IDC, in its Worldwide Quarterly Personal Computing Device Tracker for the first quarter, reports worldwide shipments of traditional PCs (desktop, notebook, and workstation) totaled 60.4 million units, recording flat year-on-year growth. This latest figure exceeded analysts’ expectations and was the third consecutive quarter where traditional PC shipment volume was flat year over year.
While IDC noted that PC activity, particularly around notebooks, was off to a good start in the U.S. this year, likely due to a positive economic environment particularly in the commercial sector, this market segment continues to be a nailbiter for vendors.
For Lenovo, in particular, the company is riddled with its own unique challenges, such as executive disruption and partner-program changes. It’s no wonder why building trust with partners is a top priority for the company.
That said, there is good news. As of April 1, Rob Cato became the official North America channel chief. He started serving as the interim chief when Sammy Kinlaw left the company earlier this year. Cato also gets to work closely with the company’s new president of Lenovo’s North America business, Matthew Zielinski, who took the reins this year after the departure of Emilio Ghilardi. If you're counting, that’s six North America presidents in six years.
Channel Futures caught up with Cato to discuss the vendor’s road map with partners. Cato is responsible for the PC and smart-device division. He told us that Lenovo has about 26,000 partners in North America, and about 19,000 active partners in any quarter.
Channel Futures: Lenovo just wrapped up its Accelerate 2018 partner conference that was held earlier this month. For those partners who weren’t able to attend, fill us in a bit on what transpired.
Rob Cato: The overall message or theme of Accelerate was "Engage." As we as a company transform from being very product-centric to more of a customer-centric company, it’s about how we engage our partners to help us drive and sell to our customers.
CF: Are there specific areas that you want to focus on?
RC: There are three specific things related to that. The No. 1 thing – and our customers and partners are included in that – is that we want to make sure that we’re focused on customers and the business outcomes around customers. So, how we drive the best possible experience and outcomes, and how we differentiate ourselves with our customers [is critical.]
The second thing is driving back to a commitment and trust with our partners. Drive the engagement to a trust and commitment level — that’s around acquisition of customer, acquisition of new business, and it’s about ease of doing business. Speed should be a differentiator for Lenovo, due to our relative size compared to our competitors in North America. We’ve got to get back to making the ease of doing business a critical success factor. Also speed and how we react to partners when they have opportunities, so how we deliver price, product, information and communication in a timely way. We want to make sure that’s a differentiator going forward.
The third area of focus, and one I think our partners are really excited to hear us talk about, is that we want to get back to growth. And, we want to get back to growth in a very meaningful way. We want to have best-in-class solutions, be engaged with our partners, and we want to invest in the channel. We want to make sure that we’re aligning our investments around mutual benefits so partners who are focused on growing with Lenovo and growing in areas we want to grow in – services and segments of the market such as education, commercial and maybe even some vertical segments like health care – partners who are focused there, we want to invest with them if they want to lead with a Lenovo solution.
CF: There were a lot of changes in executive leadership in NA, some channel program changes — that type of disruption always rocks the boat for partners. What would you like to say about it?
RC: I would tell you that for me, I’m focused on the future. Between myself and our new president of North America, Matt Zielinski, who just joined us, we’re absolutely focused on how we rebuild the trust and commitment with partners. Obviously, that’s not going to happen overnight, but we certainly believe that we do that through engagement with our partners, through new programs and investments that we’re going to make, and aligning our resources – all of them, our people, our programs, our marketing – we want to align those to the partners who want to grow with us and grow with us in a mutual way.
CF: What type of programs and investments are you referring to?
RC: With Matt being new, and myself being new, we’re working through what that structure will look like, but our intent is to disclose that to our channel in the very near future.
CF: How near?
RC: Probably in the next few weeks, certainly by early July, we’ll have that out to the market. It’s about understanding Matt’s vision for the future. One of the things that he made clear is that from a relative market size in North America, we’re only about 13.4 percent market share, so we have a lot of opportunity for growth and we’re very hungry for growth. But we want to do it in a smart way and in a very profitable way both for us and our partners.
That means gaining a quarter of a point to half a point of market share quarter after quarter. For us, it’s about – again – winning new business with our partners and finding a way for them to benefit through the channel investments that we make.
CF: Lenovo is in an extremely competitive market segment. What types of changes can the company make to squeeze more out of the PC and device sector?
RC: It’s about making sure that we’re focused on the right products and set of customers. You’re right, whether it’s in consumer or education, it’s a very competitive marketplace. But as we get into the more premium products, workstations and services that our partners can sell, those are the profitable opportunities.
There are also new products coming to market where Lenovo is jumping into and making investments, such as the smart office. There a lot of new opportunity as we get into the digitization, mobility and smart-office space. We have some new products coming out there.
Virtual reality and augmented reality is another great category that we believe is going to redefine the marketplace. We have a new virtual-reality classroom solution. We’re partnering with Google on the headset and a lot of the content. A lot of this is being driven by our new workstation – both desktop and notebooks – class solutions and products.
CF: You mentioned services — tell us more.
RC: Our services strategy is one that starts with close-to-the-box services which are very complementary to our partners – such as extended warranty and premium and premier support – so expanding the customer experience, making it the best possible. Other services, such as advanced deployment services – allowing the customer to get a better end-to-end deployment experience that’s delivered by one of our partners – as well.
CF: When will partners see concrete changes, the type that will keep them from leaving Lenovo and going to HP or Dell?
RC: I’d argue that they’re seeing changes now. It starts with bringing in a leader like Matt who sets the vision which he’s already articulated at Accelerate and other industry events. It starts there and then extends through me and the rest of the leadership team. I believe we’ve already turned the corner. Obviously, it’s about execution going forward and we have to prove that in the coming months and year.