It has been a long journey for Lenovo since the acquisition of IBM’s PC business in 2005 and have emerged as the global leaders in the PC market. Now after achieving the goal, the company with the recent completion of the IBM x86 acquisition is looking repeat the act in the PC+ market.
Post the deal completion, Rahul Agarwal, Executive Director, Commercial Business, Lenovo India
reveals the company’s channel expansion plans, overall channel transition and two partners synergies. He feels the IBM x86 acquisition will play a significant role in this transformational growth journey and reveals road map for the coming months.
Excerpts from the interview
CT: What are the structural changes that Lenovo’s Commercial business has undergone and how has this yielded positive results?
Agarwal: Our channel structure is driven by the need to maintain a core channel partner network in India. Lenovo’s decision to restructure its Commercial business in April 2014, was based on this need along with the aim to create more opportunities for partners and boost their profitability.
Previously, our commercial business and partner ecosystem were segregated in five major verticals – i.e. VLE, LE, global, government, and education. Our new strategy categorizes our partners into three segments – Diamond, Platinum and Gold, based on profit margin and volume of business.
The new strategy is more focused on direct engagement and partner profitability across segments. Further, Lenovo has 1200 accounts from the global and very large enterprise (VLE) segments, where we have direct engagement with clients with or without channel partners.
We now have dedicated managers and realigned partners for each vertical and the results have been favorable; we have done exceptionally well and retained our market leadership in the VLE and LE segments. With this new channel structure we are poised to sustain our strength in the commercial business while ensuring partner profitability and their growth.
CT: How has the growth for your Commercial business been in the Indian market?
Agarwal: Lenovo’s commercial business in India continues to be a key strength and is the largest revenue contributor (about 40-45%) for Lenovo India, with a current market share of 21.6 % without mega deals (as per IDC JAS 2014). One of Lenovo’s major growth drivers is our diversified and industry leading product portfolio.
Recognized as the #1 commercial notebook vendor worldwide Lenovo’s flagship enterprise brand – ThinkPad – remains the most preferred brand among enterprise users. Over the years, we have been continuously enhancing the features of the ThinkPad, with ongoing innovation, better design and improved performance. Our investments in innovation continue to drive growth through differentiation.
Lenovo also anticipates huge growth opportunities for its commercial business given the new acquisition of IBM’s x86 server business. We want to use our learnings from the PC business to aim for market leadership in servers in India. With the IBM x86 acquisition, Lenovo is the only company with an end-to-end product offering (PC to server).
Lastly, with the Government’s focus on digitization and Digital India, we are optimistic about the use of technology to empower states, learning institutions and businesses, and we see a huge opportunity in working with the government to spread this across the country.
CT: What is the rationale for the x86 acquisition? How does this deal benefit both companies and partners?
Agarwal: Lenovo is a leader in the global PC market and aspires to hold the same position in the PC+ segment. IBM x86 acquisition will play a significant role in this transformational growth journey. This deal made Lenovo jump from the position of No. 5 server manufacturer in the world (in unit market share) to No. 3, as per IDC data.
Lenovo has bold plans for growth in the future and IBM x86’s people and products are an important part of that. Lenovo’s products not only support its overall financial performance and strengthen its core PC business, but also helps fuel its PC+ investments worldwide. Additionally, IBM’s people represent the most experienced team in the industry. By combining IBM’s technology with Lenovo’s operational excellence, the match becomes unbeatable.
Closer to home, the x86 team’s expertise in technology coupled with Lenovo’s scale, efficiency and channel reach will help us achieve market leadership in the Indian Servers space. We will also cross leverage our combined strength in our customer and channel base giving us a synergistic advantage. Further, the x86 deal provides us the platform to launch Lenovo’s ThinkServer in India. The introduction of ThinkServers fits well into our PC+ strategy and offers a bouquet of products that includes PCs Enterprise products and Cloud based solutions.
CT: What has been the role of your enterprise partners in Lenovo’s success in India?
Agarwal: Almost 85% of our business in the commercial segment is conducted through the channel partners, indicating that our channel fraternity is a vital part of our commercial ecosystem. The significance of our channel partners is reflected in the decision to revamp our channel structure, which targets partner profitability and direct engagement. Lenovo has a nationwide reach through its strong distribution network which is driven by the need to create a core channel partner ecosystem in India.
CT:Can you please indicate some of the enterprise computing trends in India and which are the popular Lenovo products in the enterprise segment?
Agarwal: In terms of emerging trends in the product space, new form factors such as ultraportables and hybrids are increasingly gaining traction from enterprise customers. Lenovo’s wide range of Think products clearly outlines this space with devices like the ThinkPad X1 Carbon, ThinkPad Yoga, and the ThinkPad Twist. Lenovo focusses on the customized needs of its buyers. In keeping with this, the ThinkPad Twist is focused on our SMB customers while the ThinkPad X1 Carbon is a premium business segment ultrabook.
The ThinkPad Helix, which is one of our most popular multimode devices, will soon see a slimmer avatar in Helix 2, which will be launched shortly. Another trend that we’re witnessing, is that of miniaturization – enterprises are increasingly looking to cut real estate costs by opting for more compact and smaller devices. The ThinkCentre Tiny is one such example, which is extremely popular among our enterprise buyers. We believe that going forward, miniaturization will continue to hold strong with Indian enterprises.
In terms of workspace related trends, initiatives like BYOD and mobility are gaining a lot of traction due to the rapid consumerization of IT. Companies are embracing these trends to increase employee productivity and satisfaction at the workplace. We see BYOD as an inevitable business change and we are working on supporting this by increasing the number of mobile computing devices available for our enterprise customers.