LAS VEGAS – Yang Yuanqing is tired of being on the brink of success.
Yang, the chairman of Lenovo Inc., has attained almost a 40 per cent PC market share in his native China, but acknowledges that the company, which took over IBM’s PC division almost a year ago, is still an unknown quantity overseas.
He spoke to CDN before his recent keynote at IBM PartnerWorld about his position on the channel, Lenovo’s take on innovation, and why he doesn’t call the PC a commodity product.
CDN: How many partners that were reselling IBM PCs are carrying Lenovo PCs?
Yang Yuanqing: Almost 100 per cent. I think this new company will give our partners more opportunity, because previously they could only take products to sell to large enterprise customers. But in the future, our product coverage will be wider. We will strengthen our coverage in the SMB and consumer segments.
CDN: Are the Lenovo 3000 notebooks you introduced recently more of a consumer play?
YY: It’s for small businesses. It’s a very good start, but it’s just a start. I think we still need to adopt other actions to improve our products’ competitiveness.
CDN: Do you foresee a time when you might be able to undercut Dell or your other competitors on pricepoint?
YY: Certainly. I think China’s market is very competitive. Everybody’s there. The strongest competitors are there. Dell is there (for example), but in China, we still have 37 per cent market share. I think that’s the highest level in a single market. Our competitiveness has been proven in that market. Right now, we should consider how to leverage this trust to improve our market outside China.
CDN: Do you still benefit from IBM’s R&D?
YY: We have no direct benefit from IBM on that aspect. But Lenovo will continue to do innovation, continue to do technology research. We have very good R&D in (development centres in) Yamato, Japan, Raleigh, N.C., and in China.
CDN: Is the 3000 line of laptops based on Thinkpad technology, or is that pure Lenovo?
YY: It’s combined.
CDN: What’s the ultimate breakdown of your “relationship” customers in terms of channel versus direct?
YY: Worldwide we have 20,000 relationship customers. We divide our sales process into several steps: keeping relationships, signing agreements, delivery, installation and upsell services. We have several alternative approaches to do this. If a customer wants to do business directly with us, Lenovo will do every step with them. If other customers have a good relationship with our channel partners, then partners can sign agreements with those customers, but Lenovo will directly deliver our goods to them. That will ensure our efficiency. With some customers, Lenovo can do the first three steps — we keep the relationship, we sign the agreement, we deliver the goods — but third-party partners can help us do upsell service. Even for relationship customers, we divide those responsibilities between us and our partners. In China it’s about half and half. I think it’s the same globally.
CDN: How does that all help you differentiate Lenovo from your competition?
YY: For this new company, we will have a very unique competitive position with PCs. In this industry Lenovo will be the only company to do the whole value chain by ourselves. Some of our competitors don’t do development work or innovation work very much. Some don’t do the manufacturing by themselves. Only Lenovo.
Not only do we want to do that by ourselves, but we can do that, we can afford to do that. With our manufacturing in China, our efficiency is even better than OEM manufacturers that build for brand companies. We have very strong capabilities there.
We don’t view PCs as a commodity industry. We will further do innovation work, especially in security technology and connectivity technology. We still have a lot of room to innovate. Also, we think we can afford to do that. We can do innovation with efficiency.
We spend two per cent (of our budget) on our development work. Our competitors also spend two per cent, but I believe we can do more innovation work. We can do more projects than our competitors.