Bright Future For Lenovo?

Someone once told me to be wary of buying a used car because you could wind up buying someone else's headaches. Well, maybe that old adage applies to the purchase of some businesses as well. When Lenovo bought IBM's ThinkPad business for $1.25 billion nearly two years ago, it was clear that the PC division had a few miles on it. But there were more dings and dents than Lenovo realized. The margins associated with that business make it tough to do a lot of sprucing up, especially here in the United States. Today, Lenovo ranks a mere sixth in PC shipments, lagging Dell, HP, Gateway and Toshiba.

Robert C. DeMarzo is VP/publisher of VARBusiness and GovernmentVAR.

The company claims that the North America market remains challenging--so much so that Lenovo's losing money here as revenue declines. If I had a dime for every time a manufacturer blamed supply-chain woes for its troubles, I would be richer than Bill Gates. But that's one of the areas Lenovo said it will focus on improving. In fact, that's one of the main reasons the company hired Bill Amelio.

But the second problem Lenovo faces--marketing--is perhaps easier to fix than broken links in the supply chain. One could argue that, if the company gets its marketing right, the supply-chain problems would probably take care of themselves.

When it comes to marketing, we can throw everything in there, including the kitchen sink--advertising, lead generation, demand generation, channel incentives and promotional activity. But to catch up to and surpass its rivals, and to make more headway in the channel, Lenovo will have to spend a fortune or get very creative. Given its budget right now, innovation would probably be the way to go.

Let me share a story with you that demonstrates Lenovo's dilemma. I was waiting on line at a bank recently, and two businesspeople were talking about purchasing notebook computers for their organizations. The first, a woman, was explaining to the chap next to her that her company really wants to upgrade its ThinkPads. Great idea, the gentleman responded. But then the woman said this: "We're also considering some products from a company called Lenovo." The guy tried to explain to her that Lenovo and ThinkPad were one and the same. And back and forth they went. I wanted to scream--or send in a VAR. Even at the end of the conversation, the woman wasn't convinced. I suppose there are quite a few businesspeople and VARs who are equally confused.

Lenovo is a company with enormous potential, and one of the greatest notebook brands ever to grace the IT planet. But it has yet to unleash a creative and compelling argument for the channel to support the brand and evangelize it to customers. Amelio is a martial-arts expert and a good fighter. So where's the fight in Lenovo these days?

Speaking of fights, there's nothing like a good one, and who better to enter the ring than the irreverent CEO of NetSuite, Zach Nelson. He's a disciple of Oracle's Larry Ellison, who has been running the ERP vendor for several years now. Nelson fired off a memo poking fun at SAP's recently revealed financial results, which were decidedly weak, and its pledge to focus on the midmarket.

As you readers know, we've been gaga over the midmarket for the past few years now, so Nelson's missive was of particular interest. Nelson threw more than a few jabs at SAP, calling into question the millions of dollars it's spent trying to build the perception of its products as being inexpensive and easy to deploy. Nelson made a point of bragging about how NetSuite has become one of the fastest-growing companies in North America, and he contends that the SAP announcement actually will create demand for NetSuite's products.

If only Nelson would focus his sharp tongue and wit on the channel. That's one arena where SAP has outmaneuvered NetSuite. C'mon out and fight, Zach.