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Can Lenovo evolve from a PC maker to a data centre innovator?

James Henderson | July 6, 2017
Tech giant focuses on post‐PC identity with data centre and commercial PC transformations.

Lenovo is focusing on a post-PC identity, following a string of data centre and commercial PC transformations.

Revealed during Transform - the company’s commercial business-focused event - Lenovo clarified its go-to-market strategy for its Data Centre Group (DCG), outlining how it plans to compete more aggressively against industry rivals Dell Technologies, Hewlett Packard Enterprise (HPE), Cisco and Huawei.

To demonstrate change, the Chinese giant showcased its new DCG leadership team, bolstered by former Intel executives Kirk Skaugen and Kim Stevenson, who have combined to transform the vendor’s approach to the data centre market.

But despite the shift towards the data centre, the event also showcased the importance of Lenovo’s PC and Smart Devices (PCSD) segment to the company’s overall value proposition, illustrating the new emphasis on commercial PC services in the division’s long-term financial and go-to-market strategies.

“Lenovo is focusing on its post-PC identity with data centre and commercial PC transformations,” Technology Business Research analyst Stephanie Long said.

From the perspective of DCG, Long said the changes outlined at Transform in many ways jump-start Lenovo’s new go-to-market approach.

“While there were many additions to DCG hardware and software offerings announced, at the core of these changes are go-to-market and portfolio alterations that reinvent how Lenovo will target its customers and address its customers’ demands,” Long explained.

“The reinvention of its server brand, along with hardware enhancements across DCG, creates a foundation on which Lenovo can strengthen its solutions-oriented approach, earning new customers and reversing DCG revenue and profit declines in the process.”

 

New-look data centre portfolio

According to Long, a revamped DCG portfolio helps Lenovo close some of the gaps between it and its strongest competitors.

“Unifying its server brands and data centre supply chains will enable Lenovo to craft a stronger value proposition that supports its nascent entries into hyper-scale, hyper-converged and other next-generation infrastructure markets,” Long said.

In addition, Long said a redesigned DCG global channel program will further enable the vendor to transition its existing portfolio solution to meet modern demands.

“Lenovo is bringing this redesigned DCG portfolio to market to prove to its customers that it is the most trusted data centre vendor in the industry — and not through cost-cutting and marketing strategies, but rather through innovation,” Long said.

Yet despite the drive, Lenovo is late to make many of these data centre changes relative to competitors, especially Dell Technologies and Hewlett Packard Enterprise, vendors Long believes are “well underway” with overhauls to respective infrastructure and data centre portfolios.

While the moves are a positive sign for the company overall, Long said the rate of Lenovo’s transformation must accelerate further, in a bid to offset challenges stemming from stronger, larger competitors in the data centre markets coveted by the vendor.

 

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