HP tries to hide its pricing from customers and open-source competitors

On October 13, 2008, Hewlett-Packard (HP) sent a complaint to an open-source competitor, GroundWork, asking GroundWork to stop revealing HP's "confidential" pricing. I have posted the letter below. What HP isn't correcting is GroundWork's contention that HP's IT monitoring software is considerably more expensive than that of its open-source competition.

Does HP think its pricing is really a secret? It's publicly available at GSA Advantage (albeit most GSA pricing actually reflects discounting of roughly 10 percent). Guess what? HP software costs a lot of money. Is anyone surprised?

GroundWork has been highlighting its cost advantages over HP's Operations Manager and Network Node Manager offerings for some time, declaring an 82-percent cost advantage over HP's products. This isn't news.

So why is HP sending letters to GroundWork (and InformationWeek, which hosted a webinar on the subject), demanding that its pricing be buried? According to a source familiar with the matter, it was apparently GroundWork's live webcast (registration here) on September 30, 2008, which roughly a dozen HP employees attended, that seriously rankled HP.

Why? Perhaps because the data presented starkly reveals just how pricey software like HP's can be.

As noted above, HP does not claim the pricing GroundWork revealed is wrong. It simply seeks to prevent disclosure of pricing, as well as attempts to police HP's own network of customers, partners and even employees. From the letter sent to GroundWork and InformationWeek:

During [the webinar] you referenced the Hewlett-Packard Company's ("HP") pricing and listed in your slide set the "HP Software BTO Pricing Guide, 2008" as the source of such information. HP's Pricing Guide is confidential information, is marked as such, and is not publicly available. Access to HP pricing information is limited to parties under confidentiality obligations to HP.

Fine. There are very valid reasons for maintaining such confidentiality provisions, but the fact of the matter is that GroundWork could easily have pulled the pricing information from the GSA Advantage website (and probably should have). The problem isn't the pricing information. It's that HP doesn't want its high prices used against it.

Is HP afraid of transparency? Presumably it can justify those high prices, so why is it worried? Here's the letter in its entirety. You be the judge.

HP demands that GroundWork stop posting HP's pricing

(Credit: Hewlett-Packard)

[The_Decider]

Wow, when your company is afraid of showing its prices, you know you are in trouble.

By definition, pricing can't be confidential.

[James1719]

********. Show me that definition.

[botchagalupe]

Alrighty then...

HP should have looked at the numbers a little closer (Duh!). First off, if GW is replacing HP then their is no 1.7mill up front cost +18k. Minus that little number, apples to apples, gives you 1.3mill for HP over 3 years vs. roughly 500k for GW for three years. However, if you dive a little deeper into this scenario you discover GW's nativity when it comes to the enterprise. The disruptive costs of replacing an integrated solution that may be 10 years ingrained into an enterprise (e.g., PM,CM, CAP, Evt mgmt, notification hooks) can be significant. I spent a year working with a client trying to move from HP to Tivoli.

John
johnmwillis.com

[botchagalupe]

I hate spell checkers... and I reckon I ain't tat smart neither....

Niativity not nativity

[emgarf]

You're correct about "ain't tat smart" but wrong about "niativity" - it's naivete.

[robert_r3]

Lest HP forget about the "Law of Unintended Consequences" they probably increased interest in GroundWork 10 fold. I have used HP for over 10 years .... and I went to go look at GW.

JohnMWillis may be right that you can have a great investment but if the savings are there ...
If not why are companies moving away from mainframes ? dollars, dollars, dollars ...

[humanssssss]

HP is an osshole company. This is one fine example they do to screw consumers. HP is a consumers screwing company. HP all-in-one printer is a piece of tied in crap that doesn't work after 2 months of use. And they want to charge an arm and a leg, milking consumers for every dollar they have while also threatening to take legal action on anyone who dares to reveal how much they can screw consumers.

Screw you HP.

[James1719]

This isn't about consumer products. Nice rant, though.

[Orion Blastar]

It should be a no-brainer that open source software costs less than commercial software.

Compare the price of Open Office.org to Microsoft Office 2007.
Compare the price of Windows Vista Home Edition to Red Hat Fedora 10.
Compare the price of Photoshop to The Gimp or Paint.Net.
Compare the price of Visual Studio 2008 Professional Edition to Novell Mono.

[phntmvygr]

"Jim Haselmaier" == "Mr. Pickafight"

Regards,

TheWitness
www dot cacti dot net

[mquag]

Hmmm... I am not a lawyer, but I don't think HP has a valid legal claim against GroundWork, unless the confidential information was obtained through illegal means, such as trespassing or hacking into the company's network.

Most likely the info was passed to GroundWork by someone who works for a company that partners with HP. If so, that person could be in trouble with his employer and his employer could be in trouble with HP, but GroundWork (presumably) has never entered into a confidentiality agreement with HP so they have absolutely no obligation to keep HP's pricing private.

Hey HP... nice job of shining a spotlight on a smaller competitor. I had never heard of them, but now they are on my radar. The PR and credibility you just gave to GroundWork is worth millions. Most small companies wish this would happen to them. Kudos.

[James1719]

My understanding is that if you are a competitor you can't use confidential information to further your own business interests, and the providence of the material doesn't matter.

This isn't about leaked information in the public interest, it's about a breach of confidentiality with a clear financial motive. I'd imagine the law views this differently.

[James1719]

I note that GSA Advantage is not a public website (and the link above doesn't work). You must be a federal employee to register, and should therefore have obligations to respect confidentiality.

"the fact of the matter is that GroundWork could easily have pulled the pricing information from the GSA Advantage website"

Really? Irrespective of your views on the morality of confidential pricing, I'd have thought the general manager of a business would have a better understanding of legal matters.

I'm a big fan of open source, but I do hate the faux naivete "Is HP afraid of transparency?" (obviously yes; the big players are in constant negotiation with procurement departments) mixed with the cynicism of "hey, this website left a door open, I guess that means the contents are now fully public".

[Harris30]

This seems kind of silly. Most of HP's list prices are right on their website or on the product bulletin that clearly states everyone be downloaded by anyyone and is updated every week.

In addition to this, companies in these negotiation processes constantly ask clients for the winning price (aka, what did the comp offer you). HP, IBM, Dell, all of them. After you do that one or two times, you know the list price and the company's methodology to discounting. If this is illegal, everyones' hands have plently of dirt on them.

The final point is who in the world at an enterprise level pays list price for this stuff anyway? I have been doing this IT game for 15 years and have seen it commonplace to have discounts of 80-90% in competitive software deals. If this goes any further, I hope Groundwork or whoever they are place a malicious prosecution lawsuit against HP. Big companies in America need to stop pushing small companies around hoping that they run out of capital. The next thing we are going to hear is the big IT companies are going to want a bail out! with our tax dollars:)

[hkriel]

HP leads by example, bad example in this case. As the world slips deeper into recession the premier computer manufacturer in the US appears to initiate a legal scuffle with a tiny competitor in a bid apparently designed to make some lawyers richer. That's going to do a lot for the economy. Makes you proud to be an American. If you can't sell your over priced goods then sue the guy with the lower price and FORCE those customers to spend money they don't have on your expensive product. A strategy that is guaranteed to bring big market share. And if they have to ask the price, they can't afford it.

HP would do better to give OpenView away as an incentive to buy their systems. Given the headache and overhead of maintaining OV (as described to me by anonymous sources in industry who will not identify themselves for fear of reprisal) the only fair price for OV is nought.

[crmand]

The GSA link as posted in the article doesn't work but if notice it was that sessionid expired. The https://www.gsaadvantage.gov/advgsa/advantage/main/start_page.do is completely open to anyone and I did a search on Network Node Manager under manufacture of HP and found a price.

Also I would take John Willis post with a grain of salt. He is someone who publishes IBM Tivoli Documentation. I am sure it would be naive of us to consider him uninterested in getting HP and IBM to remain big players. Is the HP to Tivoli move complicated because it is hard to change tools or because Tivoli is so such a patchwork of products slapped together....

[icefalcon]

Take a look at 'the data presented' linked from above. The only part of the "pricing" information that was taken from the 'confidential' document was the rate at which HP charges for consulting which was used to calculate an estimated installation cost of $18,000.

Frankly, Groundwork would have been just as well to say "$0" and shown how they still come out ahead - the $18,000 is a drop in the bucket of the total price on the HP side of things.

[lbomber]

I've used both products extensively. HP is a boated over priced behemoth; bent on making cash hand over fist on a very good product . GW is under staffed, with a hacked together product that can do enough to give you solid fault management at a fraction of the price HP goes for.

This is like Apple trying to snuff out any company with 'Pod' in the name no matter how small that company may be.

HP needs to wise up and accept that competition in this area is starting to change.