Lenovo channel chief Sammy Kinlaw said raising System x server sales is his top priority for the year, as some partners still don’t sell these at all.
Lenovo has just followed up some mediocre 2015 quarters with a somewhat improved one, albeit with enough negatives to draw more negative financial press than positive, and to drive the company’s stock price down. However from the North American commercial market perspective in particular, Sammy Kinlaw, Lenovo’s North American channel chief, was fairly positive about the results, and thinks Lenovo’s channel is well positioned for growth this year.
“I think that overall for Lenovo, it was a favorable quarter,” Kinlaw said. “We caught some flack last quarter because our profitability was down, but now it was up 17 per cent year over year. Revenue was down slightly, not huge, [8 per cent, which was 2 per cent without exchange fluctuations], but that was in a down market.”
Enterprise business was up 8 per cent, and Kinlaw had a positive take on Lenovo’s performance in the core areas of PCs, servers and mobility.
“In PCs, we have record breaking market share [21.6 per cent, according to IDC; Gartner is lower at 20.3], Kinlaw said. “Our ultimate goal with PCs is to drive 30 per cent share, and we think conditions will help us move towards that this year. Windows 10 will help us, as we see mid-size customers moving to it, followed by enterprise. We also think this will come partly through industry consolidation, with some smaller players falling out.”
Kinlaw also said that when you dig deeper on the PCs, Lenovo is doing even better.
“I think the overall PC share is still unbelievably important, but there are things underneath you have to know,” he said. “While we want to compete on all levels, on the balance of entry level through premium-based products, we’ve done well on the premium products from CES, like The ThinkPad X1 Carbon line.”
Kinlaw also said the context was important. While Lenovo PC unit shipments were down 4 per cent, the overall market was down 11 per cent. In addition, the commercial market, where the channel plays, did better, with a 1 per cent shipment decline compared to 8 per cent in consumer.
While the Lenovo Enterprise Business Group, which includes servers, was up 8 per cent, Kinlaw said that improving this is his top challenge.
“My number one priority for the quarter is to double down on servers,” he said. “We expect double digit growth. While we know that this is a marathon and not a race, many partners don’t carry System X yet. The rate of return of them selling isn’t where we want it. We have a network of 29,000 partners in North America, but we need to drive more of them in servers, and also recruit more there.”
Kinlaw said that Lenovo’s multi-front initiatives into the hyperconverged space through partnerships is also positioning them well.
“We have partnerships with multiple ISVs on software-defined infrastructure because that’s where we believe the market is going,” he said. “They are already producing revenue. Our biggest focus there is Nutanix. And there’s a reason Nutanix is partnering with us.”
Kinlaw also pointed to Lenovo’s smartphone business as a positive, especially since it met Lenovo’s stated objective when it was acquired in October 2014 of breaking even within four to six quarters.
“We are encouraged by the Motorola business,” he said. “We broke even and that’s a big plus. In addition, our Motorola business in North America is up 52 per cent quarter over quarter. A year ago, we didn’t have a commercial channel for it, but now Synnex and CDW sell it. There is seasonality, but there are roads to market that were not there before.”
Kinlaw said the channel has also benefited mightily from strong vertical growth.
“It has been lucky for us that verticals are on fire — SMB, health care, and K-12 in particular,” he said. “That’s where the channel digs in. We certainly have a huge focus on K-12 now. We were barely present with Chromebooks in the channel a year ago and have grown dramatically since then, at 99 per cent. Health care is also huge focus. We grew 26 per cent in health care year over year, and most of that came through the channel.”