Lenovo Numbers Point to Direct Sales Gains

CMP's twice-yearly Channel Best Seller report, slated for publication in the Nov. 26 edition of CRN, shows a precipitous drop in Lenovo sales of both desktops and notebooks through U.S. distributors for the period January through June of this year. Lenovo's market share in notebooks for the period, measured as a percentage of dollar volume sold through U.S. distributors, plunged from 36.6 percent in the first half of 2006 down to 28.5 percent for the comparable 2007 period, a drop of 8.1 percent.

Likewise, Lenovo's desktop sales for first half 2007 fell 8.7 percent from the year earlier period, falling from a market share of 33.2 percent down to 24.5 percent.

The drop in Lenovo channel market share comes as the vendor reported PC shipments, including desktops and notebooks, rose 12 percent year over year in the Americas for its fiscal second quarter ended Sept. 30.

By contrast, CRN Best Seller data show Hewlett-Packard grabbed the bulk of channel share from Lenovo in the first half. HP's notebook distribution channel share reached 22.3 percent for the first half, an increase of 4.6 percent over the 17.7 percent reported a year earlier. Likewise, HP's desktop distribution share jumped 11 percent for the January through June period this year, growing to 61 percent compared to 50 percent last year.

Despite Lenovo President and CEO Bill Amelio's claim that he wanted the bulk of the vendor's "transactional" or non-enterprise business to go through the channel, solution providers say channel conflict is rife.

"The problem is that they never addressed the issue of old legacy IBM guys who turned into Lenovo guys who have always been in tune to bring deals direct," said one large regional solution provider who asked not to be identified. "They never have had anybody at the tops say 'No, you are not bringing that deal direct; it's going through a channel partner who's already engaged in the account.' That's the problem and the numbers prove it out."

Earlier this year, Amelio, in an interview with CMP, said, "We clearly put more emphasis on the channel in the last year because we went to the transaction model," he said. "Previously we were more a large account business. Some of that is direct, some of that is indirect. But as you move into transaction, that's all indirect. There will always be some channel conflict with that level of direct and a lot of indirect. We're going to work very, very hard to make sure we minimize that."

A Lenovo spokesman said Monday that channel partners are critical to the vendor's success and Lenovo has outgrown the market in all of its U.S. routes to market, including VARs, dealers and system integrators.