Lenovo: Best Buy Deal Will Not Impact ThinkPad Margins For Solution Providers

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A Lenovo executive Wednesday said the company's deal to distribute its full product line -- including its premium ThinkPad brand -- through 135 Best Buy For Business locations will not drive down solution provider margins. But some solution providers are not so sure.

Stephen Mungall, vice president Route & Transaction Sales Strategy for Lenovo Americas, said Best Buy For Business will not have a pricing advantage over Lenovo VARs. In fact, he said, Best Buy for Business will source products from distributors just as solution providers do, rather than purchasing directly from Lenovo. "The pricing is no different," Mungall told CRN. "There is nothing that disadvantages a VAR versus Best Buy."

Mungall said that Lenovo has minimum advertised pricing restrictions that will apply to Best Buy for Business. Furthermore, he said, Lenovo will be watching closely to make sure solution provider margins are not impacted by the deal.

Under the pact, unveiled Tuesday, Best Buy will sell ThinkPad notebooks, ThinkCentre desktops and the newly announced Lenovo-branded 3000 PCs online, by phone and at 135 Best Buy For Business locations. The outlet provides a 2 percent to 5 percent rebate on each order, along with what the company calls free on site consultations, according to in store information. Among the services the outlet provides are installation, maintenance and backup services.

Mungall stressed that Lenovo is not going into retail or pursuing consumers with the Best Buy For Business deal. He said Lenovo believes it can capture incremental small business sales particularly with small businesses with 20 or fewer employees. "Small business customers are going there today and we are not getting an opportunity to win that business," he said.

Solution providers are split on the impact of the deal. A number of them said they do not see the agreement impacting their margins, while others fear the increased competition.

Todd Barrett, manager of security and networking sales at CPU Sales and Service, a Waltham, Mass.-based solution provider that sells ThinkPads, said that he stopped caring about whether a hardware vendor moved into the retail and e-tail space years ago when CompUSA came onto the scene.

"Some folks will always buy according to cost," Barrett said. "They'll surf the internet, whether its Best Buy or Dell.com or pricewhore.com. Best Buy is just one more in the saturated retail market selling stuff. Just one more fish in a large pond whoring the price."

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