back to article HP: We will eradicate the colour grey from our market

HP UK claims to have clawed back some $2m worth of revenues it would have otherwise lost to the grey market by getting litigious with anyone importing and selling boxes from outside of the EU. The firm told us “preventative” activity increased sevenfold from fiscal ’12 to ’14, that “recoveries of mis-used contra” is up tenfold …

  1. Jay108

    Depends on definition of "grey"

    If we as a reseller receive another threatening letter from HP on how flashing firmware before client installs or anything HP considers "authorised by HP only" configuration it may very well be the final nail in the coffin.

    Suspect they'll bite the hand that feeds them like good ol' el reg but in a more litigative manner. Think we're all getting sick and tired of their threats to their own partners now we're considered competitors to their new solutions ventures.

    I suspect they'll overstep their mark again and ruin their new hardware lineups by further bad management and decision making.

    1. Anonymous Coward
      Anonymous Coward

      Re: Depends on definition of "grey" @Jay108

      Can you tell more precisely what HP prohibits you to do? Are you not allowed to update BIOS or some such simple updates even?

      Some appliances are never to be flashed by the end user for a good reason. Storage systems may have multiple different firmware combinations (OS, chassis, cage, drives, bios...), which have to be upgraded in specific manner according to a checklist and thus these are done only by authorized people.

      People who bork their own machines against better knowledge may well slag the manufacturer because "it just died". HP and others don't like to have that sort of backlash for their expensive systems.

      1. Jay108

        Re: Depends on definition of "grey" @Jay108

        HP prohibits:

        1) Third party modification to the software processes as assigned by HP at the time of purchase. Specifically if the hardware comes with a Windows Server license - no other OS may be sold / resold with the HP hardware if the server comes with a COA. i.e. If a server has a Windows Server 2012 Essentials it CANNOT be resold with Windows Server 2012 Standard / 2008 R2. Linux is a no-go too if it has a COA sticker. This lost HP business as we just recommended Dell server hardware instead which doesn't carry such restrictions.

        2) Third party modification to the system firmware of the hardware. Doing so will void the warranty of the hardware unless it's performed by an authorised HP "person" (vague as hell). We asked HP and they didn't have a clue regarding their own wording. Even if the hardware is brand new and as you say you may need to change or upgrade the firmware to get it to work with certain kit. This is where "HP Solutions" comes in. They upgrade the firmware at an added cost separate from the hardware. Again we just recommended Dell hardware instead.

        3) Reselling of hardware outside of "zoning". Again excuse the logic but if you sell to Company A in the UK, then it can only be used in company A on site as specified in the UK. They also threaten if the hardware is moved to a new "zone" in the business (we guess a different country) then the warranty risks being invalidated as it's not being used in the right "zone". We asked for clarification on what "zone" means. Answers on the back of a postcard.

        4) You MUST by default ask HP to provide approval for certain upgrades on the hardware. i.e. Add a HP RAID card before sale of the hardware, third party RAID controllers are looked down upon and there is always a pressure to use HP kit only inside the server or storage. Again vague threats it will invalidate the warranty. Usually other hardware providers support the hardware. Also when you ask for approval they ask some very specific information; namely what the deal is, how much you are charging, how much was the hardware, the client address, who you are doing business with etc.etc. According to the last HP bod I spoken to it's to get the customer on the HP mailing lists(!!) i'm guessing to upsell and provide "solutions".

        Mysterious person(s) passed el reg a copy on instances 1 and 2, I'm guessing another partner on HP as they previously ran stories on them. Guess it's not just us getting lambasted by HP.

        1. Anonymous Coward
          Anonymous Coward

          Re: Depends on definition of "grey" @Jay108

          1. I'm little puzzled here. HP sells all their servers also without OS and supports all the major Linux distros. Why would you first sell a server with a Windows license preinstalled AND provide another OS license with it? Also, not even HP prohibits the customer from buying RHEL and installing it.

          2. "3rd party modification to firmware?" I'm not following you here either, please give an example.

          3. As per HP: HP Global Warranty does not change export rules. For example, if you purchase your product in country "A," you must take delivery in country "A." You may then move it to country "B" where it will be covered by the warranty available for that product in country "B."

          There are local regulations about allowed wireless frequencies or privacy options that the products must adhere to. You aren't supposed to sell e.g. 802.11 stuff that supports ch14 in UK for example.

          4. Please post those threats here since HP doesn't void your warranty for using 3rd party expansion cards or memory upgrades. If the 3rd party product borks your Proliant motherboard then I'm fully symphatetic to HP for not replacing the motherboard under warranty.

          And I'm sure HP (and Dell and others) wants to upsell their components, that's nothing new. Are you not upselling anything? Some of your clients could very well have use for faster than NBD on-site warranties, or they could use warranty extensions after original warranty has expired

          "Usually other hardware providers support the hardware."

          What?

          So Dell actually gives support for the 3rd party expansion card (e.g. Lonworks, Profibus or Modbus) my clientele uses? I'm sorry, I don't believe you.

          If you meant that HP disables 3rd party expansion cards - that's not true either.

          "Also when you ask for approval they ask some very specific information"

          If you are getting a HP BID price quote then yes, HP does ask client information and they may monitor that you're not selling those specifically discounted products to elsewhere.

          re: "HP mailing lists"

          HP is aware of those BID clients and obviously where products and carepacks are registered and clients who bought HP services but I would certainly have heard if HP tried to sell them anything directly.

          Maybe they get newsletters and such? I didn't register my car with the manufacturer yet I do receive Toyota's "spam" magazine every now and then that showcases their latest models and services.

          1. Jay108

            Re: Depends on definition of "grey" @Jay108

            1) "Why would you first sell a server with a Windows license preinstalled AND provide another OS license with it?" Some entry level servers come with foundation COA attached, not our choice our decision. Under HP rules we're not allowed to resell it with a different OS if it has a COA sticker.

            2) Upgrading the firmware before giving it to customers.

            3) Businesses are international therefore are likely to move servers between datacentres and locations. We don't touch wireless stuff unless it's CISCO grade. I understand why wireless frequencies are barred in certain countries. Why servers? There is no logical reason why a server bought in one country cannot be used in another without fear of voiding things. We resell, what country the customer uses the server when we resell it shouldn't matter. We're not the end customer therefore that doc is not relevant to us. We do follow HP rules on reselling.

            4) If we resell HP hardware we MUST inform them when we make modifications to the server (i.e. add components). i.e HP wants to know what hard disks, memory, RAID cards are added before sale. In fact you're raising the very same points to an HP manager I was speaking to. We're reselling with changes to the hardware. The doc is labelled #408101 I'm sure el reg will get a copy in due course, depends how much HP snazz off their partners and resellers.

            Upselling with a purpose whether it being future proofing or providing additional goods, not to undercut or force a reseller to lose business by having HP compete directly against one of it's own partners. There is a difference. Again Dell doesn't ask what the contract is for, Supermicro don't either. IBM certainly doesn't either. Or the costs associated with the project - that is usually between the buyer and the seller.

            Other providers would still support the server, minus the third party card. HP threatens the invalidate the entire warranty of the server it's installed in if it's resold with the card in it. I say threaten.

            Dell, IBM, Supermicro get this, HP doesn't. The rules for HP change regularly or HP employees are unsure themselves of what the exact rules are.

            Don't get me wrong I like HP servers, I like the HP toolsets and kits. They're deployment and automation tools are second to none, but on their dealing with other companies it feels like we're getting a raw end of a deal. Plus we can't even get decent selling support ourselves from HP; given our status and size it really is surprising. What one HP manager says to another on reselling rules varies wildly. The fact that they are now targeting "greymarket" with the points mentioned above, I suspect they'll hit a few of their partners and resellers in the bumbling chaos and confusion.

            1. Anonymous Coward
              Anonymous Coward

              Re: Depends on definition of "grey" @Jay108

              "Don't get me wrong I like HP servers, I like the HP toolsets and kits"

              Same. I always liked them.... Until we were asked to supply one. What a pain in the arse that turned out to be.

              It was the first HP server we sold, and probably the last. Especially if they keep adding new crazy rules.

  2. Anonymous Coward
    Facepalm

    Translation: "Globalisation and market forces mean that we are losing our iron grip of the market."

    Any company that has an active and flourishing market for their equipment and seeks to shit on it really needs take a good hard look in the mirror.

  3. David 132 Silver badge
    Flame

    They want it both ways on globalization

    Moving production to 3rd-world holes to take advantage of pennies-per-day workforce - great! Brilliant management! Shrewd financial planning to gain a competitive advantage!

    Allowing Western customers to buy kit that's sold at cheaper prices in those same cheaper countries - grey market! Criminal! Shut it down! Fiduciary duty to our shareholders, lobbying government to get this dangerous practice outlawed, safety of our milk cows^H^H^Hcustomers is our primary concern yadayada...

    I consider myself a free-market libertarian. What we're seeing here is a perversion and distortion of the free market principle.

    TL;DR: Down with this sort of thing!

    1. asdf

      Re: They want it both ways on globalization

      I am always amazed by how many people claiming to be free-market libertarians are ok with things like Google and Apple colluding on employee salaries (shareholders first after all). Nice to see someone who does seem to get it at least.

      1. Destroy All Monsters Silver badge
        Holmes

        Re: They want it both ways on globalization

        Google and Apple colluding on employee salaries

        You should not be amazed at all. Once it comes down to disallowing people to talk to each other and agree on pricing you know the inner progressive logic overrides the libertarian.

        Only people who somehow think that there is a god-giving right to get high salaries from Google/Apple for divine work rendered or that people are actually being forced to work there (they are monopsonists on the job market, right?) have any sort of problem with that.

        1. asdf

          Re: They want it both ways on globalization

          Zombie post but I'll take the bait.

          >Once it comes down to disallowing people to talk to each other and agree on pricing

          Exactly corporatism at its finest. Get the culture to shame anyone talking about how much they make to others including making it a requirement for any non trivial paying job. Yet more collusion.

          >Only people who somehow think that there is a god-giving right to get high salaries from Google/Apple

          No but you can't call it free market capitalism if there is no competition for employees by illegal agreement (this only made the news because it was explicit, there sure is a whole lot of country club buddy implicit collusion going down). Competition has to work both ways.

          >or that people are actually being forced to work there (they are monopsonists on the job market, right?)

          Funny how when a few companies start doing something pretty soon all major companies are doing it. Does go some way to explaining how wages have been stagnant (adjusted for inflation) for 30 years even though productivity has increased like few other times in history and companies (especially the big boys in Silicon Valley) are sitting on enormous amounts of wealth.

    2. noominy.noom

      Re: They want it both ways on globalization

      Re:They want it both ways on globalization

      While there is a lot of greed and selfishness in most large companies, I think there is a lot of simplification in your accusation. I think if a company A bought a bunch of HP servers in an Asian market and resold them in a Western market, it would be okay as long as there was no fraud involved. I.e. company A didn't lie. They are not selling on behalf of HP and the servers are now two party owned. The grey market is when a person that sells on behalf of HP gets those servers cheaper than they would get them from HP and sells them without telling the customer that they are not directly from HP.

      I'm not doing any voting here, just joining in the discussion.

      1. P. Lee

        Re: They want it both ways on globalization

        Meh, conflation. Employees defrauding HP by doing an extra production run is HP's problem. Grey = importing when HP doesn't like it. It isn't illegal but it is due to attempted monopoly practises.

        Any legal sueballs are HP's contract problems within the channel.

  4. The Godfather

    Whiter shade of pale?

    Question that's always bothered me...does HP keep tabs on kit sold into the UK that is 'exported' or sold by UK partners into export markets (Dubai for example), which is then brought back or sold back into the UK? After all, Channel partners are global players with global presence.

    1. Jay108

      Re: Whiter shade of pale?

      Yup they do. Through various means, in all instances a reseller has to inform HP on what servers have been sold, who to and where. Not sure what they do with the information but there is a degree of tracking involved.

      Unless the reseller isn't following HP rules. In which case they may have a sueball or two thrown at them from breaching agreements / contracts.

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