Lenovo reverses commitment to lower prices for public sector

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Lenovo reverses commitment to lower prices for public sector

Simon Quicke

Lenovo has raised the prices of notebooks it supplies to the public sector by 20% to compensate for swooping movements in foreign exchange rates.

The move is a reversal of an earlier price commitment to public sector customers under Catalist, the IT procurement framework run by the Office of Government Commerce.Buying Solictions.

Lenovo is now offering notebooks under Catalist that are a fifth more expensive after movements in foreign exchange rates meant the deal signed months earlier was not profitable.

Vincent Fauquenot, Lenovo vice-president of transactional business for Western Europe, said the company had been facing an "exceptional situation" in the currency markets and needed to ensure business was profitable.

"The UK has been moving against the dollar and some of the programmes that we had in place were not sustainable," he said, adding that some large corporate customers had also experienced the same issue.

Lenovo partners have complained that rising prices for Small and Medium Sized Enterprises could ruffle the feathers of customers, but doing so in the public sector could be commercially damaging.

"The deal was on such low margins that Lenovo realised it was unprofitable, but when you make a commitment to the public sector you stick with it," said one source, "Lenovo has lost a lot of credibility so we have switched to HP".

Another agreed the supplier had been chasing market share with prices that were too aggressive, "but it has backfired".

Fauquenot said it was listening to partners' complaints and planned to "do everything possible in the coming months through our product offering, programmes and incentives to restore confidence among partners."

A version of this story originally appeared on Microscope.


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