The Lenovo at the end of November is a markedly different one than the one at the beginning of the year.
It was in January that Lenovo executives announced within days of each other that the company was going to buy IBM’s x86 server business and Google’s Motorola Mobility handset unit in deals totaling about $5 billion.
When the two deals finally closed—the $2.1 billion IBM purchase on the first day of October, the $2.91 billion Motorola acquisition on the day before Halloween—Lenovo, the world’s largest PC maker, became the No. 3 vendor in both the server and smartphone markets. CEO Yuanqing Yang and other executives have said they expect the deals to do for Lenovo what the company’s $1.25 billion purchase of IBM’s PC business in 2005 did—help propel the company to the top of the server and handset markets, and challenge the likes of Hewlett-Packard, Dell and Samsung.
“With these two deals, we are now No. 3 in both businesses, but we are not satisfied,” the CEO said in a statement when Lenovo announced its quarterly financial numbers Nov. 6. “We will replicate our success in PCs by outgrowing the market to challenge the top two. Mobile and Enterprise are now our new growth engines, and over time, like PCs, they will become our profit pool as well.”
A key driver of that growth, particularly in North America, will be Lenovo’s channel partners, and that’s where Chris Frey comes in. Frey is the company’s vice president of North American commercial channels and SMB, and in a recent interview with eWEEK, he made it clear that Lenovo will rely heavily on the channel to expand the reach of the vendor’s new products.
“We’ve got a broad partner base … that serves all segments of the market,” he said, adding those partners will play a key role for the company going forward. There may be some customers who prefer to deal with Lenovo directly, Frey said, but Lenovo’s preference is to leverage its channel partners. About 85 percent of Lenovo’s business comes from the channel.
Lenovo already had a small but growing x86 server business—under the ThinkServer brand—but the addition of IBM’sx86 server business brings with it a broad array of products—blade servers and switches from IBM’s System x, BladeCenter and Flex System businesses, x86-based Flex integrated systems, NeXtScale and iDataPlex servers and associated software, blade networking and maintenance operations. That will be the cornerstone of an Enterprise Business Group that executives said they expect will become a profitable $5 billion unit over the next year.
In the smartphone space, Lenovo had some products in markets overseas. However, with Motorola, the company instantly gets a presence in the North American market with a line of smartphones that includes the Moto X, Moto G, Moto E and Droid devices, as well as Motorola’s future roadmaps.
Both deals also bring thousands of new employees and creates a company that is now reportedly worth as much as $43 billion.
Lenovo Pushes Single Channel Program for Servers, PCs
In the channel, Frey’s challenge is to integrate the new products into the existing network, so that all partners can sell all Lenovo products. The company doesn’t want siloed channels where some partners sell some products and other partners sell different ones. Officials want end users to be able to go to their channel partners and buy whatever they need.
It’s a strategy called One Lenovo, One Channel, and its aim is to create a single distribution model for all of its products. It kicked off the day the IBM deal closed.
“We want partners to look at us as a company that can build tablets and PCs and data center [products] and [solutions for] the cloud,” Frey said, adding that he wants all partners to be able to sell everything Lenovo offers. End users “can come to one company and talk to one company about meeting their computing needs.
“Our intent is to have one set of programs.”
That includes offering partners a single experience with Lenovo, and being able to offer their customers a single experience, he said. Channel representatives selling PCs and x86 servers will work together when calling on customers, and there will be a single compensation program for reps who sell PCs or System x servers, he said. The goal is to have this single, integrated distribution model in place and running well within the next few months.
The response from the channel has been good, Frey said. Partners “are excited to be selling a bigger portfolio,” he said. Now Lenovo officials have to help train those partners—most of whom now have focused primarily on PCs—to move up the stack and deeper into the data center. The company is busy educating the channel about the new products, and then training them to talk to resellers and end users. Officials also are working with more than 1,000 new channel partners brought on board by the acquisitions, and getting them up to speed with what Lenovo offers.
“We want to train them so they can recommend us,” Frey said.