Lenovo to place new focus on workstations, desktops, low-lying services in 2017

Lenovo is preparing new incent programs to stimulate activity in these areas, believing that as areas where Lenovo lags the market, they represent relatively easy opportunities to grow against the market.

Sammy Kinlaw, Lenovo’s North American channel chief

Hardware giant Lenovo had a mediocre quarter globally. Its North American business was somewhat better, however. North American channel chief Sammy Kinlaw thinks there is significant room for the company to grow in North America. A key way to do that in 2017 will be paying more attention to workstations and desktop PCs, and by pushing partners to deliver more low-hanging services fruit like warranties.

Lenovo’s numbers in its most recent quarter were down, with quarterly revenue off US$12.2 billion, a six per cent decrease year-over-year. Pre-tax income was US$101 million, a 68 percent drop year-over-year, while net income of US$98 million was off 67 per cent.

“Even from a worldwide perspective, there were some good things,” Kinlaw said. “PC shipments were up, and we remained number one in worldwide share. But we were really pleased with how North America shaped up. We took another 1.9 per cent year-over-year share in PCs, which gets us to 14.8 per cent in North America. That means that we still have 85 per cent of the market to go after, and will be driving the channel to get to 20 per cent PC share in North America.”

Kinlaw noted that NPD has Lenovo with over 42 per cent share in the commercial channel, and that his goal is to get to more than 50 per cent.

“How do I do that?,” he asked. “I have to look at areas where I’m underindexed. There are three: workstation growth; desktop growth; and services growth. Those are my priorities.”

Kinlaw said this push isn’t taking away from any effort in areas where they are growing well.

“I want to sell more in our core areas — more premium ThinkPads, more Chrome notebooks. But there are revenue challenges. Chrome is massively important to us, but we can’t keep the lights on by selling just $200 PCs, even though that business is up 31 per cent. So this led me to think of these new priorities for the coming year. Workstations are very low-lying fruit. We compete very well with Dell and HP from a technology perspective. I think if Lenovo puts muscle behind desktops, we can be very successful.”

Kinlaw emphasized that the renewed services focus on services is on meat and potatoes warranty work, not higher level services that partners might already be offering themselves.

“I’m talking about the low-lying services opportunity like extended warranties, and converting depot warranties to on-site warranties,” he said. “We had not been successful there in the past because we had some process issues, which we have remedied with massive technological improvements.”

Kinlaw said that partners could expect to see some programmatic initiatives to support these efforts.

“We will also be heavily looking at new incent programs in our new fiscal year in April,” he stated.

Also being rolled out in the new fiscal year are new frameworks around partner tiering and partner accreditation, which were communicated to partners last month.

“These will come to fruition with the new fiscal year,” Kinlaw said. “This will include tiering to recognize Lenovo partners with expertise in servers, to reward their expertise, and let customers know who has the most expertise. Our success in the North American channel has come from a broad partner base, and we don’t want to disincent the large majority, who will be in the new Silver tier. We want the tiering to reward the small numbers of focused partners. To be in the Platinum tier, a partner will need to sell 10 million servers, with 3 million being necessary to qualify for Gold. There will also be compulsory certifications, as well as optional ones in hyper-converged and high performance computing [HPC].”

This year’s Lenovo Accelerate partner event, April 24-26 in Orlando, will offer opportunities for partners to receive their certifications.

“Accelerate is on the horizon, and partners will have a unique opportunity this year to take steps to be certified,” Kinlaw said. “We have 600 registered now, and expect to easily hit the maximum of 1200 we have set. We are debating whether to take the number of registrants to the next level going forward. That would, however, require limiting the venue to the larger convention centres and shuttling people between multiple hotels, and I’m not sure we want to do that.”