Lenovo North America President Vladimir Rozanovich On ‘Amazing’ Quarter, Dell’s ‘Direct’ Focus And Why The ‘Worst Is Behind Us’ In Supply Chain Crisis
‘We love the idea of the channel partner owning that customer relationship, very unlike Dell, where they are trying to bring everything back in-house and trying to own that customer relationship,’ says Lenovo North America President Vladimir Rozanovich.
Vladimir Rozanovich, president of Lenovo’s North American operations, on Wednesday slammed rival Dell Technologies’ direct sales focus while contrasting his company’s plan to buoy channel business with increased back-end services.
“We love the idea of the channel partner owning that customer relationship, very unlike Dell, where they are trying to bring everything back in-house and trying to own that customer relationship,” Rozanovich told CRN.
Rozanovich’s comments come as Lenovo continues a blockbuster year as the leader in PC sales. And the company just announced a record quarter to the tune of $20 billion in revenue, according to earnings results released Wednesday.
“We had just an amazing quarter—first quarter over $20 billion. North America contributed enormously to that number,” said Rozanovich .”The channel accounts for 80 percent of the way we do business here in North America.”
While Lenovo highlighted strong third-quarter earnings results, including an eye-popping 62 percent year-over-year income increase to $640 million, the industry has been hobbled by a supply chain crisis that is creating headaches for solution providers.
Rozanovich only joined Lenovo in June, and the company has seen record growth and faced unprecedented demand sparked by COVID-19.
Rozanovich, who also serves as the company’s vice president of international sales, spoke with CRN in an exclusive interview.
How do you think Lenovo could improve some of the supply chain issues for partners? Because everybody seems to be handling it differently.
We had just an amazing quarter—first quarter over $20 billion. North America contributed enormously to that number. The channel accounts for 80 percent of the way we do business here in North America. And even though supply chain is something that comes up with everybody, we’ve handled it and we’ve weathered it better than most. … But we do also believe the worst is behind us. A lot of it was component-related. That’s the part where we finally see line-of-sight that it will get resolved. But the reality is because Lenovo has buying power, being the No. 1 PC manufacturer in the world, we have a lot of clout with our suppliers in order to handle some of those chip shortages. But supply chain is also made up of the transportation of those goods. It’s still also a concern that we see lead times on ships coming across the ocean that are still at record levels. But there’s light at the end of the tunnel. We’re going to make sure we’re pressuring our component suppliers to ensure that we get the adequate supply to fulfill our customer demands.
Is there anything partners could do on their side? Does there need to be a unified approach?
This is something that I discuss with a lot of partners that I meet with. In fact, I’m up in Minneapolis today, and I met with our largest K-12 reseller and this was the topic of that conversation. What we are asking of our partners is to make sure they have a little flexibility when it comes to the overall final configuration of a product. Lead times are still relatively long; it’s very difficult just to build one product or two products. We want to build 20,000 of the same thing. So what we’ve been doing is asking our partners to ensure there’s a little flexibility—maybe the customer wants 16 [Gigabytes] of memory, but the only configuration we built up is 32 Gigs. So how can we work with a partner to see, OK, what’s the compromise of how we get to a price point and availability that works? … Some of the partners have done very well with that. Some customers would like to have the product quickly even though it wasn’t the exact configuration, and it gives the partners flexibility to sell what’s available in the channel. It allows us to supply those partners and the distributors in a much more efficient way. It gives confidence to that customer that, at least in the time of constrained product, we can get them something that is actually going to fit their needs or hopefully be even better than what they wanted.
We’ve all seen that companies are doing great right now because of high demand. What happens after the pandemic as the workforce starts to transition back?
At first, there were massive spikes in education. There were a lot of initiatives making sure we got a laptop in the hands of every school student in the U.S. to ensure they could continue learning. We saw a massive spike in consumer PC sales, probably larger than we’ve ever seen. We saw a massive spike in gaming sales. But also at the beginning of the pandemic, we saw a downturn in large corporate buying because they didn’t have people coming into work. … But now what we’re seeing is a big spike in return-to-office for high-end systems, corporate systems, desktops and notebooks … and videoconference systems, as companies are trying to retrofit their offices to make sure that they’re ready for hybrid work. We’re seeing a big uptick right now in the large enterprise space.
Everyone is trying to start making the move to Everything as a Service. One of the things that comes up when we talk to different partners is the difficulty in talking to customers about switching over to this concept.
Over the last few years, especially since cloud computing has grown, people have started getting familiar with Software as a Service, Platform as a Service and infrastructure as a Service. People have now gotten accustomed to this as-a-service model, monthly billing or quarterly billing. And that’s actually an area where we see the market going as well. And we’re kind of leading the charge here … we want to be able to be the company that becomes the IT arm for asset deployment, asset management, patch management and then asset recovery on the back end. Even with our channel partners … where we could be the kind of white-glove service behind their service, where they keep the customer relationship but we do all the work on the back end. We’re getting to the point where more customers are wanting to have that conversation [about Everything as a Service] … which is going to be a big part of Lenovo’s business going forward.
And how do you get channel partners geared up for this switch to Everything as a Service because it’s a paradigm shift from what they’re used to. How do you get them on board?
We love the idea of the channel partner owning that customer relationship, very unlike Dell, where they are trying to bring everything back in-house and trying to own that customer relationship. We have our channel partners owning that customer relationship. If we can make it easier from an IT management or an asset management standpoint, to be that white-glove service behind them, we would be happy to do that.
What do you think partners should be focused on in the coming months and years?
The more partners can engage with Lenovo on how we can help with the managing of services of their customer base, look at complex solutions as we start looking at our services and solutions offering … I think that’s an area that a lot of channel partners need to start thinking about. Lenovo develops products that enable work from everywhere and play from anywhere. That’s the conversation that a lot of the channel partners need to start having. … Instead of maybe sending 50 laptops to an office building, it could be a situation where they’re sending home office kits to 50 new employees that have started with a new organization. I think that dynamic is something that’s real and it’s here to stay as we see it.