Lenovo: ‘Partners Can Make A Lot Of Money With Us’ On AI Compute And Storage

In a joint interview with CRN, Lenovo execs Matt Zielinski and Vlad Rozanovich talk about the IT giant’s recent milestone of hitting $2 billion in annual AI infrastructure revenue, the vendor’s plan to invest $1 billion in AI, how AI is driving a new wave of cloud repatriation and how its channel partners play a critical role in delivering AI solutions to organizations of all kinds.

Vlad Rozanovich, left, and Matt Zielinski

Top Lenovo executives said the Chinese IT giant is in the “best position” to fulfill the growing wave of demand for AI infrastructure and promised that channel partners “can make a lot of money” with the company in the critical areas of compute and storage.

The comments were made by Matt Zielinski, executive vice president and president of international markets, and Vlad Rozanovich, Lenovo’s former North American president who was appointed senior vice president of worldwide infrastructure solutions group sales in June.

[Related: Lenovo’s Vlad Rozanovich: ‘There’s Definitely A Run On H100-Type GPUs’]

In a recent joint interview with CRN, the executives touted Lenovo’s milestone of hitting $2 billion in annual AI infrastructure revenue, the vendor’s plan to invest $1 billion in AI across its entire portfolio over the next three years, how AI is driving a new wave of cloud repatriation and how its channel partners play a critical role in delivering AI solutions to organizations of all kinds.

“When I think about our posture within AI and the growth we’ve already experienced there and all that’s ahead, I just think, without a doubt, we have the best position to ride that wave and, of course, that means hand-in-hand with our partners,” Zielinski said.

Lenovo Seeks To Double AI Infrastructure Channel Sales Next Year

Zielinski said Lenovo channel partners helped deliver around 80 percent of its $2 billion in AI infrastructure revenue from its 2023 fiscal year, which ended March 31.

That figure represents sales not just for servers but also storage products within Lenovo’s Infrastructure Solutions Group (ISG), and Rozanovich said he hopes to double its AI business in the channel next year.

“I actually hope that over the next year, we actually double in the channel all of our AI-based business through our infrastructure solutions,” he said.

In the company’s first quarter, which ended June 30, Zielinski said ISG revenue took a hit in part because some of Lenovo’s largest cloud services provider customers shifted investments to AI infrastructure, but he considered that a “temporary ding” as the company is “very well-positioned for the future.”

As evidence, Zielinski pointed out how Lenovo went from sixth to third place in research firm IDC’s most recent ranking of the world’s largest AI hardware providers in July. A company spokesperson said the IDC data, which is not publicly available, is part of the research firm’s latest semi-annual AI tracker report.

Zielinski said the company’s recently announced plan to spend an extra $1 billion in research and development on AI products and services across Lenovo’s three businesses—ISG, the Intelligent Devices Group (IDG) and the Solutions and Services Group (SSG)—will make it an even bigger AI player.

“We’ve been healthfully spending on R&D, a million in AI alone, doubling R&D spend over the last couple of years, and so I think we’re really ready to catch this tsunami or this wave of AI going forward,” he said.

An executive at one Lenovo channel partner, Chris Bogan, said he’s seen an uplift in AI infrastructure business with Lenovo because of the vendor’s investment in GPUs and other products from Nvidia, the semiconductor company whose chips dominate the market.

“Our Nvidia business overall is growing, and, as part of that, the Nvidia ecosystem includes OEMs like Lenovo, and Lenovo is making the investments and reaping the rewards,” said Bogan, who is vice president of sales at Mark III Systems, a Houston, Texas-based systems integrator.

Echoing comments by Zielinski, Bogan said he has seen a shift in organizations in Mark III’s customer base prioritizing AI projects over other IT investments.

“AI projects are getting approved really quickly, where other IT projects are struggling quite a bit more,” he said.

Lenovo Sees Big AI Opportunities In Both Compute And Storage

While the growing demand for AI infrastructure will fuel new sales for servers that handle the computation of cutting-edge applications, Rozanovich said another major opportunity in the market where channel partners can drive significant revenue is storage.

“The No. 1 thing that you need when you have these big AI machines, whether it’s for large language models or data analytics, storage is the thing that’s going to become overwhelming to the industry,” he said.

By fulfilling the AI compute and storage needs of customers, Lenovo’s channel partners can expect to build a substantial business with the company, according to Rozanovich.

“I really think that our channel partners can make a lot of money with us figuring out, ‘OK, where do we position these AI engines, whether it’s at the edge or it’s in the data center. And then how do we package that with the storage solutions that’s going to actually be able to contain all that data that’s getting analyzed and manipulated,’” he said.

Bogan said Mark III’s customer wins with Lenovo span in applications from computer vision to large language models, the latter of which he called “wildly successful right now.”

The systems integrator has also seen a decent uptick in business around infrastructure for visualization and advanced graphics, which includes Nvidia’s Omniverse platform for 3-D application development.

“We’re seeing quite a bit more uptick in terms of Omniverse around AI and [machine learning], and I think the idea there is looking at simulations and then being able to say, ‘OK, we can simulate a business process and we can use AI to generate better processes and generate better content and better experiences.’ If you can do that, it just adds a multiplier effect,” Bogan said.

Lenovo Sees AI Driving New Wave Of Cloud Repatriation

While Rozanovich said there will always be a need to run applications in the cloud, he said the “massive” costs of moving data on and off the cloud will prompt a significant number of organizations to migrate AI workloads to on-premises servers or edge infrastructure.

“When you start seeing big datasets and models and the amount of data that could be manipulated locally, that’s going to be [an area where] some corporations, some customers are going to say, maybe from a security standpoint, maybe it’s from a cost standpoint, they’re going to say, ‘We want to bring that back on site,’” he said.

This presents “massive opportunity” for Lenovo’s channel partners, according to Rozanovich, including those who previously only sold the company’s PCs.

The Lenovo executive said a good portion of this opportunity exists in edge computing use cases where businesses in industries such as retail, food service, manufacturing and health care need to process large amounts of data as close to the source as possible to improve operations or introduce new capabilities.

“The solution that I see for channel partners is when you look at these smaller edge-type, ThinkEdge-type servers with the associated software stack to actually do localized AI,” Rozanovich said. “Because you don’t need these massive sets going up into the cloud and back. It’s actually creating what I think is going to be a resurgence for some on-prem devices for certain vertical industries.”

Bogan said Mark III’s customers are looking at how they can migrate workloads from the cloud to on-premises infrastructure so that they can train AI models on sensitive data more securely.

The main factor, according to the sales executive, is that his customers’ chief information security officers “just aren’t going to allow [sensitive] data to leave the four walls of the data center” for emerging applications like generative AI.

“At that point, the only option is repatriation,” Bogan said.

Lenovo Works With ISVs To Create Pre-Integrated AI Solutions

As part of Lenovo’s AI push, the company is spending $100 million on a program that creates pre-integrated AI solutions that bundle systems with software for partners to sell into various verticals.

Called the AI Innovators program, it’s meant to help partners sell AI solutions to customers quicker by taking out the guesswork of integrating and optimizing software from independent software vendors (ISVs) on Lenovo’s server hardware.

“Instead of maybe that channel partner saying, ‘Hey, how am I going to look at this hardware, this software, this ecosystem,’ we’re actually now coming to some of these partners and focus on some of these key customers in certain vertical markets, saying, ‘Here’s how we’re going to actually provide you a solution to go after a specific use case,’” Rozanovich said.

So far, the program has created around 150 solutions in partnership with ISVs, and they address AI use cases in verticals such as retail, life sciences and entertainment, among others, according to Zielinski.

“AI is pretty ambiguous. It’s the art of the possible. It’s basically infinite. So one thing we’re trying to do is structure solutions with these ISVs that are verticalized and that we can spread out to the world,” he said.

For instance, Zielinski said, Lenovo created a solution with an ISV called Everseen that equipped 1,700 grocery stores owned by retail giant Kroger with a computer vision system to improve self-checkout.

He sees this as one of many ways Lenovo’s channel partners can “capitalize” on the program.

“AI is really an ecosystem partnership play, and that is everything from hardware providers, software providers, and of course, our channel,” Zielinski said.