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Lenovo updates Motorola, IBM System X plans

Lenovo Channel Chief Chris Frey

LAS VEGAS – Lenovo has said very little when it comes to its $2.91 billion Motorola acquisition, even after the deal closed on Oct. 30th.

Today at Synnex’s VARnex Conference, Lenovo confirmed Motorola will run as a separate entity. Rob Cato, the director of US distribution and VARs for Lenovo, said even though Motorola is on its own Lenovo plans on leveraging its presence in the market.

The other major 2014 Lenovo acquisition, of the IBM System X business, got more play at the VARnex conference.

Lenovo channel chief Chris Frey said having IBM System X and Motorola makes Lenovo more relevant. With these new acquisitions Lenovo is now a $43 billion enterprise on the same scale as other Fortune 500 firms such as the Walt Disney Co., Allstate Insurance, FedEx, and American Express. Lenovo now has more than 60,000 employees and is doing business in more than 160 countries.

“We want you to consider us relevant,” Frey asked the channel partners in attendance at the VARnex Fall show. “We are third now in PCs, plus smartphones and tablets. We are No. 1 in PCs and tablets passing Apple and again No. 1 in PCs with 19.7 per cent market share,” he said.

Approximately 85 per cent of Lenovo’s entire business goes through the channel. In Canada, that number jumps to 88 per cent. Frey added that all of Lenovo’s SMB business and federal government business goes through channel partners totaling more than $700 million in indirect revenue.

“We scaled our business for the channel. We have grown share and we put it through your books. Can anyone else make that statement? We are going after the premium sector; not the low end where it’s all about price. This is why we put out 40 per cent more new customer bonuses this year. We are driving new business together,” Frey said.

On the premium segment the new priorities for Lenovo and its channel will be about winning over new customers. Frey said that a run rate business is “a going out of business strategy.”

Frey asked the VARnex partner base to sell more Top Seller services. He admitted there was very little uptick in services in 2014. Lenovo also wants channel partners to move up the stack and offer the entire portfolio, now including the IBM System X line.

“We bought it all,” Frey said of the IBM System X line. This includes high-end racks systems and converged blades, which Frey says is “not a dead business”, density area systems that brings in high software revenue and rack and tower volume systems. “Volume systems are still 60 per cent of the market. I promise we are going to be more than a player in that space.”

From a market perspective, customers are upgrading their infrastructure and several of those upgrades are going to the cloud, but Frey estimates that whether on premise or in the cloud, servers are being replaced and Microsoft’s decision to end support of Windows Server 2003 will only add to that.

“Let me be clear on our channel strategy with this. It is a channel strategy. Is that clear enough? We want you to make a lot of money,” he added.

Also Lenovo will be adding more skilled people from the IBM System X acquisition. With that, Lenovo has moved its second most senior channel executive, Sammy Kinlaw, to run the System X business as that line’s own channel chief.