Lenovo Ramps Up Strategy To Continue Its 'Hyper-Growth' In PC

The company showed a strong commitment to product innovation and working with the channel during Accelerate 2019, partners told CRN.

Currently at third place in the North American PC market, Lenovo has its eye on reaching No. 2 within five years through major investments in product innovation, key verticals and improved enablement of partners, executives told CRN this week.

Lenovo saw market share of 14.9 percent in the U.S.-Canada PC market for the full-year 2018, according to figures provided by research firm IDC. While that showed strong growth from 13.2 percent in 2017, Lenovo still trailed well behind No. 2 PC vendor Dell, which had share of 25.8 percent in the market last year. (HP Inc. held the No. 1 spot, with 30.3 percent share.)

[Related: The 10 Biggest Partner Takeaways From Lenovo Accelerate 2019]

"Our vision and our mission is to be 20 percent within three years, and No. 2 within five years," said Matthew Zielinski, president of Lenovo’s North America Intelligent Devices Group, in an interview with CRN.

Lenovo is being propelled by a retooled strategy that’s been rolling out over the past year, said Zielinski, a former AMD executive who started in his role at Lenovo in February 2018.

The strategy includes new efforts targeting PC growth that Lenovo announced at its Accelerate 2019 partner conference this week in Orlando.

The conference saw a number of big product reveals--most prominently, a device that Lenovo is calling the "world's first foldable PC"--along with the debut of new partner incentives and vertical investments within the PC segment.

Unlike other manufacturers that have put less emphasis on PC in recent years, Lenovo is "not shying away from it," said Pat Lonning, director of strategic partnerships and vendor relations at Virginia Beach, Va.-based Electronic Systems Inc.

"You can tell they've really continued to invest in the client business," Lonning told CRN at Accelerate 2019. "When you go to other events held by other manufacturers, they don't really seem to be investing or focusing on it, or innovating as much."

Innovation

This week, Lenovo debuted a category-creating ultra-small desktop PC, the ThinkCentre Nano, along with a new product line of sleek notebooks aimed at SMBs, the ThinkBook.

The ThinkBook offers the durability and performance of ThinkPads, but swaps out the typical carbon-fiber chassis in favor of metal. The notebook also offers standard business capabilities in security and manageability rather than full enterprise-class capabilities, which helps with affordability.

Compared to Dell's Vostro and HP's ProBook lines of SMB notebooks, the ThinkBook is "thinner, it's lighter, it's faster. And aesthetically, the design is just off the charts," Zielinski said. "If you look at it relative to what you'd expect from an SMB-grade device, it's just so much more than that."

Lenovo also previewed a 13.3-inch foldable PC that is slated to join the ThinkPad X1 lineup in 2020. "It truly is an entirely new category of compute that we're really proud to be the first on," Zielinski said.

Andy Jones, CEO of Cleveland-based MCPc, pointed to the foldable PC as representing Lenovo's "desire to be a thought leader--even if it involves creating an entire new category."

Overall at the company, "they seem to be reinvesting in [product innovation] quite a bit," Jones said. "They're definitely fulfilling that promise from a couple years ago."

Security

At Accelerate 2019, Lenovo also announced a number of security enhancements that are coming to some of the company's new PC lineups.

The ThinkShield Chip is an embedded chip on ThinkPad motherboards that performs roughly a dozen security functions and, importantly, "you can't get to it from software," said Jerry Paradise, vice president of global commercial portfolio and product management for Lenovo's Intelligent Devices Group.

Lenovo also introduced self-healing BIOS capabilities and new ThinkShield endpoint detection technologies for improved PC protection.

On security, Lenovo has "come back out strong in that space this year," Jones said. That shows a greater awareness at the company than in past years of how critical PC security is to customers and partners, he said.

Vertical Focus

Lenovo also shared details this week on new investments aimed at boosting the company's business in government and higher education, where the the company has a slim market share, said Rob Cato, vice president and North America channel chief in the Intelligent Devices Group.

Previously, Lenovo staff members focused on public sector split their time between government, higher education and K-12. Now, each of those segments will have dedicated staff members of their own, and Lenovo has also been hiring for the effort, Cato said.

"We've added quite a few resources around our public sector space," Cato said. "These are end user sales resources that are ready to go engage with our channel partners, both in higher education and in government."

Going forward, partners that work in those verticals "should see significant engagement from Lenovo around growing that business," he said.

Rich Artese, CTO of Electronic Systems Inc., said it was clear to him during Accelerate that Lenovo has "invested a huge amount of time, money and resources" to growth in the public-sector space.

"That speaks volumes to where they're trying to play," said Artese, whose firm is heavily focused on public sector. "I think it's tremendous."

Channel Investments

As part of a broad channel program retooling over the past year, Lenovo split its Intelligent Devices Group partners into four tiers—Authorized, Silver, Gold and Platinum—based on sales volumes. Crucially, partners receive higher incentives such as back-end rebates and MDF as they reach the higher tiers, unlike in the previous Lenovo program.

Several Lenovo Gold partners told CRN at Accelerate that the program resonates strongly with them, and that they're committed to moving up to the Platinum tier--which requires $10 million in annual Lenovo sales versus $1 million for Gold status in the U.S. Path to Platinum is "compelling," said Larry Fulop, vice president of Tempe, Ariz.-based MicroAge.

"As you move up in tiers status they make it more attractive," including with increased margin and enhanced access to the company, Fulop said. "I definitely am motivated to get to Platinum in 2019."

Lenovo also announced new incentives at Accelerate geared around selling high-priority PC products and services.

The incentives include new automatic discounts and improved back-end rebates, as well as the ability for some partners to get rebates for specially configured devices, rather than just preconfigured "TopSeller" products.

For Platinum partners, Lenovo is introducing a new incentive aimed at boosting sales of premium TopSeller devices and workstation, as well as services.

The incentive, dubbed the "trifecta," will provide improved back-end rebates for partners that reach certain sales levels in each of the three areas.

"We're going to continue to pour gasoline on the fire," Zielinski said. "We're going to get even more aggressive programmatically with the partners that are more engaged with us."

All in all, Zielinski said Lenovo has set itself up to grow rapidly regardless of challenges--such as the ongoing Intel CPU shortage--as well as temporary opportunities such as Microsoft's end of support for Windows 7 and the resulting shift by businesses to Windows 10.

Zielinski pointed to the new vertical investments, along with "all the fundamentals we have in place around our acquisition engines, around our growth in SMB [and] new products like ThinkBook to expose us into markets that we just haven't had the perfect fit before."

"I think regardless of any market tailwinds or headwinds, we're just in hyper-growth mode," Zielinski said.