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David McQuarrie, general manager of Lenovo northern Europe, recently took over responsibility for the UK. His appointment comes six months after Lenovo completed its acquisition of IBM’s System x server business.
McQuarrie says part of the reason he is taking on responsibility for the UK is because his predecessor is now building a dedicated European supply chain team for Lenovo. According to McQuarrie, a supply chain focus will help Lenovo gain the best synergies from the recent System x server acquisition across the server and PC business.
It’s been a decade since Lenovo was set up following Legend’s acquisition of IBM’s PC business. McQuarrie says: “People here say they are Lenovo people, not ex-IBM.” Lenovo’s parent company, the Chinese manufacturer Legend, acquired IBM's PC business in 2004.
At the time, there was a big cultural shift, according to McQuarrie. And lessons learnt from the IBM PC business acquisition are now being applied in the integration of the System x server business. There is now one team, he says. “We feel there is a competence in the company to integrate acquisitions quickly and get the best from the people locally and get synergies globally where we can.”
Over the next year his ambition is to grow Lenovo’s market share across its PC business, tablets, mobile and servers. He says: “We aspire to be number one in every category we are in.”
The acquisition of the System x server business from IBM offers Lenovo the opportunity to move up the technology stack, to provide higher-end products and technology services in conjunction with its channel partners. The phone business promises to be the company’s biggest growth area, in terms of volume. McQuarrie’s ambition is for the teams across Lenovo’s PC, tablet, mobile and server businesses to work together – effectively offering a one-stop shop for IT hardware.
“We are moving towards being a consolidated technology provider while others are moving away. There are opportunities for value, scale and synergies between our product categories, be they phones, servers, PCs or tablets.”
Read more about Lenovo's strategy
- Lenovo has stated it will turn its acquisition of IBM’s x86 server business into a profitable $5bn business within 12 months
- Lenovo has opened its first high-performance computing centre, which it hopes will support open innovation
According to McQuarrie, Lenovo’s strengths are innovation, efficiency and scale. Key to the company’s success going forward is the integration of the four arms of the business, building Lenovo into a technology provider for the key IT hardware that organisations need to buy.
The PC business
Thanks to aggressive pricing, the company is now the world’s largest PC company, regular beating HP in terms of market share. While the PC market is shrinking as a result of the growth of non-PC computing devices, McQuarrie says: “The growth we’ve seen in the UK has been significant, but I want that growth to accelerate, despite the fact that the industry is seeing some weakness.”
He says that Lenovo is targeting all vertical sectors from the public sector, and small and medium-sized enterprises to individual consumers. He agrees that pricing can be used as a weapon to grow market share, but adds: “We are not just focused on price, but we have not taken the price of products like our Yoga tablet down because it offers genuine, differentiated value.” He points to the Yoga’s incorporation of a mini video projector and up to 18 hours of battery life as evidence of that value.
The strength of tablets
In the tablet market, McQuarrie is betting on the success of its Yoga device to help establish Lenovo as the third biggest tablet maker, behind Apple and Samsung. “You have to get to double-digit market share to become really relevant,” he says.
This is not going to happen over the next few quarters, or even within the next year. The company will continue to sell both Windows and Android tablets. “We want to be the provider of choice based on the value we bring and the innovation we put into the tablet devices,” he says.
Integrating System x server
For the server business, McQuarrie says the company needs to work on getting the IT and supply chain aspects of the IBM x server acquisition completed. But from a sales perspective, he says: “We are one Lenovo, with one face to the customer.”
Of the server business, he says: “There is a massive server and storage marketplace which we are not taking best advantage of. All customers buying servers and storage are also buying PCs.”
His goal is to make Lenovo the main supplier of those PCs. He says: “We must replicate the growth we’ve seen in the PC business with storage and servers.”
He’s talking here about the volume storage and server market. He says that SMEs will often use the same reseller to buy PCs, servers and storage. “We want to be in a position where a customer will buy two or three servers to run file and print and Exchange and 20 PCs from a reseller. We want to give the customer the benefit of one set of invoicing and one set of relationships. They can buy everything from the existing Lenovo PC business.”
One of McQuarrie’s goals is to make the most of the organisation’s ex-IBMers to build expertise above the volume server market to support application areas like HPC and SAP Hana. In this respect he says Lenovo is working with new and existing customers on so-called solution sales, where it takes on a consulting role.
“The difference for us is that we do not aspire to delivering the solution and all the services directly. Instead we have a clear strategy of partnering with solution providers. We don't compete with our channel – we partner with them.” This, he says, is a very different approach to the other large server manufacturers.
And unlike HP or IBM, Lenovo has no plans to become a cloud provider or deliver software products, according to McQuarrie. “Software will be through a partner approach,” he adds.
However, Lenovo will build system management tools. In April it introduced XClarity, a systems management tool for System x servers and Flex System converged infrastructure platforms.
The final piece of the Lenovo jigsaw is mobility. The company paid $2.91bn to acquire Motorola’s mobile division from Google last year. McQuarrie says: “The Motorola brand is widely known, but it only has 1-2% market share. My ambition is that the team which sells PCs and the team which sells phones work well together and go to market. This is a very serious play for us. We see the mobility market as the biggest growth opportunity for Lenovo over the next five years.”
With HP getting ready to separate its PC and Enterprise businesses, Lenovo looks set to go on the attack. If McQuarrie and the senior management team can execute their strategy, CIOs may well find Lenovo as the top hardware provider in their IT infrastructure shopping list.