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Partners Behind Lenovo’s Record Growth and PC Sales 'Frenzy'

By TC Doyle
February 13, 2014 - News

Lenovo continues to buck trends by advancing in markets in which others are in retreat. Company Vice President and Channels Chief Chris Frey says partners are a big reason why.

On the heels of Lenovo’s release of its third quarter earnings this week, Frey outlined for Channel Partners what’s fueling the Chinese company’s rise. In an interview, he talked about the company’s increased investments in partner programs and touched on the reasons why Lenovo has made surprising bids for Google's struggling Motorola handset division and IBM's low-end server business.

Here’s a recap of the company’s fiscal third-quarter results: For the period ending Dec. 31, Lenovo sales reached a record $10.8 billion, up 15 percent year-over-year. Earnings, meanwhile, totaled $265 million, or 30 percent higher than a year ago.

Propelled by strong desktop and notebook sales, Lenovo remains the world’s largest PC supplier and its leading share gainer. In the third quarter, Lenovo’s market share rose 2.4 percentage points, to 18.5 percent, according to the company. While HP, Dell and others struggle, Lenovo thinks its “clear strategy and consistent execution" are helping it advance. The results from the last period mark the 19th straight quarter in which its market share increased against its competition.

Despite dwindling sales of PC sales worldwide, the $10 billion that Lenovo sold last quarter was the most in the company’s history. During the period, Lenovo shipped 32.5 million devices, or roughly five per second.

In North America, channel sales outpaced total company revenue growth. Total channel revenue in North America grew 16 percent. Notably, product sales through VARs who source products from distributors and who sell to small and midsize enterprises rose by 30 percent.

“In the last four quarters we have seen significant growth in our VAR businesses due to the investments we have made in our outside sales capabilities, inside sales support and channel programs," said Frey. He is especially pleased by the growth in this segment because the partners are achieving results largely on their own; they aren’t assisted by Lenovo field sales reps, in other words.

From a product perspective, Lenovo ThinkPads continue to outpace the market. So do Lenovo’s server products. Sales of those doubled through the channel in the last quarter, according to the company. Lenovo is also enjoying strong growth in desktop PCs, which bucks the trend worldwide. Even though Gartner and IDC have slashed their long-term PC sales forecasts, sales of Lenovo commercial PC products have grown in each of the past five consecutive quarters. In fact, Frey says, “the commercial desktop is being refreshed faster than any other product category we have today."

Contrary to popular convention, not everyone will eventually migrate to a thin client or tablet device, he believes. Aggressive sales to customers who have employees working in call centers, banks, retail stores and other settings have convinced Lenovo management that the “death" of the PC is grossly overstated.

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