Lenovo CEO's 'Lighthearted' Vow To Quit If Goals Aren't Met Belies Daunting Datacenter, PC Challenges

Lenovo Chairman and CEO Yang Yuanqing made a "lighthearted comment" when he said he'd step down if the company failed to hit sales targets, but the Beijing, China-based firm's competitive position is no laughing matter.

Known to Lenovo employees as YY, Yang this week reportedly told Chinese media in Shanghai at the company's annual Tech World conference that he'd leave his position if the company doesn't hit the aggressive $12 billion annual online PC revenue goal he's set within three years.

"It was a lighthearted comment that showed YY's faith in [China PC business chief] Liu Jun's strategy for the China business," a Lenovo spokesperson told CRN in an email. "He followed it up in the same sentence by saying, 'But I believe I won't need to do that.'"

[Related: Conversation Starters: 5 Keys To Lenovo's AI Future]

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Lighthearted as Yang's comment may have been, his online PC sales goal represents nearly half of the company's current PC revenue, and it'll have to reach for that goal while facing significant market headwinds.

MichaeI Goldstein, CEO of LAN Infotech, a Ft. Lauderdale, Fla., solution provider that works with Lenovo, said Lenovo has products that compete strongly in the IT market, but those products are up against stiff competition and tend to be expensive.

"I do see good momentum, and we just got reassigned a new rep, and from the past, the reps have been pretty aggressive in what we need to sell the product, and they have a great set of products," Goldstein said. "I have Microsoft, Dell and Lenovo, and on mobile, I think Lenovo is ahead of the others. The majority of our mobile customers love the X1 line. If you're a road warrior, the X1 is amazing, but it's not the least expensive solution. The Tiny Workstation is great, too. You can slap it on the back of a monitor, or tuck it under a desk. On the other side of it, it's a very competitive space. Those things distinguish them, but everything in between becomes about whether you like vanilla or chocolate."

Worldwide PC and data center hardware markets are in decline. Lenovo, which became the largest PC manufacturer in the world under Yang's leadership, registered revenue declines in all of its major businesses during its 2017 fiscal year ended March 31.

Lenovo PC sales dipped 2.3 percent year-over-year, while sales in its mobile and data center businesses fell 5.4 percent and 10.6 percent, respectively. In the second quarter of the calendar year, Lenovo's PC shipments fell nearly 6 percent year-over-year as it ceded the worldwide lead to Hewlett-Packard Inc., according to research firm IDC. In the first quarter – the most recent period available from IDC – Lenovo's server sales saw a year-over-year decline of 16.5 percent while shipments fell more than 27 percent.

In addition to online PC sales, Lenovo is making a shift toward the burgeoning market for artificial intelligence [AI] technology. AI is the focus of a $1 billion investment effort by Lenovo, and last week, the company introduced several AI concept products, including a virtual assistant; a VR headset; a "SmartVest" for monitoring heart function; an AI-based services platform and a smart speaker.

Yang, in addition to making Lenovo the world's largest PC manufacturer through the acquisition of IBM's PC business, also kicked open the door of the data center market with the $2.3 billion acquisition of IBM's x86 server business about two years ago, but the company has had trouble formulating an effective strategy for that business. In June, the company also introduced a new data center line, including several new server, storage and networking products, aimed at turning that business around.