Lenovo Cites Hardware, Channel Strengths In Bid For More Partners

Lenovo, coming off a couple of blockbuster acquisitions giving it a dominant position in mobility and servers, is preparing to capitalize on the potential turmoil in the IT industry caused by major restructuring by both of its largest rivals.

Chris Frey, vice president and North America channel chief for China-based Lenovo, said his company's massive acquisition of IBM's x86-based server business and its acquisition of Google's Motorola mobile phone business make Lenovo the only manufacturer in the world that works with customers from the mobile phone to the data center.

Frey also showed how the company's partners can get high margins on server sales.

Related: [Lenovo Enters Enterprise Storage Market Without EMC, IBM Help]

Frey, talking to an audience of solution provider attendees at this week's Varnex conference held by Fremont, Calif.-based distributor Synnex, said the breadth of solutions Lenovo offers is important to channel partners.

"One thing people don't talk about: Every 400 smartphones requires a server and a storage device," he said.

With the closing of the IBM and Motorola transactions, Lenovo is now a $46 billion company and No. 231 on the Fortune 500 list of large companies, Frey said.

"Who cares about No. 231?" he said. "They reason why you should care is we're relevant."

Frey used his keynote to contrast Lenovo with rivals Hewlett Packard Enterprise and HP Inc., which this month were formed by the split of Hewlett-Packard, and Dell, which is in the process of acquiring EMC, without mentioning them by name.

For instance, Frey said Lenovo does all its own R&D as well as manufacturing, and noted that Lenovo does not outsource its manufacturing.

He also cited the strengths of Lenovo as a haven of stability in a fast-changing IT business.

Lenovo is currently the world's largest PC manufacturer, with a 21 percent market share, Frey said. The company is also the world's third-largest manufacturer of servers and tablet PCs, and the fifth-largest smart phone supplier, he said.

Lenovo is also a leader in the North American channel, Frey said. All Lenovo federal sales are channel-led, as are 96 percent of its SMB sales, 94 percent of its health-care sales, 89 percent of its Canadian sales, 89 percent of its enterprise sales, and 82 percent of its public sector sales, with the latter not including sales through agents, he said.

Lenovo's growth and its breadth of solutions caught the eye of at least one longtime HP partner.

Troy Drever, president of Pure IT, a Calgary, Alberta-based solution provider and HP partner, told CRN that he found it interesting how Frey positioned Lenovo in comparison to HP.

Lenovo's message of offering solutions spanning from mobile to client devices to servers is an interesting one as HP just completed its split, he said.

"Lenovo makes a lot of sense," Drever said. "I don't like what HP did in splitting in two. I understand it. But HP has been our go-to partner, just like Compaq before it and Digital before that. Now we have to deal with two different companies, two different programs, and two different incentive plans."

Dean Edouarde, group vice president at UGM Enterprises, a Los Angeles-based SMB solution provider and Lenovo channel partner, said Frey's presentation included some valuable Lenovo corporate trends, but was missing a call to action.

"He didn't say anything that says, 'You gotta go out and do something new,'" Edouarde said.

One thing Frey did do was introduce partners to Lenovo's Stack TopSeller programs as a way to maximize margins.

Frey showed how a combination of up-front discounts, rebates, spifs, and new customer bonus could result in a 19.9 percent margin on a sale of 10 x86 servers.

"Twenty points on a $25,000 sale?" he said. "Sounds like a software program to me. ... If I can't get your business with that, I might as well give the microphone back to Bob [Stegner, Synnex's senior vice president of North American marketing]."

At that point, Stegner yelled from the audience, "Thanks, Chris."

"And that wasn't even planned," Frey responded.

PUBLISHED NOV. 11, 2015