Most vendors now understand that it is not only more profitable to sell through the channel, but that solution providers generally sell more products and services into accounts than a direct sales force does.
Case in point is Lenovo, which, thanks to a heavy reliance on the channel, is surging by almost any measure applied. While the latest financial numbers make it hard to compare year-over-year results because they include sales of handsets from the Motorola Mobility unit that Lenovo acquired, sales are booming across the PC and Windows tablets space, according to Chris Frey, Lenovo channel chief for North America. In fact, Lenovo reported that PC and tablet sales globally reached $9.2 billion for the third quarter, generating a pre-tax profit of $494 million.
Meanwhile, following the acquisition of the IBM x86 server business, Lenovo reported that its ThinkServer brand and the System x business unit sales reached $1.2 billion for the quarter. The System x unit accounted for $986 million. Lenovo, like IBM before it, still lost money—$42 million—for the quarter, but the overall business is on track to become a high-margin $5 billion business. In fact, Lenovo claims to be the third-largest provider of servers with a 10 percent market share.
A big part of the reason for that, Frey said, is that Lenovo is about to apply many of the same channel sales principles to servers as it does to PCs. With both channel sales teams now reporting to Frey, Lenovo is going to open all accounts to its channel partners. Partners will not only be welcome in larger accounts, but there will be no forcing of attach rates to qualify to sell into those accounts, Frey said.
Instead, Lenovo intends to make it a lot easier for existing channel partners to sell PCs, tablets and servers, while also looking to gain market share by recruiting additional channel partners, Frey said. These channel partners shouldn’t need a calculator to figure out how much money they are making by partnering with a vendor, or an electronic rolodex to navigate all the business units a vendor has just so they can sell a solution that spans multiple product categories, according to Frey. In its place, Frey is promising partners they will only need to engage with one instance of Lenovo.
Right now, the channel in the Americas accounts for 30 percent of Lenovo’s overall global business, Frey said. This is a number he plans to continue to raise through what he promises will be nothing less than hand-to-hand combat, account by account, regardless of the market segment.
Michael Vizard has been covering IT issues in the enterprise for 25 years as an editor and columnist for publications such as InfoWorld, eWEEK, Baseline, CRN, ComputerWorld and Digital Review.