Channel Partners Welcome IBM PC Division Sale to LenovoBy Pedro Pereira | Posted 2005-04-26 Email Print
Despite initial trepidation, many VARs and distributors say they feel good about IBM's planned sale of the Personal Computing Division to Chinese manufacturer Lenovo.
In the last three years, IBM has built a loyal following in the channel by working to eliminate conflict between its direct business and partner sales.
So when the Armonk, N.Y.-based computing giant said in December it is selling its Personal Computing Division to Chinese manufacturer Lenovo Group Ltd., channel partners worried.
They worried that the advances IBM had made in building solid channel partnerships might be undone, and they worried that they would be forced to deal with a company about which they knew very little.
However, as IBM prepares to make the sale final before the end of this quarter, partners say they now feel a lot better about the change.
This is because most of the channel team from the PC group is moving to Lenovo and the executives who will be in charge of partner relationships are promising that the channel strategy will not change.
VARs and distributors also are hopeful that Lenovo will integrate its own low-cost and reputedly well-engineered products with the IBM line, giving them low-priced quality products they can use to fend off direct-selling vendors such as Dell Inc. and Gateway Inc.
"I do think that Lenovo has a good shot at being successful in growing the business due to their low-cost manufacturing and the intense focus they bring to the business," said Steve Raymund, chairman and chief executive at distributor Tech Data Corp.
As of now Lenovo sells no products in North America, and the company has not disclosed what it plans to do with Lenovo-branded products here after completing its purchase of the IBM PC business.
Greg Spierkel, the co-president of distributor Ingram Micro Inc., who will soon take over as chief executive, is hopeful about the prospects. "There's an interesting opportunity for us in maybe getting access to Lenovo product," he said.
Details of any Lenovo brand plans will come after the deal is sealed, said Stephen Mungall, the IBM vice president in charge of distribution who will run direct and channel sales for the Americas at Lenovo.
"Will there be Lenovo-brand machines? The expectation is high that there will be but there is no definitive answer now," Mungall said.
Pete Peterson, vice president of systems and software product marketing at Tech Data, said he believes Lenovo's priority when it starts integrating the IBM PC group will be taking costs out of manufacturing and delivery processes. Only after that is accomplished should we expect to see Lenovo bring its own machines to North America.
Lenovo will keep the Think brand.
One important detail of Lenovo's plans is already known, Mungall said. Under the purchase agreement with IBM, Lenovo will keep the ThinkPad notebook and ThinkCentre desktop brands for at least five years. The same team that has done the research, design and development of those products is moving over to Lenovo.
This is welcome news to channel partners, especially those with customers committed to IBM-branded PCs. Retaining the Think brand helps channel partners make the case to their customers that not much will change when Lenovo takes over.
Not that customers seem too concerned with the change, said Chris Redshaw, president of Future Vision Inc., a solutions provider in Raleigh, N.C.
"Most of our customers have not even mentioned it," she said. Future Vision has taken the initiative in informing customers about the change before they have a chance to worry about it.
"We have educated them and told them what is happening, and their reaction has been very positive," Redshaw said.
Scott Goemmel, executive vice president of PMV Technologies of Troy, Mich., said his customers also have reacted positively, despite some early concern. IBM has put those concerns to rest by laying out how the transition will take place, he said, adding that he knows of no customers planning to switch from IBM products as a direct result of the Lenovo deal.
Even so, John Thompson, vice president and general manager of Hewlett-Packard Co.'s Solution Partners Organization, said he believes as much as 50 percent of IBM's PC business is up for grabs during this transition.
Customers will make a decision on whether to switch to Dell or HP, he said. So Thompson is encouraging Palo Alto, Calif.-based HP's channel partners to step up their marketing efforts in trying to win over IBM customers.
As far as partners and customers are concerned, said Mungall, Lenovo will be another IBM in its approach to technology, partners and customers. Mungall said he is confident that customers by and large will not be looking for another brand.
"As customers learn what [the Lenovo deal] is and what it isn't, we have been very successful, to the point of the customer saying, 'There's no need for me to change,'" Mungall said.
If anything, he said, customers are likely to benefit from the focus that Lenovo will bring to the IBM PC business. Within the vast organization PCs were just one of many divisions, while under Lenovo the PC business is the sole focus, he said.
Redshaw said she plans to stick with IBM and then Lenovo, but the company has to keep its channel focus. Future Vision was a loyal HP partner for 10 years, but it switched to IBM after HP bought Compaq Computer Corp. and started to push its direct-selling business. Redshaw said she would rather not have to switch again.
"Of course we're a little nervous," she said, but added that so far all indications from IBM about the sale of its PC business bode well for Future Vision's partnership with Lenovo.
Tech Data's Peterson said IBM has done a "phenomenal" job of communicating to partners details of the transition, which he said has gone a long way toward putting partners at ease about the change.