Lenovo Channel Chief On Plans To Sell Moto Z Smartphones In The Channel, The PC Strategy And 'Fantastic' Growth In Partner Sales
Lenovo In 2017
At CES 2017 in Las Vegas, where Lenovo debuted numerous products, Lenovo channel chief Sammy Kinlaw sat down with CRN to discuss what's next for the company and the channel. PCs will remain a major focus, as Lenovo gained share in the market in 2016, going from 20.8 percent to 21.3 percent during the year, according to research firm IDC.
Kinlaw discussed new ways of selling PCs through the channel in 2017 -- as well as new products that will be introduced into the channel, including the popular Moto Z smartphone.
The following is our Q&A with Kinlaw on what channel partners can expect from Lenovo in 2017.
What is the message to the channel out of CES?
We're just finishing out the quarter, that is our fiscal 3Q, we're moving into our fiscal 4Q now. And I always find that our value-added resellers want to know how you're doing as a company, so if I look at where my growth came from, certainly the numbers aren't final and we don't have anything disclosed, but I give you directionally how we did -- the growth engine for Lenovo last quarter was absolutely through the value-added reseller space. That business year over year was up very high double digits. And when you're up very high double digits in a market that's flat to declining, that means you're taking share, of course. So I'm thrilled with that.
If I look at the number of resellers in my community, it's about the same year over year. We certainly know that there's market consolidation going on in the VAR space. But another very good indicator for our partner community, and what's happening with the economy is, the folks that are selling Lenovo products are selling lots more of them. [The average partner's] spend is up roughly 40 percent more year over year [in the most recent quarter] -- very high increase. So the partners who are selling Lenovo products are not only doing a good job, they're doing a fantastic job. They're selling lots more.
What are the key PC products?
To start with, Chrome -- we have a very successful Chrome business. We've got multiple Chrome products planned for this year, so we're really excited about the proliferation of models within our Chrome business. Also within mobile, I'm extremely excited about our premium products. We had a good quarter last quarter with premium, but these new innovations, because of processor changes from Intel and Windows 10 -- faster, thinner, lighter continues. So the X1 Carbon. And having some sizzle, because it's available in silver, creates some new dynamics. So we're thrilled about what X1 Carbon updates will bring to us this year. But I'm probably more excited about X1 Yoga, and new features -- from edgeless display, the way the keyboard goes flat. That gives new things for our value-added resellers to talk about and to sell, and it distinguishes us in even a bigger way than what our competition has. We're having a really good show innovation-wise.
The PC is in decline, but obviously Lenovo is not slowing down with the category?
The device is not going away. Certainly there's lots of new ways in which you can store data and the way that you can compute with cloud, but you [need] to have an input device. Input devices are proliferating, they're not decreasing. So Lenovo is in the PC business. That is our mothership. We're not moving away from that. You go through the CES floor, and it proves it to you. ... We're growing and taking share, and we're doing it because we're making [top-notch] devices.
Anything direction-wise on your PC strategy that you could highlight?
I can tell you that our value-added reseller community can expect me to be very aggressive in not only making sure [that with] these premium devices, we train them all and have the right programs to incent them to sell them. But I'm going after more desktop share. I'll be laser-focused on growing and building out our workstation business. We have the product, we have the technology, we have the proof and the programs to support those devices and growth. And we're going to do it.
On the 'Partner Sold, Partner Delivered' program -- I understand that could be expanded soon?
We're going to expand. I'll have more formal announcements coming up at Accelerate in April. I did announce that program originally at Accelerate, and it's proven to be a success -- the partners that are in that program are selling our [server] services, and then they get to perform the service work on our services offerings. It's a win for us in that we sell more services, and it's a win for them in that they can make double-digit margins performing the service work. It's only server today, but I absolutely want to move that into PC in 2017.
Can you give some sense about what the program might look like for PCs?
You'd have to be an authorized warranty service provider to begin with, and then from there once you're in that program, and you've proven you can service and fix our products just like we can, then we'll replicate the model we have for server into PC.
How else is Lenovo positioning itself for emerging trends?
I would tell you that we want to capitalize on the hype and success of new Moto Z, with the mods. We're opening up distribution into selling unlocked phones. So we're in negotiations with all of our distributors to be able to sell the Moto Z and the Moto family, through our commercial channel, from distributor to VAR. In the device convergence between smartphone, tablet and PC, there's a need for it. And we're going to be very aggressive in making those products available to our commercial VARs. Which is new -- we haven't done that before.
What would you want VARs to know about selling smartphones?
It'll give them new revenue streams. It'll give them an opportunity to sell another hardware device that's not cheap. These are premium products. And it'll give them one more avenue of ownership with their end users, versus their end user going to a local Verizon or AT&T store. They will own the technology. Smartphones have not been a channel product, but the trend in the market is that unlocked phones are growing at a very fast pace. Versus locked with a two-year contract -- those are stopping. So the game is changing a little bit.
What's on the horizon with server?
Last quarter was a milestone quarter for us with server -- many, many new wins through the channel. We had very positive year-on-year growth with server. And, as you know, we've been shaping that business from acquiring it from IBM two years ago. It certainly took longer than we expected, but as I said, [we're seeing] milestones. ... So, how do I further that? I've been heads down in creating what we're going to call our value-added channel within the server community. And at Accelerate this year, I'll give the specifics of what that value-added channel is going to mean within server. There are certainly going to be revenue clip levels. There's also going to be certifications and accreditations. Now it's coming to fruition. This is a big deal for us -- it's a long time in the making.