The PC is supposed to be dead, a margin-deprived hardware business that has no future, but Lenovo is bucking that trend with a vengeance.
The world's fast-growing PC maker has been on a roll the last two years, thanks to its channel-centric sales approach and its revamped product portfolio. The company, which purchased IBM's PC division in 2004, has introduced a number of new products recently, from SMB-focused ThinkPads to all-in-one desktop PCs, while also boosting its channel strategy with its first ever North American partner conference last month.
Now Lenovo is stepping up its efforts with even more new products, including tablets, and a major advertising campaign to increase its brand awareness. The new campaign, titled "For Those Who Do," will be focused on consumers and small business owners, which are two frontiers of potential growth for Lenovo.
Meanwhile, Lenovo plans to launch two Android tablets this summer -- an enterprise class ThinkPad device and an IdeaPad device for consumers -- with a Windows-based tablet coming later.
CRN talked tablets, branding and more with Lenovo President and COO Rory Read at the company's Accelerate 2011 partner conference in Las Vegas. Here are excerpts from the conversation.
What are you impressions of Accelerate 2011 so far?
I think it's an outstanding turnout. I think there's a lot of energy and buzz in the room. People seem optimistic about the industry. I think they're optimistic about the partnership that we're creating together. And I think they sense the synergy in the relationship. So I think people are pretty positive. I'm also very excited about the professional structure of the show; I think it's really well done. The marketing team did a really great job with the event. To me, it looks first class, and it reflects that we have momentum.
Should you have had this event sooner, then? Should Lenovo have held a partner summit a year or even two years earlier?
Well, I think it's at the right time now. We first started with our CES appearances and building our presence, and then giving clarity to our business partners on our strategy, making that strategy very consistent, and then really executing on it. People know what we're going to do. And they believe that we really see their success as being the key to our success. Then we started to do some sessions with distributors and larger business partners, and those sessions went very and well we took feedback based on those sessions and used it [for Accelerate 2011]. And we've been lifting our market share all that time. So I believe this is the perfect time to have this event and really expand. When we started to think about doing this event, we set a target for attendees. And we've exceeded that target. And we've challenged the events team for next year. We said, "Why don't we double, or even triple, this event next year?" Because there's interest here about the product set and the channel strategy and how we can win together.
Next: Lenovo's Tablet View And Desktop StrategyWhen we spoke at CES 2010, you said you believed that netbooks, which were hot at the time, weren't a threat to the core notebook market and that netbooks would eventually blend into the overall laptop category. That prediction looks pretty good now, especially since netbook sales have slowed. What's your perspective, then, on the tablet market?
I personally believe that tablets will eventually settle in around 14 to 18 percent of the overall PC market; and that's tablets that are in a PC-style space that are doing real work. I'm not counting people that are using tablets as e-readers. In each market, there's a surge of activity around a new technology and then it comes down to water level and becomes more standard. I think the form factor is important, and I think it will play in consumer, small business and enterprise segments. But it's not going to be dominant form factor at any time. It's not going to happen. There will be other solutions down the road, plus there are benefits to things like ultra-thin notebooks or clamshell devices with additional input devices. So yes, tablets will be an important form factor. But in fact the more important trend isn't about the physical form factor -- it's the convergence that these devices are driving across the operating systems and processors.
Think about the impact that Android and ARM have had on the ecosystem. The proprietary control points of today's ecosystem have to come under pressure now. It's not unlike the Internet and TCP/IP 15 years ago when proprietary networking protocols like SNA and mainframe systems dominated the landscape, and people said "Oh, the mainframe is dead. The server is dead." Well, it was quite the opposite. Since that time server volumes have exploded. In fact, the proprietary control points adjusted and changed and price points also changed, which fueled an explosion in innovation. I think we're going to see that same kind of explosion created by this convergence over the next 3-5 years.
And it's not the death of the PC – quite the opposite. When those price points and control points change, it's going to open up the ability for 3 billion people additional in emerging markets to obtain the technology. That's a lot of people. And let's say my math is off and I'm only a quarter correct; that's still 700 million to 800 million more people that have to have that technology. And that's what's going to fuel this next expansion. And that's why emerging markets are so critical, and why Lenovo is number one in a lot of those markets like China, India, Latin America, and Russia. If we can capture that scale, then that means the price points and value gets better for everyone here in North America and across the planet. So I think that's the more interesting discussion than the physical form factor of tablets. Tablets are important, don't get me wrong. But they've been around for 10 years, and it's just that we're seeing a different solution today with touchscreen capability and other features at a different price point. That's going to evolve, and you're going to see tablets blur into the traditional PC space.
Lenovo has spent a lot of time at this event promoting its dekstops. Partners obviously know the ThinkPad brand but you're now trying to expose them to other product segments, particularly desktop systems. How will you achieve that?
I think what's key is the partner relationship. If you create a synergistic relationship based on mutual respect and value to each other, I think that opens the door for ever-expanding business opportunities in both directions. I think putting in place our protect & attack strategy almost three years ago and executing consistently so the partners know and trust we're there for them is crucial. We're not going to acquire some large services business to compete with them.
Together, we and the business partner create a better solution for the end customer. That rings true for them. And I think the resellers here at the event are seeing that. And once they see that, then they're willing to explore more opportunities. Based on that, they say "Okay, your laptops makes a lot of sense, you have great technology there – let's now move to desktops or tablets. Here's a vendor partner that we know and can relate to and can be successful with." And they know that our products stand for high quality, innovation and great value. That's going to be the same whether it's notebooks or desktops. So we really want to be that client provider across the portfolio. And I think it's a natural time for this show and for expanding into the desktop area.
Next: Lenovo's New Branding EffortCES 2010 seems like a pivotal point for Lenovo in terms of the company's image. You followed that up with strong channel initiatives, and together those two efforts really changed the conversation around Lenovo and seemed to open a lot of partners' eyes. Are you pleased with the progress you've made since that time?
I'm very excited about the progress we've made in almost two years. I think the thing we're most proud of is the level of trust and depth of the relationships we've been able to cultivate without business partners. That is the path to success in the PC and client device space. There is no doubt. And if you look at where we came from three years ago, sure, we had a solid partner base and a solid channel. But if you fast forward to today, and you talk to any of our channel partners and ask them if we deliver on our commitment and if we are committed to the channel, I think they'll answer yes. And we're listening to them every day. This event that we're at is not just about sharing out products with partners. It's about having one-on-one sessions with them and listening to their feedback so we can adjust and make the partnership even more successful.
You've introduced a lot of new products, and you have a growing partner base in the channel. Is the last step increasing your brand awareness?
Yes, that's 100 percent correct. We solidified our base, and we have a heritage of quality products and innovation. So many of our competitors have turned their backs on that; they're focused in buying off the shelf from OEMs and ODMs. What we're doing is continuing to invest in the technology to create the next wave of innovation. Then, we create a deep and loyal relationship with our channel, and grow the business. The last piece, now that we have about 10.2 percent global market share, is to make a big investment around a major branding campaign. It's the perfect time to position Lenovo and our product set around the idea that we create the technologies for those people who get out there and make things happen -- "For Those Who Do." And it really ties back to our culture, the Lenovo way. We deliver on our commitments. We do what we say, and we own what we do. That's a lot of "do," and that's consistent with our new campaign. The whole idea is that it's not just about technology for technology's sake. It's about creating those devices that allow people to make things happen and move their world forward.
Where will that branding be focused then? Will it be targeted primarily at the consumer level with the idea that it will work its way up to the SMB level? Or will you start at the SMB level and hope the message works its way down to end users?
Well, you probably know by now that I'm a scale guy; I like to grow, get bigger, get stronger and expand. I believe it's a two-pronged approach. We have to go after both. We're very strong right now in the commercial sector -- there's no doubt about it. We're number one in large enterprises and public sector in notebooks, and we're number two worldwide in commercial notebooks. So that business is going well, and we have a great brand. So as business and our consumer business in China remains strong on the protect side, we'll attack both consumer and SMB. I think the time is now to push in both directions, and to make sure we get that shelf space in the large retails, and also make sure we're creating the next generation of SMB-focused products like the new ThinkPad Edge systems. We have momentum, so let's keep the ball rolling.
Next: Lenovo's SMB, Consumer FocusWill the branding message be different for the two markets then? Or will it be consistent?
I think the idea of "For Those Who Do" can play to both audiences because there's some overlap, but the way that you play and it and leverage it will be a little different. So in the SMB space, we want to take examples of business owners and entrepreneurs who are using technology to make their companies go. On the consumer side, we want to take examples of people that have a passion for a certain hobby or activity. For example, base jumpers can use their computers for an analysis of their jump. We want to create the technology that makes each of them able to do their thing. And I think by enabling that concept, it plays very well to both the SMB and consumer markets. You just have to shape the story a little around the action and activity and passions of those groups.
There's seems to be a movement of consumerization of technology in the commercial sector. Do you think that will continue and how will it affect your strategy?
I do think it's going to continue. Over the next half a decade or decade, you'll see a continued convergence across devices. It's only natural; you and I used technology to do our jobs. But when we're home, we often use that same technology for other interests and passions. So I think that blurring will continue to evolve. There's no doubt that businesses need the security and the reliability features to protect their corporate assets. But the kind of activities you do in business today, like rich media and video conferencing, all of those things have blurred across the lines. But I think there will be subsets of functions and features that will be accented more in the commercial sector, and we're going to make sure we listen to those customers and tailor the specific solutions to get the best experience. We won't push a one-size-fits-all or vanilla solution. They will be tailored.
If you look across our product portfolio right now with ThinkPad, ThinkPad Edge and IdeaPad, you can see they share some common features and design language, but they are also clearly tailored to the specific needs of their target audience. We spend hours upon hours as a team going through the technology to understand what are the right features that should be consistent across the products but also what has to be unique for each segment to give that customer a reason to buy and also know that Lenovo is the right value for the dollar.