CRN Interview: Bill Amelio, Lenovo

Lenovo CEO Bill Amelio spoke with Industry Editor Craig Zarley at last week’s IBM PartnerWorld in Las Vegas about the PC maker’s evolving U.S. channel strategy. Following are excerpts from that interview:

CRN: With you coming from Dell, how committed will you be to the channel going forward? Will Lenovo's business model evolve into to one similar to Dell's?

Amelio: Partners were concerned at the beginning with my background, but of course I had 18 years at IBM as well. So I've worked both ends of the street. [The discussion now] is how are we going to win the race together and they love it. The important thing is for us to behave and operate as one company. If we can do that, we can take on the likes of any direct model. We have to find where we have complementary skills and stop the areas where we have conflicts.

Clearly, what we are about is growing and growing profitably. We are about doing that with whatever possible way we can do that and be successful. We believe that the best way to that is with some of our key partners that offer things that we can't do and who have better touch and better reach to the customer base. With that said, let's all agree to put the best model up on the wall and do what we can to approach that efficiency. And we can. There's a lot of room for improvement on our side as well as the partners'. We need to make sure that there are areas where we are always being complimentary and not confrontational.

CRN: When will Lenovo introduce a server in the U.S.?

Amelio: No plans at this juncture. Not one of our priorities. We have a server business that's going well in China right now. We are also going to work arm in arm with IBM to make sure that when we do launch it's complementary with what we are doing with IBM.

CRN: Is there some contractual thing that prevents you from doing this?

Amelio: There is no contractual thing, however, we do want to maintain a great partnership with IBM. They are a great partner of ours and we want to make sure it continues that way. We have a similar strategy with the rest of our business partners. We want to line up the value chain from suppliers all the way to customers. What we are telling partners is that we have to be best-in-class to do this. What we do well, we should do. What partners do well, they should do. Together, that whole thing has to be as efficient as we can possibly get it. Today we have a lot of work on our side to get improvements and we think that in conjunction with some of our key business partners we can add extra value that some of those guys that go direct can't do.

CRN: It seems that you are making the small-business market clearly a channel play, but it's less clear how you will approach large enterprise accounts. What is you plan for partners in Fortune 1000 accounts?

Amelio: The market in the United States is 50 percent direct. That may change a little bit one way or the other but the fact of the matter is that's where we are today. The whole point is that when we work with a partner, what is the value-add that we are both providing. If, for example, our supply isn't as reliable as it should be, well then we'll need a partner to help us do a better job managing inventory in certain areas. But as we get to be a more reliable supplier, managing inventory is not going to be the highest value-add operation that our partner can do like peripherals, services, and providing other support to the customer.

CRN: As you talk to larger enterprise solution providers who don't do that much in the PC space at this point, what would be your proposition to get them to partner with Lenovo?

Amelio: If they are doing a big rollout somewhere and they need PCs, desktops and mobile, there's no better product than what we have. Our reliability is 30 percent better than anyone else. We have great total cost of ownership for anyone who adopts them. So we have a sound value proposition for any partner that wants to work for us.

CRN: Do you plan on developing a named account strategy in large accounts, identifying ones that you will work with directly and ones that will be reserved for the channel?

Amelio: It's a simple thing. Whatever the customer wants that's what we will do. If the best value proposition is to go to that customer with a partner, that's what we will do. We have not done a strategy of named accounts. There are certain customers that demand direct. I am not going to argue with the customer, otherwise nobody gets the business.

CRN: Will the pricing be the same for customers buying direct vs. buying from a channel partner?

Amelio: Of course. We are going to be learning how to walk a tightrope here on how to manage this problem that you just brought up as well making sure that work arm and arm, shoulder to shoulder with our partners. I've had meetings with several partners this week talking about the exact same game plan. What we all have to work for is the most efficient model. Several of the partners have several things that I have no interest in doing whatsoever. They are best at that and they should do it. There are things that we do well and we should continue to do them. What has to change over time is that we have to take out inventory everywhere we possibly can across the value chain.

CRN: What are the value-added services that partners bring to the table that you can't provide?

Amelio: Some do extremely well with managed help desks, for example. Others have call center operations that we will utilize. Others provide a set of peripherals around our products along with our peripherals. There are plenty of places; all we need to do is decide what our go-to-market strategy is with each of the partners. It will be somewhat different, based on the capability of each partner. We need to make sure were complementary. And where there's conflict, we have to ask each other, ‘Who does it better?’

CRN: Will Lenovo do any services such as call centers or help desks?

Amelio: Right now, the go-to-market strategy is to have partners do that. That doesn't mean we will never do it, but it's not high on my priority list of something to go look at, and I think partners do it better than I do right now.

CRN: You just introduced a lower-cost 3000 line of systems? The ThinkPad line has built its reputation on better quality and superior technology. How are you going to maintain that perception of quality for the ThinkPad brand in the market?

Amelio: It's not perception; it's reality. We will keep reality going because we are one of the few PC companies that actually invest in research and technology.