Lenovo’s Matthew Zielinski On X1 Fold Momentum And Nearing No. 2 In North America
Sales of the first foldable PC, the ThinkPad X1 Fold, have ‘far exceeded’ the company’s initial targets, said Zielinski, president of Lenovo North America’s Intelligent Devices Group.
As Lenovo launched a wide array of updated and enhanced devices at CES 2021 last week, the company’s top PC executive in North America pointed to major traction for Lenovo’s big innovation from last year’s show--the ThinkPad X1 Fold.
Dubbed the world’s first foldable PC, the ThinkPad X1 Fold got its first showcase at CES a year ago and went on sale this past fall. And the device has gotten off to a strong start when it comes to demand, with Lenovo “pleasantly surprised” at how many buyers have wanted the X1 Fold even with its $2,500 starting price, said Matthew Zielinski, president of Lenovo North America’s Intelligent Devices Group, in an interview with CRN.
“I think people are anticipating that this thing is going to be amazing when we can start traveling again, and they want to get comfortable with the form factor,” Zielinski said. “It has been very warmly received. It’s far exceeded our expectations for the product launch … We are double-digit percentages above where we thought it would hit last year.”
In the interview with CRN, Zielinski also discussed the key themes of Lenovo’s CES 2021 device portfolio, how the company is aiming to get to No. 2 on PC market share in North America this year--which would mean surpassing Dell Technologies--and the big opportunities looking ahead for channel partners.
“Our goal has always been to change the PC landscape in North America--and it’s happening,” he said.
What follows is an edited portion of CRN’s interview with Zielinski.
How has Lenovo’s approach to its intelligent devices business changed due to the events of 2020?
For the entire year of 2020, it was about just doing the right things for humankind. As a company, I think where we landed at is that we’re just all-in. We’re all-in for our partners, for our customers, for our people, for our communities. All that still stands. We all know 2020 changed the world, but it’s changed our industry forever. We’ve always been on this charge of driving intelligent transformation and we’ve talked about smarter technology for all and how we want to unbridle the full human potential. Our products are more about just taking things from good to great. They’re essential. Without access to technology, people and communities are just completely marginalized. People need really good stuff from us to be able to live, to work, to collaborate, to meet their grandkids for the first time--to just do all these things that are not luxuries. They’re just ways of communicating and they’re essential to living a complete life. So I think that’s one of the biggest epiphanies out of 2020.
We’ve seen this extraordinary surge in demand--because people are realizing that it’s no longer about having one PC per household. The way life has to work is that it’s one PC per person. Everything has really culminated with that. And as I look back on 2020 from a macro standpoint, with people needing all of this technology, it’s become more apparent that people also need help with it for the lifecycle of the product. That’s whether you’re talking consumers, whether you’re talking small and medium businesses, whether you’re talking large enterprises managing their deployments so they can go off and focus on core competencies. It’s really underscored the need for services. Whether it’s a 24/7 help desk for consumers buying a consumer product from Lenovo.com, or whether it’s everything else--these things can be complicated sometimes and people need help to use them. So we’ve been on this charge for an intelligence services-led transformation and we see that playing out very fruitfully.
What are some of the ways that your products have changed in response to all of this?
People are really wanting better camera technology, they’re wanting better microphone technology, better sound technology. People also want to eliminate blue light, so we’ll have more ThinkPad models and gaming models available with low blue light emission displays. We’ll have more PCs enabled with Dolby Vision, and we’ll have more microphone technology that includes smart microphones--which will automatically mute if there is a lot of noise--and noise suppression. We’ll have all these various items that have come about from the experience of all of us spending 12-plus hours a day in front of our PCs. And then there’s the camera technology. Almost every single customer we have in our advisory councils has said, we’ve got to improve our camera technology. So we have a roadmap to improve not only the camera hardware and FHD/1080p in our ThinkPad lineup, but also we’re doing more and more post-processing with our current camera lineup. All of our new products are now rushing to serve the needs [from users] spending a lot more time on all of our devices.
What do you see as the key themes of your CES portfolio?
Portability and connectivity are both at the core. The new form factor innovations are all about taking these devices outside of the office. And all of these new form factors will be 5G-enabled and Wi-Fi 6 enabled. So with the ThinkPad X1 Titanium Yoga, it’s 11.5 mm thick. And it’s not black -- a lot of our customers have been saying, can we do something in a metal chassis? And we finally have done that. It’s 5G-enabled, Wi-Fi 6 enabled. It also has the smart microphone that I talked about, it has enhanced Dolby Atmos--two speakers firing upwards. It has the enhanced software capabilities around the camera, post processing etc. So it really is one example of the innovations that we’ve brought in this year.
Then with the ThinkBook--that was the product built for SMB that was designed to be the [HP] ProBook killer, the [Dell] Vostro killer. We are almost completely out of stock [on ThinkBook]. We can’t build them fast enough--that product has taken off tremendously. And if you recall [from CES 2020] there was this ThinkBook Plus that had the E reader on the top--we’ve now improved that significantly. The new version will have 5G options, and we’ve enlarged the screen on the top to be larger. It has a smart pen that sits inside of it. It’s available with all the features that we talked about on the audio side. And it has an option for a wireless charging mat.
We’re also launching the ThinkReality A3 smart glasses. 2020 accelerated the adoption of a ton of different things, including AR/VR for commercial applications. I’d go as far to say it’s now becoming mainstream--2020 will see about a $12 billion spend in AR/VR, and by 2024 IDC is projecting about $70 billion spent in AR/VR. And so with the ThinkReality A3 smart glasses, you can tether them to a Motorola smartphone and you can tell them to a mobile PC. So you have this “AR/VR anywhere” concept, and we think it’ll be very useful for training applications, field maintenance applications. We’ve gotten a lot of feedback from customers that there’s a need for far more mobile and scalable AR/VR.
So the ThinkBook has been a very successful product for the channel then?
Yes--it’s almost 100 percent through the channel, and the adoption has been extremely positive. Our only limitations are we can’t build [the ThinkBooks] fast enough. And that’s certainly not a function of our own supply chain--our factories have never had higher output than they do right now. We just have some downstream issues with [component] availability that’s just tightening it a little bit. But our backlog is extraordinarily healthy.
For the ThinkPad X1 Fold, what has been the reception so far?
I think we’ve been pleasantly surprised at the adoption of it. And I do think there was something about 2020 that accelerated [the X1 Fold], just like it’s accelerated so many other things. What also has surprised us is, it has a starting price point of $2,499--but our average selling price is actually closer to $3,000. People are not just buying the entry level, they’re buying it with 5G and with all the bells and whistles. We have a few reasons why I think people are enjoying the experience. I think people are anticipating that this thing is going to be amazing when we can start traveling again, and they want to get comfortable with the form factor. What do I think we can improve upon? To be very candid, I think some customers would like to see something bigger. So we’ll look very closely at whether this is the right size, or do we need to go a little bit larger? And I think you’ll continue to see OS improvements over time. But certainly it has been very warmly received. It’s far exceeded our expectations for the product launch. I won’t use exact numbers, but we are double-digit percentages above where we thought it would hit last year.
What are you looking at in terms of your competitiveness going forward in North America with the other major PC vendors?
We’re flirting with No. 2. I don’t know if it’s going to happen in this quarter, I don’t know if it’s going to happen next quarter. But certainly within a three to six month timeframe, I believe we will be the second largest PC manufacturer in North America. But we’re not stopping there. If you think about the future with Lenovo, our goal in SMB, corporate and public sector is to achieve 30 percent market share in those three verticals by 2025. We have a plan. We’ve proven it with the channel--that we can execute tirelessly. We’ve remained wholly committed. And I’m excited to meet with all the partners as we roll out our new five-year plan. And we’ll beat it again.
With everything going on in the CPU space, how is Lenovo approaching its CPU choices right now?
At the highest level, it’s great to have competition and we want to have the ability for our customers to choose. And so we embrace all the technology partners--whether it’s Arm-based, whether it’s AMD, or whether it’s Intel. In isolated areas, one might make sense over the other. But certainly, we like the fact that there’s two very viable options, two really good players with really good architecture and technology. And we’ll continue to embrace both. And by the way, that also allows us a lot more supply flexibility when you have two viable players and you can move things around when things get tight--whether it’s as a CPU vendor, or in the world now where we have a shortage of integrated circuits on the planet, and you have different flavors for different PC makers. So having multiple options is good for everybody.
Did any of your thinking change on the CPU issue in 2020?
We’re really good at building PCs. AMD and Intel others are really good at building chips. And so we’re going to continue to embrace that model. I think what 2020 did prove out was, it was a good thing that we were diversified in our offering. Because it did give us a lot more flexibility when things got tight. Things are still tight. And the fact that we have so many options is one thing that’s allowed us to keep our output as high as it has been. So I think the dynamic with 2020 affirmed the fact that we have done the right thing by having a multi-vendor strategy there.
What should partners be expecting from Lenovo this year?
We’re just getting started. When we talk about the goal of getting to 30 percent market share in public sector, corporate and SMB by 2025, that should be very interesting [for partners]. Our goal has always been to change the PC landscape in North America--and it’s happening. And it’s going to keep happening. We’re entirely committed, and we’ve got some big plans ahead.