10 Key Takeaways From Lenovo Accelerate 2018

Lenovo's Next Chapter

While acknowledging that recent channel program changes were tough on many partners, Lenovo executives say that the opportunities for growth with the company are massive. Lenovo's leadership for North America used the Accelerate 2018 partner conference to emphasize that efforts to rebuild trust with partners and reinvest in channel growth are well under way. And Lenovo has all the right pieces for gaining share in the PC and data center markets in North America, executives said during the conference this week in Las Vegas. "The mission is really to unbridle all that potential that's already existed," said Matt Zielinski (pictured), Lenovo's North America president for its PC and smart devices division. Since Zielinski joined the company from AMD in mid-February, he and other executives have "spent the last 13 weeks really diagnosing and dissecting the business, to really chart out a strategy that I believe is a winning one," he said.

In the following slides, we've rounded up 10 key takeaways from Accelerate 2018 on Lenovo's product and channel efforts.

Rebuilding Trust

An overhaul to Lenovo's channel compensation program last fall hurt profitability for many partners, while the company has also seen frequent executive turnover in recent years. Now, a top focus for Lenovo is to "start building back some commitment and trust back into our ecosystem with our partners," said Rob Cato (pictured), Lenovo's new channel chief for its North American PC and smart devices business, in an interview with CRN. For starters, Zielinski is committing to the company by relocating to Lenovo's North America home base of Raleigh, N.C., Cato noted. "He wants to be the guy that's going to lead us back and be here consistently," Cato said. "He's building a place in Raleigh. We haven't had a president in Raleigh for a while. So I think that is also a commitment he's making not only to Lenovo but to our channel partners also."

"There's been a lot of changes. There's been a lot of inconsistency. And I think our channel partners have been lacking a little bit of clarity from Lenovo," Cato said. "So for us it's about making sure we get back to that clarity."

Share Gains In North America PC Market

Trailing well behind HP Inc. and Dell in the North American PC market means that Lenovo is something of an underdog, according to Zielinski. But the company has compelling offerings primed for the commercial market -- such as the well-regarded ThinkPad X1 series and its P Series workstations -- and Lenovo is "hungry" to steal share from competitors, he said. Lenovo's target is to add between a quarter and a half percentage point of market share per quarter for the foreseeable future, Zielinski said. "As our business improves, and we return to growth where we can scale and deliver our technology to more users, then I believe there'll be a very natural snowball effect," he said.

Dan Hammack, co-founder and CTO of Centennial, Colo.-based DHE Computer Systems, said he agrees that Lenovo is poised to grab share from competitors with the help of partners. DHE has had success getting customers to switch to Lenovo from vendors such as Dell, both as a result of competitive pricing and a strong services component, Hammack said. "As time passes I anticipate many other OEM takeaways" at DHE, in which customers switch to Lenovo from other vendors, he said.

The Workstation Business Is Surging

One of the brightest spots in PC for Lenovo is its workstation portfolio, including its P Series notebooks and desktops. "The workstation business is on fire -- truly a force to be reckoned with," Zielinski told partners during Accelerate. The workstation portfolio includes the ThinkStation P320 Tiny (pictured), which Lenovo touts as the "world's smallest workstation." Workstations are now a billion-dollar-per-year business for Lenovo, and "and that could be easily $2 billion here very, very quickly," said Kirk Skaugen, executive vice president at Lenovo, during his Accelerate keynote.

Workstations are "easy to sell. We make a lot of margin on workstations," DHE's Hammack said. "We're big fans of the entire P Series, especially the mobile devices like the P51 and the P71. And then on the towers, they're fantastic too. We've had enormous growth in that area ourselves."

Big Opportunities In Data Center

Lenovo's data center business is "on an unstoppable growth trend," Skaugen said during his keynote, with every geography closing the recent quarter with double-digit revenue growth. Going forward, Lenovo expects "far greater than market growth" in data center, he said.

Helping to drive the growth are offerings for supporting high-performance computing and artificial intelligence, such as the ThinkSystem SR950 server (pictured). "They have a strong commitment to high-performance computing and digital transformation, especially around AI," said Stan Wysocki, vice president at Houston-based Mark III Systems, which specializes in those areas. Lenovo has been "ahead of the curve" in supporting new chips from Intel and Nvidia, and has built out a sales force dedicated to high-performance computing and AI, Wysocki said. "They're definitely all in. And I like that," he said. "I think because of what we've done and where we've invested, we're attractive to all vendors. But [unlike Lenovo] not all vendors are really forthcoming in leading initial engagements."

Hammack noted that DHE is expecting to shift more of its data center business to Lenovo from other vendors. "The new ThinkSystem solutions are priced right, they are built extremely well, and they're easy to deliver and deploy," he said.

Advantages In Software-Defined Data Center

As the industry moves to software-defined infrastructure, Lenovo has some important differentiators with its ThinkAgile line of software-defined solutions, Skaugen (pictured) said. "Lenovo is not encumbered by the status quo," he said. "We're not trying to protect a legacy business. So we can move very aggressively, whether you're talking about Nutanix or vSAN or Azure Stack. Or Pivot3 or DataCore or Cloudian. Any of those. We can move very aggressively to software-defined."

Lenovo has a "unique value proposition for each of those [vendors]. So we're doing quite well," he added. "Nutanix has said we're their fastest-growing OEM. But we have a good presence with the other folks as well."

Shifting From Product-Centric To Customer-Centric

Lenovo has been a "product-centric company for a number of years," Cato told CRN, but is now working to evolve into a customer-centric company that doesn't bring predefined ideas about what to sell. "Far too often we've gotten ourselves into trouble by going in convinced that we know exactly what a customer wants, or exactly what a partner wants to deliver to a customer. We kind of pushed a certain product on them," Cato said. "They may need a different type of product. And our programs weren't designed and focused on that." Lenovo is now retooling its approach to focus more on end-user needs, in part by incentivizing employees and channel partners around customer centricity, executives said.

That goes for both the PC and data center sides of the company, Skaugen said during his keynote. And that also means targeting customers by segment. "Gaming customers are different than enterprise ThinkPad customers. So too in data center -- hyper-scale customers are different," Skaugen said. "Every part of Lenovo now is organized from a customer-centric, end-to-end philosophy."

One specific change is that employee bonuses are now based on "customer-centric behavior"-- such as on-time delivery and after-sales support--to a much greater degree, Skaugen said. "This is a journey, but I think the early results are quite good," he said. "Our campaigns are now very solution-focused. It's about usage models, not just about dumping products out there."

Improvements On The Way For Partners

Lenovo still has work to do in terms of delivering pricing information in a partner-friendly manner, executives said. The goal is to use AI automation to shrink complex quotes "from multiple days down to multiple minutes," Skaugen said.

This is "an area that isn't an overnight fix that we will need to work on," Zielinski said. "We'll just need to be a little bit higher on the human touch, and then obviously over time be able to automate that. But still, given the size of the organization and the speed in which decisions can be made, that's something we can manage as our IT infrastructure of our own grows into something that can be best-in-class. That's something that is certainly a work in progress."

VR Solutions Show Promise For Business

Zielinski told CRN that Lenovo is "very bullish" around the possible business uses of the company's virtual reality solutions, such as the forthcoming Mirage Solo, a stand-alone VR headset running Google Daydream VR. In particular, the Mirage Solo could have major uses in aiding student learning by "bringing the field trip into the classroom," Zielinski said.

At DHE, "we see that there's a potential huge amount of opportunity there in that space," Hammack said. "We think that that is going to be a great margin opportunity for us, and it's an exciting solution. Schools need these types of things. If it helps their curriculum, helps the students learn better, I see it being a hit. ... From everything I've seen and the training that we've gone through [for Lenovo VR], I think it's going to be a rock star in their portfolio."

Focus On Giving Back

Lenovo and sponsor D&H Distributing also put an emphasis on helping others during Accelerate 2018, with an initiative to benefit the American Red Cross. At stations set up at Accelerate, attendees were invited to put together "Comfort Kits" (including toiletries and other personal amenities) for victims of disasters. D&H also pledged to donate $1 to the American Red Cross for each kit, and Lenovo pledged to donate $1 for every tweet made using the hashtags #LenovoAccelerate18 and #Donation during the conference. Lenovo is also matching 50 percent of VAR donations made to the organization during May, up to $25,000.

Partner Assessment

Partners who spoke to CRN during Accelerate said they are optimistic about rebounding with Lenovo following the recent shake-ups in compensation and leadership. "I'm starting to get some better feelings. I'm starting to see the light at the tunnel a little bit," said Mark Sanchez, CEO of Loganville, Ga.-based CommQuest. "And by what they're saying in the near future -- about wanting to invest in those who are really making an effort to push the product -- I feel like I'm one of those. They've said, 'Yes, good things are coming and we think it's going to really benefit you.' So those kinds of statements make me feel better about the direction of where things are going."

Lenovo "hit a reset button when they brought [Skaugen] in, which I think was needed," Mark III Systems' Wysocki said. "I didn't expect anything to change overnight. But I think they're in the right place. You look at a lot of the key wins that they've had -- winning back accounts that they had lost over the last couple of years. That shows a lot."

While Lenovo partners have faced challenges amid the recent changes, "I think the [Lenovo] team realizes that," DHE's Hammack said. "We've all felt the pain but I think we just had to get through some of the transition models, some of the leadership changes. ... Right now, it's good. Right now I'm positive on Lenovo from all angles."