ChannelBiz UK sits down with Lenovo’s Neil Berville and Darren Phelps
ChannelBiz UK had the opportunity to sit down with Lenovo’s Darren Phelps, SMB & channel director UK&I (pictured), and Neil Berville, executive director, EMEA channels & programs, so, of course, we took it.
While Lenovo – famously buying IBM’s product division years ago now – is creeping in to becoming one of the established big hitters in the UK market, its global presence speaks for itself. The company has been climbing up the market trackers quarter after quarter, and although it isn’t necessarily first choice for the British consumer, it’s confident that it will be: the question in the UK isn’t one of the right products, Lenovo claims, but of nailing the branding. It is quite assured everything else will come with maintaining its growth performance, strategies, and, like many things, a little bit of time. As for most big vendors, Lenovo explained that the channel is crucial.
Darren Phelps told us that the company has 1500 partners that it classes as active with the top 20 in the Gold category and around 80 premium partners. Under a simple program designed to attract partners, with the appropriate rewards, Lenovo has managed, year on year, to grow its partners by 25 percent.
Neil Berville said that Lenovo is not necessarily looking to be more aggressive, though it has come catching up to do. “If you look worldwide, we have our best performance,” he said, adding that China is clearly a strong market. Lenovo has the fifth largest share of the market in EMEA based on the Q2 calendar, and is number five in the UK. “The first goal of any country is to get to ten percent share,” Berville said. “The growth, if you go back two years, the share was probably half of that – the growth is fast but the key is what the partners want is sustainability.”
“[Partners have] seen too many people put the foot down too hard, too quickly, and ultimately it’s not sustainable,” Berville said. “We have a very structured business model around the channel, and managing the whole model of the channel, meaning inventory, wanting just the right amount without having to drive it up… The market is pretty volatile, it varies seasonally, and n the current climate, getting that right every week is what the channel really relies on us to do”.
Berville reckons it is not long on an EMEA basis before Lenovo hits ten percent share, similar for the UK. It might be next quarter. The company has the lofty goal of reaching the top three vendors in 2013.
In terms of market share, Berville explained that the company has been consistently increasing its profits – and it has been the fastest growing vendor for 11 quarters, he claimed. “It has never been at the expense of pushing or buying market share,” Berville added. “It’s easy to do one or the other but difficult to do both together, both tracks have gone in the same way”.
Hesitating to use the word ‘organic’, Phelps did so anyway. “It’s about doing business in the right way, we like to think, it’s organic. It’s balanced across the business,” Phelps said. “Over 12 point share in commercial, growing in consumer, and in SMB it’s pretty rapid at the same time. You clearly have to align yourself with those partners to push and pull, if you’re not doing it in the right way you’ll soon hear from partners and distributors.”
As for a general message to the channel, Berville said that Lenovo doesn’t have a saturated channel yet. “If you look at the PC reseller population but also versus some of our competitors in traditional players,” he said, “we have quite a lot of scope to add resellers. With our teams we’re always trying to grow the up and comings into the premium and gold tiers, but we want the distributors to attract new resellers in at the bottom”. Interested partners, Berville said, won’t find every reseller on every corner selling the same proposition: “There’s less of them, there’s fewer of them selling like HP or a competitor,” so resellers should, Berville advised, “start pushing Lenovo as an alternative”.
There was no shortage at the Canalys Channels Forum of nodding to the far reaching and dire economic conditions facing customers and consumers in Europe. Referring to the wider UK PC-buying market, he pointed to GFK statistics: “I would say the beginning half in the UK was very soft, you were seeing a 20 percent decline year on year, though the last two or three weeks you’re seeing a stabling off”. Whether Windows 8 is an enormous success or not, Berville said that sales are beginning to reach the same level as last year. “You’d think it would be the other way as we get closer to Windows 8, have people holding off”, he said. It’s neither Windows 8 is “so revolutionary that it’ll crash and burn, but equally it offers a lot”.
There will be interesting new products entering the market after Windows 8, and, of course, Berville pointed to Lenovo’s upcoming Yoga which will be anything but the Downward Dog. Although, he said, not everyone will be able to afford it initially, like when more Windows 8 products come out over a year these will move into more aggressive price points. For now, vendors are expecting – and, we add, hoping – that the public perception of the personal computer will begin to change from traditional clamshell products, and, Berville added, this could kick start passion and enthusiasm for the products. “That’s what it’s about,” he said, “We’ve got in our stable products Yoga, some convertibles, three or four different takes on the way to get touch working – we will see which will be the winners and that people really get a passion for, some might not click in the same way”.
Phelps believes that a primary strategy is being ready to capitalise on anything that can stimulate the market, like Windows 8, but also the “tradition of the PC is an opportunity for us – it’s an attack market. We’ve been ready for convergence”.
Citing, ChannelBiz UK guessed though wasn’t acknowledged, the fever of the press and some analysts who opined with great enthusiasm about the death of the PC, Berville said that the world has passed through that era. “I think people are already past the point where one thing does everything, the thought that PC is dead, I think that’s already passed,” he said. “It’s better for some things than others and we’ve already found that, and that will develop. I’m sure we’ll create some different spinoffs of those products – some people will say they’ll buy Yoga to replace their PC and tablet, others differently. The market is fundamentally not buoyant because the macroeconomic market is not buoyant”.
For now, though, Berville declared that Lenovo wants to be number one. “We’re going to get there worldwide faster than in EMEA and the UK”, he said, “but the guys in the UK have a target”. “Anyone in the business wants to be number one,” Phelps added, but Lenovo is “up there making the organic growth, and it’s about doing it the right way – we’ve got the ingredients, partners, and ambition to get there”.
“We will stay in the core business,” Berville said. “The interesting thing is, what you call the PC business, we call it PC plus – we would have a strong smartphone business in China, smart TV, we’re now expanding the smartphone business in the Philippines and India, the first place in EMEA will be Russia, and that’s about what we know: PC is going to be the core, but the device itself is going in all directions, and the technology is converging. That’s the core, and we want to be in it all elements of it”.
Branding is the obvious route to a large slice of the pie in the UK. Phelps said that penetrating stores such as Amazon, Argos, John Lewis, and others, is important: sending products to those partners builds the brand and the relevance of recognising Lenovo as a brand in consumer is important, as the company is already pretty strong in business. For Lenovo, it started with a rather clean slate: the opportunity was there to plant the initial seeds of perception in the UK market. “It’s amazing,” Berville said, what reassurance from outlets like PC World can do when reeling off the facts for a sale. Because Lenovo has worked hard at explaining the company to potential customers, retail sales staff can mention that it’s the second biggest PC maker in the world, and people are quick to say, “OK, now I’m happy, talk to me about the product,” Berville said.
As for trusting not a new – but growing – brand that has its origins in China, referring to the recent paranoia surrounding ZTE and Huawei, Berville told us that the company is seen as an example of how a Chinese company bought a pure blue chip company and is one of the few to make that very successful.
“It was a big thing at the beginning,” Berville said. “The relationships and the partnership with IBM was kept very purposefully at the beginning. But now, with our growth, we not only acquired the business, we are maintaining a lot of people and skills, and we have doubled the business in the last two years – there’s not many examples of that”.