end-user customer. o Computer system or upgrade delivery occurs no more than 12 months following the initial date of the end-user purchase order. o HP determines the ISV's software product satisfies the end-user customer's primary application needs. o The software package is a material and essential factor in the end- user customer's decision to purchase the HP system or upgrade. o The ISV provides HP with an executed copy of the purchase order/software license agreement between the ISV and end-user customer indicating a total adjusted net price of a least $6,000 o The ISV's influence is a material and essential factor in causing an end user to convert from a non-HP platform to HP. The ISV also qualifies if it provides conversion services to enable the end-user customer to employ HP platform products. o Software support includes installation support, documentation, training, and timely response to software faults and bugs. Discuss the fee payment clauses: when HP determines the fee will be split between multiple ISVs, the calculations HP uses (7 percent and 30 percent), when HP reserves the right to withhold payments, if the end user has the right to make multiple copies of the software, and so forth. The ISV is paid 30 days following either the date HP ships the CPU to the customer or the date all documentation required for payment of a fee is received by HP. The ISV is an independent contractor. Discuss the relationship clause. Also discuss the terms of terminating the contract. The ISV agreement is terminated one year from its effective date. Either party may terminate any exhibit or the entire agreement without cause upon 60 days' written notice to the other. .PA Conversion Specialist ************ VAC-F12.GAL ************ ..pictureA:\VAC\VAC-F12.GAL,65535,49151,1,37,13, The Conversion specialist provides conversion services and associated support services that may be used in conjunction with HP products. The specialist must provide HP with satisfactory evidence that the software package was actually converted by the specialist and satisfies a major application need. HP determines that the converted software package satisfies the end-user's major application requirements. The delivery of the computer system occurs not more than six months following the date of the end-user's initial purchase order. .PA VAR Channel ************ VAC-F13.GAL ************ ..pictureA:\VAC\VAC-F13.GAL,65535,49151,1,37,13, If a VAR wants to act as an ISV, refer to the ISV qualifications on slide VAC-F11.GAL. .PA Systems Integrator Channel ************ VAC-F14.GAL ************ ..pictureA:\VAC\VAC-F14.GAL,65535,49151,1,37,13, .PA OEM Channel ************ VAC-F15.GAL ************ ..pictureA:\VAC\VAC-F15.GAL,65535,49151,1,37,13, o There is a minimum annual volume commitment of $400 thousand list to qualify as an OEM. o The OEM agrees to assume sole responsibility for marketing HP products it has purchased from HP. o The OEM is offered no sales or marketing assistance from HP in conducting its business. o The OEM is responsible for maintaining support services for the added value portion of the system. o The OEM should submit in writing to HP any proposed product modifications that might affect either the performance, safety, or radiated emissions certifications of the product. .PA Franchisor Channel ************ VAC-F16.GAL ************ ..pictureA:\VAC\VAC-F16.GAL,65535,49151,1,37,13, o HP approves each location that the franchisor is authorized to sell/ship to. o The franchisor is expected to promptly respond to all inquiries and request for technical support for HP products from its locations. o The franchisor also agrees to promptly forward all technical, sales and promotional materials, price lists, and other documents furnished by HP for reshipment to its locations. o The franchisor is required to maintain accurate records for contract compliance verification, product safety information, and sales/marketing support programs. .PA Certified Workstation Reseller ************ VAC-F17.GAL ************ ..pictureA:\VAC\VAC-F17.GAL,65535,49151,1,37,13, o Authorization is approved at the location level. o Value-add typically includes network integration and multiple third- party software solutions. o Each location must have at least one employee who has achieved Novell ONE or equivalent. o Support must be provided on a face-to-face basis. o The CWR must limit promotional activities and either ship or invoice all products to customers within MTA defined by Rand McNally. o Investment to get into the program is over $25 thousand in the first year, based on the following cost:                                       Monthly Channel                                       Partner Rental First year Demo/Support Unit and Support cost ------------------------------------------------------------------- Hardware and software $40 thousand $1,200* $14,400 Hardware support 215** 1,935 Software support 245*** 2,205 Training (technical and sales):   Tuition for (2) CWPs (2 wk class) 3,500/ea 7,000   Tuition for (2) SRs (2 day class) 0 ____0_                                                         $25,540 * Channel Partner six-month rental at three percent of list per month ** first three months hardware warranty *** first three months software support complimentary if one year of support purchased at time of hardware order .PA Distributor Channel ************ VAC-F18.GAL ************ ..pictureA:\VAC\VAC-F18.GAL,65535,49151,1,37,13, The distributor has experience in reselling computer equipment to authorized resellers. The distributor agrees to provide or make available ongoing technical support to end users of the products. If the distributor's status changes with respect to mergers, acquisitions, consolidations, or other reorganizations that are major in scope, HP must be notified in writing prior to the intended date of change. The distributor agrees to make available ongoing technical support to end users of the products. This includes DARs and the distributor's own sales force. The distributor also agrees to: o ensure that its employees complete any required training course designated by HP o fairly present the products to DARs o confer with HP on matters relating to market conditions, sales forecasting, and product planning o report suspected product defects o not pre-announce any products before an official public announcement o make available promotional funds, allowances, and services paid to the distributor through HP's co-op funds to and for the benefit of DARs in proportion to the dollar volume of business and in conformance with a business plan mutually agreeable to distributor and each DAR A full 12-month volume level represents the distributor's estimated volume of purchases throughout the term. A less than 12-month volume level is calculated by prorating the distributor's volume of purchases during that term. Distributor order milestones will be assessed every six months. In the first six months, if orders are less than 40 percent of the distributor's 12-month volume level, the orders for the second six months will be subjected to lower discounts. o If the first six month's orders represent 50 percent or more of the 12-month volume level, orders during the remaining term of the agreement may be subject to greater discounts if a greater discount is available. The payment terms are net 30 days from the date of HP's invoice. All orders are placed via a purchase order with the following minimums: o minimum hardware order = $5,000 o minimum hardware release and ship-to = $1,000 o minimum accessory order = $500 A distributor may return a quantity of products at the end of each month whose value equals up to 10 percent of the net sales dollars invoiced to the distributor and purchased during the preceding three- month period if the distributor has purchased the products for inventory only. Stock adjustment are given only if the products: o are listed on the most current version of the product exhibits o are procured by distributor directly from HP o are listed on inventory reports o are in unopened original packaging and marketable as new merchandise o are not the same products already on order with HP and scheduled to ship to distributor within 90 days of the return The standard warranty period shall commence upon HP's shipment of the products to distributor and terminate either 180 days after the date HP ships the products to distributor or 90 days after shipment of the products to the end user. The distributor's relationship with HP will be that of an independent contractor. Any commitments made to customers with respect to quantities, delivery, modifications, interfacing capability, or suitability will be the distributor's sole responsibility unless prior written approval is obtained from HP. The distributor shall send monthly reports to HP involving inventory and sales. Inventory reports are provided for the purpose of price protection and stock adjustment. They are due 10 days after the close of each calendar month. Sales reports are due 10 days after the distributor's fiscal month close. Discuss HP's trademark, logos, and trade name agreements, and so forth. .PA DAR Channel ************ VAC-F19.GAL ************ ..pictureA:\VAC\VAC-F19.GAL,65535,49151,1,37,13, Each DAR is qualified separately and must execute the DAR certification form. The DAR will purchase products from a distributor. The products will be incorporated in a system consisting of substantial amounts of other hardware and/or software that the DAR manufactures, develops, or licenses. The DAR will sell or lease to end users other than the DAR's corporate parent, division, or any subsidiary of the corporate parent in the regular course of business. The DAR is required to sell: o in the vertical market specified in the application o in the geographical area specified in the application o the added value described in the application o with adequate, direct support o to end-user customers located in U.S. for use in the U.S. The DAR is an independent contractors engaged in purchasing HP products for resale to their respective customers. Only DARs that have completed the certification forms will be authorized to purchase HP products from the distributor with which it applies. The certification term is 12 months. If the relationship with the distributor is terminated during the certification term, the DAR can change its purchasing relationship to another distributor only once during the remaining term. Each DAR must maintain at least one SE on staff who has successfully completed the required training for each HP product line carried. A minimum of one year's experience in UNIX and, for HP RISC X Station products, one year in networked computing environments is required. The DAR must maintain an active HP support contract for each HP product line carried or obtain equivalent technical support from the authorizing distributor. The DAR must maintain or have full access to a least one fully functional HP system for each HP product line carried to be used for demos, support, and training. HP's co-op funds paid to distributors will be made available to and for the benefit of DARs in proportion to the dollar volume of business and in conformance with a business plan mutually agreeable to the distributor and each of its DARs. Unless prior written consent is obtained from HP, the DAR will not copy or modify any HP materials supplied through the distributor with the exception of software materials which may be copied for archival purposes, to replace defective copies, or for program error verification. .PA VAR to DAR Conversion ************ VAC-F20.GAL ************ ..pictureA:\VAC\VAC-F20.GAL,65535,49151,1,37,13, When a VAR converts to a DAR, it will have contact with a distributor instead of direct contact with HP. A VAR has a contractual agreement with HP. For DARs, however, the contract is replaced with certification. VARs have an annual commitment of $400 thousand list. DARs are not restricted to a set dollar limit. A DAR's targeted geographic area can be regional or national. On the certification forms, the DAR needs to specify both its targeted vertical market and geographic area. This information is not tracked for VARs. DARs are required to have trained SEs on staff to maintain their HP products. They are also required to have access to a demo/development system. DARs do not qualify for PSP status; therefore all programs, with the exception of IDEA! Rooms, associated with PSP are not available to DARs. Those programs include: o comarketing support o joint marketing activities o advisory council membership o AT&T mailbox o PressFAX o PSP Insignia o travel discounts .PA VAR to DAR Benefits ************ VAC-F21.GAL ************ ..pictureA:\VAC\VAC-F21.GAL,65535,49127,1,37,13, o HP's discount structure begins at $400 thousand for VARs. Low- volume DARs ($50-399 thousand) may receive discounts from their distributors. o By ordering off-the-shelf systems from the distributor, DARs may get faster delivery. .PA Marketing Programs for Channel Partners ************ VAC-G01.GAL ************ ..pictureA:\VAC\VAC-G01.GAL,65535,49151,1,37,13, Marketing Programs ------------------ This section covers the various programs within VAC. The programs are designed to communicate, develop, and promote HP Channel Partner solutions both internally and to end-user customers. .PA HP Channel Partner Program Levels ************ VAC-G02.GAL ************ ..pictureA:\VAC\VAC-G02.GAL,65535,49151,1,37,13, HP Channel Partners have two program levels for their solutions. A solution is defined as a software product developed by the Partner, a service provided by the Partner, or a combination of both. Channel Partners may have a basic program level with HP, which is called "Listed," or a more strategic level termed "Premier." Premier Solution Partners (PSPs) receive the highest level of promotion and marketing support from HP. Any solution/service can be coupled with HP equipment ranging from single-user workstations to high-end, multiuser systems. .PA Channel Partner Program Levels ************ VAC-G03.GAL ************ ..pictureA:\VAC\VAC-G03.GAL,65535,49151,1,37,13, This graphic shows the two program levels. Approximately 88 percent of HP Channel Partners are in the "Listed" category and 12 percent are PSPs. Descriptions of each category follow. .PA "Listed" Program Level Services ************ VAC-G04.GAL ************ ..pictureA:\VAC\VAC-G04.GAL,65535,49151,1,37,13, The slide lists the basic requirements a Channel Partner must meet to become "Listed" and the program benefits. o programs available to all "Listed" Channel Partners:      events      HP Computer Update magazine      ChanneLink      Know-How Marketing guide      database listing      HP-TV service access o programs unavailable to certain "Listed" Channel Partners:      Solutions Catalog (Distributors, CWRs, OEMs)      input to advisory councils (DARs)      promotion within Computer News magazine (OEMs) For all Channel Partners not listed in the second bullet, the other benefits that should be stressed are the Solutions Catalog, promotion within Computer News, and HP SR support. .PA Nomination Criteria for Premier Solution Partners (part 1 of 3) ************ VAC-G05.GAL ************ ..pictureA:\VAC\VAC-G05.GAL,65535,49151,1,37,13, Channel Partners are nominated to become a PSP by the field account manager or sponsoring entity. The invitation is extended to Channel Partners that meet the sets of qualifying criteria established by the sponsoring entity. Channel Partners that are strategic to HP's business objectives and will contribute to HP's success are given the opportunity to participate in this VAC program. Becoming a PSP is not an automatic process; it is by invitation only. .PA Nomination Criteria for Premier Solution Partners (part 2 of 3) ************ VAC-G06.GAL ************ ..pictureA:\VAC\VAC-G06.GAL,65535,49151,1,37,13, .PA Nomination Criteria for Premier Solution Partners (part 3 of 3) ************ VAC-G07.GAL ************ ..pictureA:\VAC\VAC-G07.GAL,65535,49151,1,37,13, Once the HP SR or sponsoring entity nominates a Channel Partner to become a PSP, VAC Marketing Center ensures that the Channel Partner has a current contract, is listed in the VALID database, has three installed sites (two running HP hardware or at least six months in the Americas and one must be in the U.S.), provides a comarketing plan, and has an assigned SR and sponsoring entity. The PSP must be signed off by the field (DM level) and sponsoring entity's functional manager. .PA Communications Programs ************ VAC-G08.GAL ************ ..pictureA:\VAC\VAC-G08.GAL,65535,49151,1,37,13, o Programs for Success is a customer overview of the HP VAC strategy program using features/benefits and documents. It is useful to Channel Partner prospects as an introduction to the general VAC program and to current HP Channel Partner accounts as a program guide. o HP Advisory Councils are forums where PSP executives and distributors' executives (distributors cannot be PSPs) can meet with HP executives and managers on a regular basis to resolve VAC issues. There are five councils: MPE, Multiuser HP-UX, Workstations, SIs, and Distributors. Each council is comprised of 8-12 executives. The members are rotated every one to two years. o ChanneLink provides Channel Partner employees with sales tools and product information on a regular basis. To receive them an employee must be identified in the VALID database with a "sales" code. ChanneLink items include: price guides, configuration guides, sales training manuals, Radio HP, and so forth. o HPNN electronic information network provides a communications medium to VARs and distributors that have valid HP contracts. These Channel Partners can access order status, pricing information, electronic messages, online documentation, and a news module that contains HP- internal and competitive information. HPNN is up to date, easy to use, and free of charge. o HP Computer Update magazine is published monthly and contains product, program, and promotional articles. The "HP Channel Partner NEWs" insert has articles regarding HP VAC programs, HP product promotions for the Channel Partners, and new HP literature. A Channel Partner must have a current contract and be listed in the VALID database to receive a subscription. .PA Development Programs & Events ************ VAC-G09.GAL ************ ..pictureA:\VAC\VAC-G09.GAL,65535,49151,1,37,13, o Technology Camps are technical symposiums targeted at channel software developers. The camps are two days of intensive workshops that are taught by teams of HP technical experts. They are geared to help experienced software developers expand their skills with HP operating systems. o HP product training courses and materials help Channel Partner employees get the most from their HP equipment and increase productivity. HP will work with Channel Partners to determine the optimal combination of HP educational offerings to help their technical staffs become as effective and productive as possible. There is self- paced and classroom training. o Know-How Marketing is a business and marketing planning guide. This reference tool can assist in the development of business plans, marketing plans, marketing communication tactics, advertising, direct mail, telemarketing, public relations, trade shows, seminars, sales literature, newsletters, graphic design field training manuals, and electronic media. o During the annual INTEREX (HP User Group) conference, HP sponsors a Channel Partner's breakfast meeting. At the breakfast, Channel Partners can hear presentations from special interest speakers and interact with sponsoring entity representatives. o Marketing Forums are open to all Channel Partners (with the exception of DARs) and held on an as-needed basis. The forums' objective is to deliver specialized workshops on developing marketing tactics and strategic marketing plans. o The HP Channel Partners Conference is held every one-and-a-half to two years. The conference agenda includes general sessions discussing trends (channel or industry), specialized workshops, and a tradeshow event (promotion of solution/services). The conference objective is to provide a forum for Channel Partners to network with other Channel Partners and HP personnel. .PA Promotional Programs ************ VAC-G10.GAL ************ ..pictureA:\VAC\VAC-G10.GAL,65535,49151,1,37,13, o The HP-TV Network can be accessed by HP Channel Partners that wish to produce effective media communications to demo or market their products. Channel Partners can hire HP-TV, HP's in-house service organization, to produce sales videos and electronic media so Channel Partners can demo their solutions to prospects, train their sales forces on HP products, or target niche markets with direct-mail fulfillment pieces. Television and cable advertising services are also offered. o Computer News is an HP magazine that promotes Channel Partners internally within the company. It publishes Channel Partner success stories and new or updated application information. Computer News is produced twice per month and distributed to HP field and factory personnel. Articles must be submitted by HP personnel. o HP produces two solutions catalogs (MPE, MPE/XL and HP-UX Apollo Domain/OS) containing detailed information about solutions, services and tools provided by Channel Partners (and HP). The information is indexed by company, product name, and market key words. The catalog entry also provides Channel Partner employee contacts for further information. o IDEA! Rooms are standardized demo centers located around the country that have the latest HP systems and peripherals. The IDEA! Room is an ideal demo facility for a PSP Channel Partner to display its solutions. The IDEA! Room serves as a repository for Partner software by providing a centralized tape accessible from each demo location. The IDEA! Room eliminates the need for the Channel Partner to have and maintain its own demo sites. A PSP can be nominated for the IDEA! Room by its Channel Partner rep or sponsoring entity to VAC. The PSP is mailed a packet that must be completed and sent back along with a copy of its software to the IDEA! Room Manager in Cupertino, California. The Channel Partner is responsible for working out all software bugs either over the phone or by sending someone to Cupertino. Demos are performed by an HP EUSR or Channel Partner personnel. o The VAB Rental Program allows Channel Partners to rent rather than purchase demo/development systems at favorable rates and terms. Any Channel Partner that leverages HP sales in the U.S. and has signed an HP Development, Testing, and Demonstration Agreement is eligible to use the HP VAB Rental Plan. There is a minimum rental time of six months. After that time, a renewal on a monthly basis can be initiated or the equipment can be returned or purchased. o The Insignia Program allows Channel Partners wishing to promote their association with HP to identify their special HP VAC Program status graphically on their advertising and marketing communications pieces. The insignias, which may not be modified, include HP Channel Partner and Premier Solution Partner. The insignias camera-ready artwork can be obtained from HP representatives. o The IMpact co-op marketing program gives a Channel Partner a wide variety of ways to receive reimbursement for marketing and business activities. To be eligible for IMpact, the Channel Partner has to have a current contract and a signed compensation agreement (e.g., CA exhibit). The program is available to ISVs, VARs, SIs, and distributors. Details on the IMpact program are in "IMpact SF 38 Training Slides" dated May 1992 and distributed at the June 1992 SF 38 training conference. The slides are IMPACT1-26.GAL with an additional APPENDXA.GAL slide for distributors. DARs can receive co-op funds though distributors. A separate program (Advantage) is available to CWRs. .PA Leadership of IMpact Program ************ VAC-G11.GAL ************ ..pictureA:\VAC\VAC-G11.GAL,65535,49151,1,37,13, Within the "InfoFlash" newsgram dated July 29, 1992, InfoCorp made this quote regarding HP's leadership with the IMpact program. IMpact was compared to Sun's and NCR/AT&T's cooperative marketing and infrastructure programs. IMpact was deemed the leader. .PA IMpact Program ************ VAC-G12.GAL ************ ..pictureA:\VAC\VAC-G12.GAL,65535,49151,1,37,13, The slides are IMPACT1-26.GAL with an additional APPENDXA.GAL slide for distributors. .PA Marketing Assistance ************ VAC-G13.GAL ************ ..pictureA:\VAC\VAC-G13.GAL,65535,49151,1,37,13, HP's marketing services are designed to assist the Channel Partner in developing its company's grow and increasing its market share through successful selling. HP provides cooperative lead generation to Channel Partners at HP funded trade shows. For example, a Channel Partner participating in an HP-sponsored booth will be given software leads while HP maintains all hardware leads. A Channel Partner is eligible for HP marketing assistance based on its program level ("Listed" or PSP) category. .PA Marketing Support Services ************ VAC-G14.GAL ************ ..pictureA:\VAC\VAC-G14.GAL,65535,49151,1,37,13, This slide summarizes VMC's programs by program level and marketing assistance given to each level. Everything listed for Channel Partners is also available to PSPs, but items listed for PSPs are unique to that category. .PA DAR Marketing Support Services Available ************ VAC-G15.GAL ************ ..pictureA:\VAC\VAC-G15.GAL,65535,49151,1,37,13, This slide lists marketing support services that the DAR receives from HP and the distributor. .PA HP's Product Value ************ VAC-H01.GAL ************ ..pictureA:\VAC\VAC-H01.GAL,65535,49151,1,37,13, Product Value ------------- .PA HP Computer Systems Organization's Products ************ VAC-H02.GAL ************ ..pictureA:\VAC\VAC-H02.GAL,65535,49151,1,37,13, This slide lists the hardware platforms available to CSO's Channel Partners. .PA HP's Strengths ************ VAC-H03.GAL ************ ..pictureA:\VAC\VAC-H03.GAL,65535,49151,1,37,13, HP's industry strength and leadership are powerful motivators for Channel Partners to do business with us. HP has received number-one ratings for support worldwide: o Datapro--minicomputers o Ledgeway, UNIX Today--workstations o Sierra Group--LANS, midrange systems o IDC--overall support o VARBUSINESS--Annual Report Card o Fortune--quality of products/services o INPUT--software support o Datapro, Ledgeway--networks .PA Summary ************ VAC-I01.GAL ************ ..pictureA:\VAC\VAC-I01.GAL,65535,49151,1,37,13, Summary ------- .PA HP's Program for HP Channel Partners Summary ************ VAC-I02.GAL ************ ..pictureA:\VAC\VAC-I02.GAL,65535,49151,1,37,13, This slide summarizes the topics discussed in this slide pitch: Financial Incentives o Channel Partners are motivated to team with HP through competitive discounts on hardware, demo/development systems, and rental equipment. Their end-user customers can receive benefits of HP's financing through the lease/bundled financing program. Channel Partners are reimbursed for business and marketing activities through co-op funds. Commitment o HP is committed to indirect channels. Our commitment is demonstrated throughout the organization, from top management down. Illustrations of HP's commitment become obvious when VARs rate us number one in a wide variety of categories in VARBUSINESS magazine's survey. o Nearly half of HP's business is generated through the indirect channel. Our future projections indicate that over 60 percent of our business will come from this channel. HP has targeted named accounts in which to sell direct, and the remaining markets will be funnelled through the indirect channel. Infrastructure o HP Channel Partners are recruited, developed, and managed by HP teams that include channel sales reps, sponsoring entities, and the VAC Marketing center. Every section of a team is structured to ensure Channel Partner growth and success. Product Value o HP has received the number-one rating for support worldwide. o HP is the leader in standards-based computing and open systems. o HP products range from PCs to multiuser systems. Flexible Relationships o HP Channel Partners incorporate leveraging (ISV, SI) channels to reselling channels in one- or two-tier relationships. There are a total of 12 types of channel relationships within CSO. o The qualifications for becoming a Channel Partner have be covered. Marketing Programs o VAC Marketing Center has a wealth of programs that are designed to develop, promote, and communicate to Channel Partners. InfoCorp, a market research firm, states that ". . . no comparable vendor of computer systems has introduced a program that is as complete as IMpact. It is flexible and comprehensive and should address many of the needs of resellers and software suppliers. Hewlett-Packard has set a new standard in programs for marketing workstations and multiuser systems." .PA Appendix ************ VAC-APP.GAL ************ ..pictureA:\VAC\VAC-APP.GAL,65535,49151,1,37,13, Appendix -------- .PA HP Sales Rep Compensation Program ************ VAC-APPD.GAL ************ ..pictureA:\VAC\VAC-APPD.GAL,65535,49151,1,37,13, This compensation chart shows the Channel Partner how HP sales rep are compensated for working with them. .PA Financial Highlights Recap ************ VAC-APPF.GAL ************ ..pictureA:\VAC\VAC-APPF.GAL,65535,49151,1,37,13, This slide recaps compensations for leveraging and one-tier reselling Channel Partners. o When resellers act as leveragers (ISVs), they receive three percent cash compensation, and the hardware volume discount is no longer applicable. o The annual CAP on compensation for a VAR acting as an ISV is $250 thousand maximum or two percent of commitment level.