How Lenovo is succeeding despite a shrinking market for PCs

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Lenovo's Suite at CES is always chock full of innovative new products

Few markets accept proven as grueling for vendors equally the Windows PC business. Literally hundreds of companies take congenital desktops, notebooks, and at present tablets based on showtime DOS and now Windows, only simply a few have been able to make a long-term success out of it. When it comes to selling Windows computers in volume to enterprise-scale customers, the concern is speedily coming down to three companies — HP, Dell, and Lenovo. I had the opportunity while at CES to sit down for an exclusive interview with Emilio Ghilardi, the new COO of Lenovo North America, to learn from him why Lenovo has been so successful in such a hard surroundings, and how it plans to stay that mode.

Lenovo's formula for success

Ghilardi can quickly point to the reasons he sees for Lenovo'south continued success selling to large businesses. First in his mind is its consummate line of products — from mobile devices all the mode to the data center. He credits Lenovo's direction for having the foresight to acquire both the Motorola phone business organisation from Google and it x86 server business concern from IBM — in addition to its before conquering of IBM's popular ThinkPad line of notebook computers. That breadth has allowed Lenovo to call at the CIO level in companies and human action as an It partner — ironically much similar IBM itself did for decades in the mainframe era.

In the meantime, HP completely fumbled its TouchPad product line and had to dead terminate WebOS — taking it largely out of the mobile market for years. While HP is working hard to regain a presence in mobile devices, it's nevertheless mode behind. Dell has had a lot more success than HP in mobile, including some recent innovative new products, but and then far hasn't made all the inroads it wants in the information center. No doubt Dell hopes that its recently-appear merger with EMC will requite it the breadth and muscle to be a true enterprise partner to its customers, but the companies still needs to execute on that strategy.

The Lenovo Yoga family was an early innovator in effective multi-mode design 2d, Ghilardi credits Lenovo's vertical integration of manufacturing and blueprint, in add-on to sales and marketing. While all of its competitors — with the notable exception of Apple — have been trimming R&D spending to the os, Lenovo has been able to maintain a loftier level of investment in innovation. In role this is because of Lenovo's Chinese roots, which help requite information technology a lower cost structure in both manufacturing and development than its competitors. Nigh Windows OEMs, Lenovo included, are beholden to the clout and subsidies they receive from Microsoft and Intel. Only Lenovo's technical strength, and low-cost manufacturing, give it more flexibility than its rivals to pursue only the product opportunities it believes will be valuable.

Finally, Ghilardi believes that innovating to address customers' unmet needs is a fundamental factor in Lenovo's continued success. This starts with Lenovo's customer-focused product blueprint process. Focusing on customer needs may seem similar mutual sense, merely the hard work of getting customer input, sifting through it, and so really building products that address their needs isn't something every tech business firm is good at. Lenovo regularly runs focus groups of long-time and new customers in diverse locations effectually the earth to go along its production road map on track. Ghilardi is the offset to own upwardly to the criticism that Lenovo has too many products. He says that might exist truthful, just the company doesn't e'er know which will be a success, and he would rather have also many than besides few.

Lenovo'due south products speak for themselves

The i7 in the Yoga 900 makes it powerful enough to do just about anything most users need As someone who bought my first IBM ThinkPad nearly 30 years agone, I well remember how its rugged build, solid features, and integrated TrackPoint were compelling to me. But early ThinkPads were certainly far from stylish. Since becoming part of Lenovo, the former IBM product line has become a lot more stylish and a lot more than versatile. Sure, the trademark "Think" devices are notwithstanding an just-slightly-sleeker shape than before, and they are still black, but they are brimming full of the latest consumer-friendly features — catering to the Cull Your Own Device (CYOD) mantra now followed by many enterprises.

The ThinkPad make is now besides surrounded by mid-range Yoga, and consumer-focused Miix products. These are trendy, colorful, and more than capable of going head-to-head with their competition. Shortcomings in previous production generations (like the 8GB RAM limit for the X1 Carbon that caused me to buy still another Dell XPS for personal use) are gone. I used a loaner Yoga 900 to practice all of my reporting from CES and found information technology packed an amazing dial into its 2.8 pound, sleek, chassis (our sister publication PCMag.com gave it an Editor'southward Option laurels).

At the aforementioned time, Lenovo's products retain their corporate-friendly focus. Security features like Trusted Platform Modules (TPM) and Intel's vPro are built-in to the ThinkPad products. Some are available as options for Lenovo'due south consumer versions. Companies with enervating road warriors can customize just about any calculating platform they need, with snap-together keyboards, docks, chargers, hard drives, and even pico-projectors at present available. The X1 Tablet, for case, integrates many of these expansion modules into its form factor, while for other notebook models they are packaged into in a modest-grade-factor stacking dock.

Lenovo's strategy is built-in of market place necessity

Lenovo's core market of traditional PCs is at best stagnant, and nigh likely shrinking. Last year's drop in PC shipments is partially blamed on economic factors, just information technology is role of a long term slow decline. Lenovo is still the worldwide leader in PC shipments, and it fared amend than any other Windows PC maker, but merely Apple actually shipped more than PCs in 2015 than 2014. Some of those missing sales turned into mobile device sales instead, so a broad production line is quickly becoming a necessity.

Top 5 Vendors, Worldwide PC Shipments, Fourth Quarter 2015 (Preliminary) (Shipments are in thousands of units)
Vendor	4Q15 Shipments	4Q15 Market place Share	4Q14 Shipments	4Q14 Market Share	4Q15/4Q14 Growth
1. Lenovo	15,394	21.4%	16,125	20.0%	-4.5%
2. HP	14,290	19.9%	xv,900	xix.viii%	-ten.1%
iii. Dell	10,169	14.1%	10,780	13.4%	-five.seven%
4. ASUS*	5,713	vii.ix%	5,668	seven.0%	0.8%
4. Apple tree*	v,658	vii.9%	5,504	six.8%	2.8%
Others	twenty,664	28.seven%	26,460	32.9%	-21.nine%
Total	71,889	100.0%	80,436	100.0%	-10.vi%
Source: IDC Worldwide Quarterly PC Tracker, Jan 12, 2016

Lenovo'south competitors aren't standing still either. When Michael Dell took the visitor individual 3 years agone, he did it in part so that it could spend more on innovative products. One of those was the new version of the XPS 13. Targeted at consumers, the model found a surprisingly-warm reception amid enterprise customers. Inspired by that success, Dell's newly-unveiled line of Breadth business organisation laptops incorporates more style and more end-user appeal than previous versions — in a clear effort to go caput-to-head with Lenovo's new ThinkPad models. HP also seems to be getting on track, with its new Sceptre X2 hybrid getting excellent press as a Surface Pro and Yoga competitor.

Where Lenovo goes from here

Lenovo's strategy is largely ane of common sense that could probably be described with the business organization schoolhouse buzzword "fast follower." By hewing to the stated requirements of its customer base of operations, it can reasonably look to take products they will wind up ownership. Equally many other companies have learned the hard way, though, the keyword in this strategy is fast. When there is a disruptive or discontinuous innovation in the market place — like the introduction of smartphones into the corporate earth through the back door of employee adoption every bit consumers — fast followers demand to motility rapidly and effectively. That's where Lenovo's vertical integration, financial strength, and willingness to adapt come into play.

As an example of how this played out in mobile, HP felt information technology couldn't make the turn a profit information technology needed with "me too" devices based on either Android or Windows Phone, so it gambled billions on WebOS in a failed endeavour to be a leader. Dell essentially exited the handheld business information technology helped first with the Axim — only re-inbound long after Apple and Samsung were off to the races with smartphones. Lenovo took the practical approach of ownership Motorola's established smartphone business at a fire sale cost, and using its worldwide presence and manufacturing ascendancy to turn it into a 80 meg unit a year supplier.

Ghilardi and Lenovo see the future equally belongings enough more than of these transformational challenges — including the domicile of the future, the office of the futurity, and of course the ubiquity of calculating devices as they become embedded in everything from our appliances to our cars. Fundamental to Lenovo's future success will exist maintaining its speed and adaptability every bit it grows, and as competitors like Dell and HP refine their own strategies.