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Key Facts You Should Know About Lenovo's Plans

 
 
By Michael Vizard  |  Posted 2016-05-18
 
 
 
 
 
 
 
 
 
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    1 - Key Facts You Should Know About Lenovo's Plans
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    Key Facts You Should Know About Lenovo's Plans

    Lenovo has much riding on data center products and services sold via the channel. Key to that strategy is training thousands of PC resellers to sell servers.
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    2 - Lenovo Financials
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    Lenovo Financials

    After posting a loss in the second quarter, mainly due to restructuring costs following the acquisition of the mobile computing business of Motorola, Lenovo reported net income of $300 million in the third quarter. Revenue for the period was $12.9 billion, down 8% year-over-year. Sales in the PC group dropped 18% due to both declining demand and supply chain issues affecting key PC products.
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    3 - Impact of Restructuring Plan
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    Impact of Restructuring Plan

    Lenovo claims its restructuring plan delivered savings of $650 million in the second half of the year and $1.35 billion annually in the last fiscal year.
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    4 - Lenovo Financial Goals
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    Lenovo Financial Goals

    Lenovo said it is on track this fiscal year to reach $5 billion in enterprise revenue, on a constant currency basis. The channel team alone has been tasked with driving $500 million in incremental revenue this year. A larger portion of that increased revenue is expected to be driven by the sale of additional Lenovo services.
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    5 - Lenovo PC Market Share
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    Lenovo PC Market Share

    Lenovo says it grew its PC market share to a record high 21.6 percent in 2015. The company has also set up a sales team dedicated to drumming up more business for partners in the small-business sector.
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    6 - The New Lenovo PC Group
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    The New Lenovo PC Group

    The newly formed Lenovo PC & Smart Device Business Group is responsible for PCs, detachables, tablets, phablets, gaming and smart home products across Windows, Chrome and Android products.
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    7 - Lenovo in the Enterprise
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    Lenovo in the Enterprise

    Now known as the Lenovo Data Center Group (DCG), this unit focuses on servers, storage and hyperconverged appliances. Lenovo claims to have a 7.2% share of the server market.
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    8 - Driving Data Center Sales Through the Channel
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    Driving Data Center Sales Through the Channel

    Lenovo, hiring 2,000 sales people to drive data center sales through the channel, aims to train thousands of PC resellers to sell servers. The expectation is that many Lenovo partners will be eager to expand their businesses to include more profitable data center products and services.
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    9 - Enterprise Partnerships
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    Enterprise Partnerships

    In addition to teaming up with Nutanix to resell and develop 2u hyperconverged appliances for the SMB market, Lenovo has alliances in place with Red Hat, Juniper Networks and SAP.
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    10 - Lenovo Mobile Group
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    Lenovo Mobile Group

    Focused on smartphones, Lenovo's Mobile Business Group is led by Xudong Chen in China and Aymar de Lencquesaing, former head of Lenovo North America, around the rest of the globe. Both executives are co-presidents of MBG.  The Motorola Mobility team will now report to de Lencquesaing, who will become chairman and president of Motorola. The Mobile Group also leads development on a forthcoming Project Tango initiative to create a smartphone in partnership with Google.
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    11 - Lenovo Innovation Investment Strategy
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    Lenovo Innovation Investment Strategy

    A new Lenovo Capital and Incubator Group has been set up to invest $500 million initially in projects through the Lenovo Capital Phase II Investment Fund, which will focus on key technologies, including cloud computing, big data, artificial intelligence, robotic and Internet services.
 

Lenovo is on the mend after returning to profitability in the third quarter following a bumpy first half of its fiscal year. The core challenge Lenovo faces is that demand for PC products continues to wane. As part of Lenovo's strategy to invest heavily in data center products and services, the company forged a partnership with Nutanix to resell and develop hyperconverged appliances for small and midsize businesses (SMBs). However, it will take time before the company becomes a force in the data center. Following the acquisition in late 2014 of IBM's x86 server business, Lenovo's share of the server market remains just above 7 percent. Lenovo is bringing on some 2,000 dedicated sales reps to help drive server sales that would ultimately be fulfilled by its channel partners. In the meantime, a newly restructured Lenovo is looking to cut costs while focusing more on higher-margin products and services. Achieving that goal will not be easy, but one thing that is clear is that thousands of Lenovo channel partners selling PCs today would be keenly interested in expanding the reach and scope of their businesses into the realm of the data center.