LAS VEGAS — With millions of dollars in sales riding on the launch in a few weeks of Lenovo Corp. as a global personal computer company, the CEO-in-waiting has given an incendiary address to fire up resellers.
“One of these companies hates you,” Steve Ward told dealers at IBM’s annual partner conference, referring to competitors Dell and Hewlett-Packard. “It’s not just that they hate you, they believe you’re irrelevant. In every single speech they talk about how you should be put out of business, how your children should not go to college.
“Another [company] isn’t sure what they want to do.”
It was an aggressive opening in a fight not only for market share in PCs and notebooks but also for sales partners. Lenovo, which wants to buy IBM’s PC business for US$1.7 billion in a deal scheduled to close before the summer.
He took the opportunity of addressing several hundred resellers to tout the advantages Lenovo could bring to them.
These include the potential of lower hardware prices thanks to improved operational efficiencies once the IBM PC division is free from its organizational ties and Lenovo’s ability to negotiate lower component prices.
However, Ward wanted to make sure resellers understood the stakes are high in the short-term as buyers wonder if Lenovo products will be as good as IBM’s.
The company’s future will be determined in the coming months, he told resellers. “In the next four months what we need is tremendous growth.”
One measure of the pressure is that at a Tuesday presentation resellers were pushed to do record IBM PC sales this month before the first quarter ends.
“If we can increase our revenue and growth in March, the rest of the year is a piece of cake,” said Fran O’Sullivan, who will become Lenovo’s chief operating officer.
Last year the PC division recorded a 23 per cent increase in revenues over 2003, she noted, 72 per cent of which went through the channel.
O’Sullivan challenged partners to sell US$3 billion in PC products under the special-pricing Topseller Express program this year, US$1 billion more than they did last year.
Teams are already working on marketing to strengthen knowledge of the Lenovo brand in North America, she said. Lenovo will also spend US$200 million around the world to generate demand.
But she also said some of the things IBMers won’t be taking to Lenovo are the giant’s administrative policies that slowed it down. “‘No status quo at the new Lenovo’ is the motto,” she said.
“We are going to be a very efficient, fast-decision PC supplier,” she said.
It isn’t clear, however, how fast those efficiencies will translate into increased reseller margins.
“Just as the margins did quite well last year — and look at the growth we had through last year — they’ll see the same kind of performance as over 2005,” Ward said in an interview.
“What will they see that’s different? They’ll see substantially more marcom (marketing and communications), substantially faster decisions on pricing and on terms. In addition they’ll see leasing rates from IBM that are unbeatable in the industry.”
Asked how important it is to retain or expand the number of IBM resellers, Ward replied that “it’s important to have the right resellers. We’re looking at the resellers who are improving customer satisfaction, and growing their business and our business. Those resellers we’re extremely loyal to. We need to grow into much broader, very small business, we need to grow into the VAR space and we’re putting clear focus on getting that done.”
The challenge will be Dell and its direct model. But IBM — and, he implied, Lenovo — has done very well in small business and large accounts with ThinkPad and ThinkCentre products, said Ward.
In an interview after O’Sullivan’s presentation, Pierre Desjarlais, Montreal-based vice-president and general manager for eastern Canada for Compugen, a national systems integrator and VAR, was pleased to hear Lenovo won’t be burdened by IBM’s decision-making process. Compugen has decided to carry the IBM-Lenovo lines.
“If we want to go after direct manufacturers like Dell we need to have an organization that’s very price-conscious and can execute rapidly,” he said. “We’ll be more than happy to probably be the No. 1 Lenovo partner in Canada.”