Lenovo wants to be the world’s largest PC vendor. With their dominance of their home market of China, and with the acquisition some years back of IBM’s primarily enterprise-focused PC business, they’re on their way.
In North America, though, Lenovo still lags behind high-profile incumbents such as Hewlett-Packard and Acer, with rivals such as Dell also providing stiff competition. The vendor is hoping an expanding consumer product line, along with a move into retail in the North American market and a major branding campaign, will help it make up ground.
Milko Van Dujil is senior vice-president for mature markets with Lenovo, which includes responsibility for the Canadian market. He was in Toronto recently, and sat down with CDN to discuss their strategy.
CDN: Lenovo has been somewhat conspicuous in its absence from North American retail shelves, something you’re looking to change. How, and why now?
Van Dujil: We have to do into retail; there’s no debate. You have to have the right product set, which is different than (SMB and commercial). You have to do a branding campaign. When people see products on the shelf, they have to feel something when they look at a Lenovo PC. There has to be a connection with the brand. We need to do work on the brand and position it in a certain way. (Advertising agency) Saatchi & Saatchi has developed a campaign called the “For those who do!” campaign and that’s where we’ll position the Lenovo brand and company on TV, outdoors, and in print. And retailers will see that we’re investing to support the brand. Very few companies can afford to do that in every country in the world to the same extent, so we’re going to pick a couple of markets where we go first into retail and get it right. In mature markets, we’ve picked Japan, the U.S. (and Germany). And we’re looking at how that goes. At Best Buy we’ve gone notebooks and desktops in every store. We ran the first TV campaigns during the NBA finals.
CDN: Will Canada be in the second phase?
Van Dujil: We haven’t compartmentalized the phases, but for sure we want to go into retail everywhere. We haven’t made decisions on a number of countries yet but we’re clearly evaluating. Canada is a good market for us. It’s an important market for us. We’re evaluating, but we haven’t made any final decisions as to what, how, and when. Expect we’ll go into retail in more and more countries around the world as we continue to be successful growing and investing.
CDN:: Have you had any trouble securing shelf space in an already crowded retail PC market?
Van Dujil: I wouldn’t call it a problem. It is a challenge and a major undertaking when you’re not yet into retail to go into retail, because you have to take products off the shelf. Some others will go when you come in, you’re competing with others so that’s a battle. You need to fight your way in, and once you’re in you need to do a great job. That’s also why the branding is so important and we’re investing heavily. You won’t get into a store and stay in successfully if you’re not investing in the brand and people aren’t bombarded. Then you need to make sure the product is good and the service, and it all clicks together. It’s a challenge to get in but where we wanted to get in, we got in.
CDN: Apple has had strong success with its Apple stores. Microsoft is rolling-out a store strategy, and IBM used to have IBM stores. Are you considering a Lenovo storefront as part of your retail strategy?
Van Dujil: In China we have 12,000 storefronts in malls, dedicated storefronts and franchises, and not just in the major cities. That’s part of the success story in China. We’re having storefronts in Australia, in many emerging markets. Not always dedicated stores, but stores in stores. We’re evaluating many different things.
CDN:: Here in Canada, in the mobile space it’s HP and Acer fighting it out for top spot in market share, while Lenovo is back a bit with Dell and Toshiba. Is it your lack of presence in the consumer market that’s holding you back here?
Van Dujil: Definitely. That’s why retail is so important to us. All those companies are in retail, and if it’s half the market you have to be there. That’s why I’m so optimistic about our company’s future. We’re strong in commercial, and when we add retail to it there’s so much more we can do. When you look at Canada and overall, the interesting thing I see is when I look at HP and Dell they’re focused more and more on services. Every acquisition they do is in the services space or the software space, every interview that Michael Dell does or HP does is focused on going into the data centre or cloud services, and then they also do PCs.
CDN: Don’t you share their interest in the cloud and services? I’d think that’s where the margin is for vendors and partners today; they’re not making all that much money off laptops.
Van Dujil: I definitely share the interest. Look at the convergence of the telco industry, telephony and PCs. When I look at my kids, I don’t know how many pictures they upload per day. I read an article on the Olympic Games in London; their biggest worry is will they have enough data capacity to be able to deal with all the electronic ticketing and so many uploads of pictures and videos. To answer your question, definitely. I think there’s a huge demand for data centres for cloud, for processing, and I think when you look at companies like HP and IBM, and I understand Dell is focusing more on that, there’s a big market. I come back to always being a believer in doing a few things right (rather than) doing many things half, because you don’t get anything done. We’ve decided we’re a PC vendor. We want to be one of the biggest PC vendors in the world. We still have a ways to go. For us to diversify and go into the services market is too far, too fast at this moment. Is it a big opportunity? Definitely. But we believe growing our scale organically, or non-organically though acquisitions and joint ventures, going into new segments, bringing out new products and being very tuned-in to our channel partners as a PC vendor and not competing with them for services is the right strategy for us.
CDN: What do you see then as the opportunity for your partners to make money with Lenovo, and where should they be investing?
Van Dujil: In distribution there’s still an opportunity in logistics around PCs because there’s so many units you need to get to customers. Also, I think services around the box. Instillations, getting this whole thing about telco/social networking/tablet security, there’s a huge demand for services to pull it all together. When you look at SMB, there are more and that want help getting IT networks implemented so they can focus on their core business. As the economy grows again, people will spend all their time running their own business and they want partners to take care of the IT for them. So I think the market for services around the PC is growing. Not in the least with cloud computing, where apart from the data on the PC there’s data sitting somewhere in data centres that is transparent for the user. It’s easier said that done to make all that work. We really want partners to make money with services around the box. The only services that we sell are warranty services or some very close to the box-related services.
CDN: What are partners telling you they’re looking for from Lenovo that you’re maybe not providing yet?
Van Dujil: What partners in general are looking for us to do is make sure we provide them with the best PCs at the right cost-levels, supplied to them on time. That’s the key thing. Next to that is innovation. We’re spending a lot of money to make sure we make this and keep this the best product there is. Quality, after sale services, we’re focusing on making sure our products have the best quality in the business. In the past, we’ve definitely had some (channel) issues. We didn’t have a reliable enough supply chain. That we’ve put a lot of focus on and made tremendous improvements. I think our supply chain has now become one of our advantages.
CDN: Speaking of products, has Lenovo entered the tablet fray yet? I’ve heard perhaps later this summer?
Van Dujil: We launched a hybrid PC in Las Vegas (at CES) which is an Idea (consumer line) product. It’s a Windows PC and when you take the screen off it’s a beautiful thin tablet which is Android-based, so it’s the best of both worlds. We have that in China. We haven’t rolled it out in the rest of the world yet. We’re going to see what the pick-up is in China. Tablets themselves, we’ll bring out a Windows tablet and an Android tablet for the consumer market, and we’ll have a Think tablet for the enterprise space that’s an extension of our Think product line with all the benefit of always-on, long battery life but only USB connections as well as a pen to be able to write with pen recognition, as well as the robust security and scalability. We’ll bring our Think tablet out at the end of August, and the others will be out late July/early August, first in North America.
Follow Jeff Jedras on Twitter: @JeffJedrasCDN.
