Lenovo Channel Chief Kinlaw On Life After Chris Frey And The Hyper-Converged Opportunity

Kinlaw On The Evolution Of Lenovo

Lenovo is challenging legacy hardware vendors who have a massive installed base and loads of loyal customers by partnering with innovative, high-growth software firms like Nutanix, SimpliVity and Nimble.

The evolution of Lenovo's channel program, its strategy for growing in the hyper-converged infrastructure market and its competitive angles on hardware heavyweights like Dell EMC and Hewlett Packard Enterprise are all topics CRN covered in its recent discussion with Lenovo Channel Chief Sammy Kinlaw. CRN contacted Kinlaw following the departure of longtime Lenovo exec and Vice President and General Manager of U.S. Commercial Sales Chris Frey.

Since buying IBM's 'System X' x86 server business in late 2014, Kinlaw said Lenovo has quadrupled the number of partners selling that line. System X is the cornerstone of Lenovo's strategy to push software-defined technology, a data center effort that depends almost entirely upon partners to win accounts and accelerate growth. To that end, Kinlaw is upping Lenovo's incentive game to keep partners in an aggressive frame of mind.

What's your message to partners who are faced with some pretty broad changes in the market, whether it's Dell and EMC coming together or HP splitting up?

At any of these industry conferences, we have the opportunity to hear messaging from our competitors, and what's interesting is how many folks are using the words and language we've been using for a number of years. Just recently, I heard one of my competitor executives use the words predictable, consistent, reliable and profitable. Those are pages out of our playbook. That's flattery, and it tells you that what we're doing has gained attention. They've noticed. Our PC business has continued to scale and grow at a pace well above the industry. In the DCG [Data Center Group] side, it's a crowded market with only a few players with strong allegiance. So that means I've got to work harder. I have to have programs that are aggressive, that are future-looking and that are easy. And of course, I have to have product that is best-of-breed and the most reliable and most scalable.

How can you ensure that your partners make that a reality?

I've got to make it profitable, I have to have it on-shelf at disty and I've got to make sure that I've got technology that's forward, and then it's about programs that support it all, and it's not just about spiffs. The spiffs are there, but you've got to know that we're competing. I've got to have dollar bills at the ready. I've increased win bucket moneys at distributors and my account execs so they can make decisions on the fly. I've also given our DRC and the disty community competitive quote funds so when they're up against a competitive quote, they can close it on the fly. Easy. We know we've got to gain trust, and that's what we're doing. We haven't wavered from our channel approach.

Chris Frey (pictured) recently left the company. What does that mean for the business? What other changes are being made?

On the heels of Chris Frey's departure, we're in the midst of some coverage changes. We remain laser focused on DCG. There's no change in that whatsoever. As a matter of fact, we're continuing to invest more in the DCG business for North America. We certainly recognize the need for specialty, and with that we're doing some things with our end-user sales teams. That's the organization that Chris Frey previously ran. We're segmenting the PC and the DCG business. All of the DCG field sales teams calling on end users – SMBs, mid-market, large accounts – those sales teams will now report up through Cliff [Kumkowski]. We recognize Cliff's history and knowledge of the marketplace in the product categories that we want to expand within, and he's a perfect choice to lead that effort.

Who will ultimately run the PC business?

In the interim, that business will report up through Emilio [Ghilardi, Lenovo's North America president] (pictured) until we find the right candidate to take the reins of our mothership. We have the executives intact that were in Chris' regime, and that will continue on, but in the interim timeframe, they'll report to Emilio, and he'll manage that business as we have before.

What's next for Lenovo as far as new channel program elements or products are concerned?

This is coming out to channel partners retroactive to October 1. I've had a spiff program where if you're a channel rep, you can submit a 1099 tax form, and we'll send you a debit Visa card and we'll populate it based on specific sales of products through distribution into the VAR community. It's one of my most successful programs, it's an expensive program and it's been around for a while. It drove a lot of consideration factor. For DCG, this program was focused on SMB until today. We're changing that. We're widening the aperture and making it much more inclusionary. I'm opening it up to the entire VAR community that we have in North America, my network of 28,000-plus VARs that can choose to sell DCG products will now have these spiffs available to them.

What's driving the decision to make that change?

This is a major investment for Lenovo, and the intention is to drive consideration factor to our channel sellers, our account execs who work in small VAR, mid-VAR, large VAR. We want to drive consideration factor and attention toward specific products. We're heavily leveraging the spiff toward hyper-converged offerings. I'm pumped that it's going to drive excitement and for a lot of VARs that wanted to be included in the spiff, it's now an inclusionary incentive for our community.

What is Lenovo's hyper-convergence play as of today?

We have a Nutanix appliance. We announced that initially in December 2015, we're 10 months into it. It's been a big success for us. We're thrilled with what hyper-converged opportunities have done. As we look to grow our System X business, it's a saturated market. The players are well-known. You've got HP, you have Dell. We know with critical infrastructure, it's hard to persuade a partner to move critical infrastructure without a big reason. What I love about hyper-converged is that's the reason to change. It's driving, with $40 billion in incremental revenue that's expect to come through software-defined over the next three or four years, people are looking at it in a different way. When people are looking at software-defined, they're willing to look at a different label. That's exactly what's happened with us.

You're 10 months in, what patterns have you recognized in the hyper-convergence market that you think Lenovo can take advantage of? Where are you seeing the most opportunity?

One thing that's just now becoming fully-baked and is now shipping is our SMB Nutanix bundles. These are bundles that are pre-discounted. They are focused on an entry price point that is much lower than our traditional, or historical offerings with Nutanix. They start at $25,000. We've got an opportunity to sell Nutanix not only to mid-sized end users, it now gives the SMB community the opportunity to try Nutanix/Lenovo hyper-convergence that starts in a 1P opportunity and maxes out at 2 nodes. I think with VARs, with players like CDW, with players like PC Connection, we're going to have an opportunity to scale hyper-converged more than we've ever done before.

You've also partnered with SimpliVity. How does that relationship coexist with the Nutanix relationship?

It's not just Nutanix. That's a Lenovo-labeled appliance, but in the hyper-converged space, my SimpliVity business is through the roof. We're doing a great job with [SimpliVity's] 'meet in the channel' strategy. I don't want to diminish our opportunities in hyper-converged, broadly. Certainly Nutanix is a focus because we ship the hardware and the software, but Simplivity is hot. They're opening doors, and we're building a much more strategic relationship with those guys at the same time.

Who's selling Lenovo servers? Where are you seeing a lot of traction?

We have seen a different partner community for Lenovo System X versus what IBM had. IBM had what was a very small partner community. Since we've taken on the System X group, our volume of partners has more than quadrupled, so our group of folks who sell System X has widened greatly. There are two paths: One is small VAR, small partner. That community has grown System X significantly, and that's incremental revenue to us because we didn't have a baseline with those partners in System X. I also have positive year-on-year growth in the DRC community, it scales all the way through folks like CDW, Insight, at PC Connection. There's a great scale. Not to diminish the importance for us on the national-type partner, the data center-type partner. There are lots of things we're doing program-wise to further incent that community. But today, where am I seeing the upside? It's at both ends of the spectrum.