Canalys 2016 Channel Forum at Macau had a lot of takeaways: One big is that Lenovo is ready to revolutionize the datacenter market with its technology tie ups. It was probably the reason why Lenovo was present in the event as a Keynote sponsor.
It is not hidden that Lenovo is aggressively trying to tap datacenter market. Reason being ever since the company has acquired the X86 servers’ portfolio from IBM, Lenovo has been endeavoring to add value to it. The objective of the company is to create a leadership position in this market by targeting the new age IT business opportunities. It means the company is targeting the organizations adopting Web-scale IT, Converged Infrastructure, Hyper Converged Infrastructure and All Flash solutions. To do that, the company has technology tie-up with companies like Nutanix, SimpliVity, Nimble Storage, Cloudean, Nexenta and many more. However, its growth in the standard server market is quite given which they have inherited from IBM.
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“With the next-gen IT influencing the CIOs, we have world class partnerships.”
Sumir Bhatia
Vice President
Asia Pacific
Data Center Group Lenovo
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Sumir Bhatia, Vice President, Asia Pacific, Data Center Group, Lenovo, said: “We acquired this business in 2014, which is relatively new to the other business. Our go to market and disruption of the data center is that ‘we are often called the challenger’. We relish that. Reason being, we have no legacy. With the next-gen IT influencing the CIOs, we have world class partnerships. We have partnerships with Microsoft, VMware, Red Hat, Nutanix, SAP, Juniper and Nimble, etc. It is not just handshake partnership but it is engineering partnership from the ground up.”
He added, “In the space of Hyper Converged infrastructure for example, today we have the most number of range of Hyper Converged solutions because of Nutanix alliance. We have 11 different boxes in HX series of hyper converged boxes today, which offers 600 different combinations. So, taking this into the market of data center is a huge advantage.”
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“We clearly are occupying the position, where nobody else in the world who has this kind of portfolio,”
Rahul Agarwal
Managing Director & CEO
Lenovo India
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Partners are key to Lenovo’s GTM strategy. As per Sumir Lenovo is the channel first company. 95% of its India business happens through the partners. And, the company is persistent to its stated position and grow its partners on the datacenter business.
He maintained, “The range of Nutanix solutions we have actually fits quite a lot of industries right away. There are two aspects of these machines. First these products need to be plug n play and up and running quickly. But the other aspect is after the installation bringing efficiency. What is the efficiency. It is about footprint. It is about bringing energy down and TCO down. So, it fits across all the segments. The range we have starts from entry level models upto much higher scalable models.”
However, the awareness of such capability of Lenovo in the market is not great so what the company is doing is that it is participating in the top events. In the Red Hat forum in India Lenovo was the platinum partner, where Sumir himself was speaking. At SAP events, too, Lenovo was the platinum partner. Similar, in a lot of other events Lenovo is participating as a top sponsor.
Sumit added, “Also we are working with our partners to take it to the market. The other way of gaining visibility is winning in the market. We are winning high-end solutions on SAP. You would be happy to know that worldwide 52% of SAP Hana implementation has happened on Lenovo platform. In India, we are winning some SAP Hana projects.”
“As an organization, our take is that we have been leader in the PC for last 14 quarters. Firstly, we are saying that PC is not dead neither it is declining. No.2, people are saying commoditization has happened and there will be no innovation. We are proving that wrong. We will continue to innovate – whether that is Yoga laptop or Yoga Book or ThinkPad x1. We have ranges of products. In phones, we have two brands – Lenovo and Moto. We have tablets, we have entire range of PCs – right from desktops to thin clients to Laptops to Convertibles to Detachable. And, we also have the Datacenter Solutions. So, we clearly are occupying the position, where nobody else in the world who has this kind of portfolio,” added Rahul Agarwal, Managing Director & CEO at Lenovo India.
“We believe that whatever happens in the background, people will always need devices. So, all the transition happening in the competition is paving path for opportunity for us to step in and take some servers,” he added.
Asked about when the Indian x86 server market is going down how the opportunity is translating for Lenovo. Rahul said, “Firstly, X86 market is not declining. Last year to this year, it has declined due to lack of large deals of US$ 25-30 million and above. So when you divide the market in three parts from the server requirement perspective, one is traditional IT, which is non-virtualized is quite large. Then is the converged and hyper converged and virtual server market. This part is growing at almost 40%. This is where we are in partnership with and the balance is the hyper-scale providers including the AWS and Azure who are buying too, is very tricky. We will play selectively. The middle part which is 20% today, will become 50%. We will play here as a dominant player. Therefore, there is enough growth potential. That is why we are Challenger Brand.”
Today, 95% of Lenovo Data center business happens through partners. And, as per Rahul the DNA of Lenovo is partner led. He added, “If you look at the history of Lenovo, we have seen success through partners. We believe that partners specially in the market, which is changing so rapidly, partners are going to be very crucial for us. We feel that partners are adding value for us. We cannot have that number of feet on street. Secondly, they understand the customers very well. The top 50 partners are very good and they have very good technical resources. They can do POC and they can do SI job, which we are not able to do and the fact is that a lot of servers are sold as solutions today.”
Sumir commented: “The demand of the customers is very specialized today. That is where the partners are handy. For example, in Big Data and Analytics, you need specific partners who have focus on Analytics. You need SIs who can pull in these Analytics companies and glue it together. So therefore, partners are very critical to us. All this make us ‘Channel First Company’ today and we will remain as Channel First in the future too.
Elaborating on the approach to the datacenter market, Rahul said: “We have two-pronged strategy for the data center business. First is for the large solutions that goes to enterprises and government, where we have about 15 odd partners whom we work with strongly, who have capability and technical poise, who handle any kind of requirement.
That number may go to 20 in 2017. We are not seeing the drastic increase in the high-end SI partners. What we want is that the engine becomes smoother for them because some of them still are absorbing the way we work and the new people that we hire.”
“The other one is the SMBs or the small requirements which are of non-solution approach because today 50% of the market is still the box selling. For this market, we need reach. There is a lot of need in the market for one server or two servers. There, the customers need not to even talk to us or we do not even need to know who the customer is? That is the run rate engine where we are the leaders. There our strategy is to further increase our distribution. So I will say that we have the basic partners strength but what we need to do is at the higher end is to improve our share of wallet” he added.
Finally…
Sumir concluded, “When we build the partners’ ecosystem, we are getting them into training and making sure that they are articulating our value proposition into our customers. Obviously, we are continuing to invest on people on the ground to support these partners. We have just launched two certification programmes. There are three more certifications in the pipeline.
Rahul added, “Good thing is that we will continue to bring innovative products which grow very fast with the portfolio and disrupters in nature. The big game changer is not the investment in the market but the execution of plan. We need clarity in the purpose and rigor in the execution.
