ORLANDO, Fla. -- Lenovo's top executives addressed their channel partners' main concerns -- the pending IBM x86 server group purchase, positioning and selling Lenovo products, and new products and program enhancements -- at the opening general session of the Lenovo Accelerate 2014 partner conference being held here this week.
With the Lenovo partner conference sold out six weeks prior to the conference registration deadline, a first for the company, Sammy Kinlaw, director of channel sales for the U.S., Caribbean and Central America channel, admitted that while Lenovo continues to grow in both revenue and partners, the top-of-mind issue for the 810 registered partners in the room was the pending acquisition of IBM's x86 server group and how it will transform Lenovo and their businesses.
A Connecticut-based Lenovo partner noted that this is his first Lenovo conference, although he's not a new partner, and was driven to attend because of the pending IBM x86 purchase, which, he said, would be fantastic for his business.
The channel-centric vendor's business in North America has seen big year-over-year growth: 65% overall revenue growth, 67% server growth and 35% growth in the SMB market. Lenovo also boasted 40% growth in its North America PC business in a market that's declining or flat at best. At the same time, 3,200 new partners signed on with Lenovo.
What many Lenovo partners may not have been aware of is Lenovo's position in the marketplace – No. 1 in PC sales worldwide for the last three quarters, No. 2 in what the vendor calls "PC +" sales (tablets, servers and workstations) and No. 3 in the world in smart connected devices. And, perhaps as a sign of where Lenovo is headed, the vendor has the No. 1 app store in China. The company recently created a free app called Shareit -- for sharing photos, videos, music, documents, contacts and even other apps -- that's had more than 100 million downloads to iPhone, Android and Windows mobile devices.
While this market share is impressive, Lenovo still lacks top brand recognition in North America, a scenario that's slowly changing and is likely to get a big boost when the U.S. federal government approves the acquisition of both the IBM x86 server group and the Motorola smartphone business from Google.
Lenovo North America President Jay Parker noted that Lenovo brand awareness in the consumer and SMB space grew 67% in the past two years, with the company moving from the No. 10 position in brand awareness to the No. 4 position most recently. Lenovo will continue to make investments in branding until it's No. 1, Parker said.
"We're at an inflection point where we can make history," he said, citing what he described as a number of extraordinary things going on in Lenovo's business and its business with partners, most notably accelerating its server business with the acquisition of IBM's x86 server group, essentially buying IBM's heritage of performance, technology, expertise and talent in the data center.
"It's that trust and craft that's hard to crack organically," Parker said.
The Motorola acquisition will also give Lenovo the ability to bring its smartphone business -- No. 3 worldwide but not in North America -- the brand, the carrier relationships and the intellectual property to succeed here.
"These two acquisitions together allow us to become that PC+ player immediately across the board," he said.
Lenovo has visions of being a great technology company, he said, not just a great PC company and not just a great device company but one that creates an experience across devices.
Matthew Goodchild, CTO of CG Technologies Corp. of Concord, Ontario, is looking forward to the pending purchase of the x86 servers. "It will strengthen our relationship with Lenovo," he said. CG Technologies is an IBM business partner and buys its x86 techology. The partner also sells Lenovo PCs.
CG Technologies runs a data center that uses IBM x86 technology and provides Web and email hosting and virtual services to SMB customers. Today, most of Goodchild's customers aren't familiar with the Lenovo brand, except for the Lenovo ThinkPad line. "Our customers don't know Lenovo, but when we say 'IBM ThinkPad,' they get it," he said.
Goodchild said he is not too worried about the integration of the x86 business into Lenovo, because of how well Lenovo has integrated IBM's ThinkPad into its business following that acquisition in 2005.
Parker laid out Lenovo's top five priorities for 2014: incorporating the acquired companies into its team; strengthening the company's commercial business, which, Parker said, creates brand recognition across the company's routes to market; smart commercial acquisition or growth; servers and services; and customer experience.
The independent sales motion has to continue because once it slows down, your business is dependent on someone else.
Chris Frey, vice president of North America commercial channel and SMB, Lenovo
Both Parker and Darrel Ward, vice president and general manager of Lenovo's enterprise product group, stressed that Lenovo is not abandoning its current server products but rather is growing and investing in its ThinkServer business and that it will continue to be a part of Lenovo's portfolio following the IBM x86 acquisition. The message for partners is that the complementary product portfolios will coexist.
In fact, in the first half of this year, Lenovo refreshed its entire product line, adopting the latest Intel technology. The company is also tackling new "Think" product segments, such as the RS140 one-socket server, due for release later this year, for example. Expect to see another significant refresh coming from Intel later this year, followed by a Lenovo refresh of the entire ThinkServer product line, according to Ward.
Lenovo also wants to grow its services business and wants the partner community to execute. Today, Lenovo outsources a good portion of its services business to the partner community and going forward wants to increase that revenue with partners.
Chris Frey, vice president of North America commercial channel and SMB, noted, for example, that selling the company's TopSeller services -- warranty extensions and accidental damage protection, for example -- will be a priority going forward and that partners need to add to their sales quotes from the get-go.
Frey drove home the idea of creating an independent channel, which the company first discussed two years ago. Last year, the initiative to create an independent channel focused on a "hand-to-hand combat" strategy that revolves around winning every day with customers, training and ongoing skills development.
"The independent sales motion has to continue because once it slows down, your business is dependent on someone else," he said. The independent sales motion drives sales velocity, Lenovo investment in the channel and, ultimately, drives higher partner profitability.
Frey's battle plan for the year is to make sure Lenovo's channel team creates engagement and relationship models with partners and with Lenovo field reps who call on large accounts; to drive partners to continue to grow SMB business with ongoing training; to limit channel conflict and to make sure engagement policies are enforced; and, as partners increase business, to make sure Lenovo's back-end operational efficiencies scale with that business growth.
Lenovo did not announce any major changes to the Lenovo Partner Network but the company talked about a refresh of the "combat kits," mobile demo kits that are available to partners. The existing client combat kit has already been refreshed, the company launched a new server combat kit a few months ago and announced an education combat kit last week. The company is also planning to change the back-end discounts in its New Customer Bonus program to front-end rebates later this year.
Expect to see changes in Lenovo's training and certification strategy when the acquisition of IBM's x86 server group comes to fruition. Access to IBM x86 product training materials are part of the acquisition agreement, according to Ward.