A Channel Conversation With Lenovo Channel Chief Chris Frey


At the end of its second fiscal quarter ended Sept. 30, Chinese PC manufacturer Lenovo reported a 36 percent year-over-year increase in profit. After the successful quarter, Chris Frey, Lenovo's vice president of North America commercial channels and SMB, spoke to CRN about all things channel and what partners can expect from Lenovo moving forward.

The financial highlights in its earnings report included keeping its grasp as the No. 1 PC maker in the world, shipping more tablets and smartphones than PCs for the second consecutive quarter, and out-performing the market for 18 quarters in a row.

Frey went on to break the high-level numbers down further.

 

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"We shipped a record total number of units last quarter of 29 million devices. If you think about that and do the math, that's four devices per second throughout the quarter. Those products were both PCs as well as in the PC-plus arena, which includes tablets and smartphones," Frey said.

Frey said Lenovo experienced growth across every area of the world for the quarter. The Americas region, within which Lenovo includes Canada, the United States, Latin America and Brazil, alone "grew at a premium to the market of 43 percent," Frey said. Much of the growth in the Americas Frey attributed to becoming No. 1 in Brazil, one of the fastest growing economies in the world.

In North America alone, Lenovo's commercial business saw its highest share to date, Frey said.

"In the commercial business, which obviously goes through the channel, we had our highest share ever at 12.9 percent, so almost up a whole point year on year as it relates to share," Frey said. In total, he added, Lenovo does about 85 percent of its commercial sales in North America through the channel.

"The channel business is really growing our SMB business. We again have outgrown the market last quarter at over a 25-point premium to SMB and that is driven by the channel," Frey said.

Of the channel-driven growth Lenovo experienced, much of it was due to a large increase of the actual customer base through a long-standing program Lenovo refers to as its "Customer Bonus Program." Through Lenovo's VAR business or "tier-two" business, the company posted a 45 percent growth in its new customer base.

"We're not just driving deeper in current accounts, we're acquiring new customers every single quarter and that is driven by the channel. [45 percent] is a big number," Frey said.

Frey said there are several things Lenovo partners should be looking forward to over the next few quarters, not the least of which is opportunity surrounding Windows XP end of life coming in April. The opportunities will inevitably include assisting customers in security and network bandwidth, Frey said, but the opportunity will not end in April. In fact, Frey believes partners will be reaping the refresh benefits well into the summer.

"I think most SMB customers probably aren't aware of what's really transpiring in April. You get to May, June, July, I think into mid-summer, that the refresh will continue for SMB once they realize what they are not going to be getting from a support standpoint," Frey said.

In light of the refresh cycle, Frey urged partners not to ignore the desktop, saying the desktop refresh is real and significant. Specifically, Lenovo's Tiny Desktop is the PC that is getting the most action in recent weeks.

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