Lenovo's U.S. PC, Server Sales Get Channel Boost

By Michael Vizard  |  Print this article Print
Lenovo,PC and server market share

In the United States, channel partners are helping to boost Lenovo's business and aiding its efforts to gain market share.

Although Lenovo's global revenue appears to be under pressure, market-share gains in the United States in both PCs and servers are bolstering the company's outlook. What's more, Lenovo's U.S. channel's business is robust.

Lenovo's U.S. PC market share for the second calendar quarter grew year-over-year from 12.8 percent to 14 percent share in declining market, according to IDC.

In the U.S. server space, Lenovo saw 40 percent growth, though it is a much smaller business.

Lenovo in its fiscal first quarter ended June 30 reported that global revenue dropped 6 percent year-over-year to $10.1 billion. But net income for the period rose 64 percent to $173 million.

In the U.S. market, channel partners are helping Lenovo gain share at a time when overall sales of Windows PCs are declining, said Sammy Kinlaw, channel chief in North America.

"In the U.S., our channel business is on fire," he said.

In the meantime, Lenovo is highly focused on getting its roughly 35,000 channel partners in the United States to sell more servers, Kinlaw said. Traditionally, Lenovo has successfully bundled lower-end tower servers with PC sales. Mainly via a recently forged partnership with Nutanix, Lenovo is aiming to gain share selling a hyperconverged appliance aimed at the small- and midsize-business (SMB) market.

Matt Eastwood, an analyst with IDC, said it's apparent that Lenovo's server business is starting to gain some traction in the SMB space. In contrast, the higher-end servers that Lenovo gained with the acquisition of the IBM x86 server business are not a good a fit for the channel, said Eastwood.

"The alliance with Nutanix is much more of a channel play," said Eastwood.

The next big challenge Lenovo will face will be heightened competition from Dell once the merger with EMC is complete. Dell already resells hyperconverged appliances from Nutanix. EMC brings with it a VCE unit that markets everything from a hyperconverged appliance to vBlock servers consisting of thousands of nodes.

Add in the channel efforts of a host of other rivals in the IT infrastructure space, and it becomes clear that any market-share gains by Lenovo will be hard-won indeed.

Mike Vizard has covered IT for more than 25 years, and has edited or contributed to a number of tech publications, including InfoWorld, CRN and eWEEK. He currently blogs daily for IT Business Edge and contributes to CIOinsight, Channel Insider and Baseline.