Looking To Take the Next Step, Lenovo Blurs Lines Between Consumer And Commercial Devices

In just a few short years, Lenovo has risen from an obscure also-ran in the PC market to the top global computer maker.

After jumping ahead of PC stalwarts Hewlett-Packard and Dell, Lenovo is looking to take the next step with tablet and smartphone dominance, putting it up against mobile heavyweights such as Apple and Samsung (Lenovo recently acquired Motorola Mobility from Google, which was announced after the initial publication of this article). To get there, Lenovo is making some bold moves to broaden its appeal and take advantage of the consumerization of IT and bring-your-own-device trends.

For example, Lenovo recently began melding the internal operations of its consumer and commercial businesses (traditionally, the ThinkPad line of commercial products and the IdeaPad line of consumer products were kept separate). In addition, the company is exploring new form factors and designs -- even bringing a new Android-based desktop to market.

[Related: Lenovo: Red Dragon Rising ]

During the Consumer Electronics Show in Las Vegas, CRN spoke with Jay Parker, president of Lenovo North America, about the company's plans for 2014. Parker gives his take on everything from Android's potential on desktops and notebooks to the effect of Windows 8.1, while also discussing the company's future plans for the smartphone market in North America. Here are excerpts from the conversation with Parker at CES 2014.

CRN: You've talked previously about some mobile form factors merging together. Are hybrids and convertibles viable for the enterprise?

Parker: Yes, I think so. It's taken off faster in the consumer market, obviously, because the operating system -- Windows 8 -- is more prevalent in the consumer market at this point than the enterprise. But as the business environment moves to more touch-based applications, as businesses transition their operating systems, and as tablet form factors become more prevalent, then I think these multimode PCs are going to be the way many users want to go. In the last six to 12 months we've had a number of customers move to our Helix form factor on the ThinkPad side, and I think that's only going to accelerate.

CRN: For the enterprise tablet, is it still mostly a Windows 8 sale? Or are corporate customers looking at Android as much as Windows?

Parker: Well, going back to what I said before, I think when you're talking about the traditional computing environment and how it will over the next few years transition to touch-based systems, I think many of those customers will transition to a two-in-one device. Now there absolutely are unique business requirements for pure tablets -- not traditional computing but new ways of using technology that tablets are appropriate for. And in that case, Android -- as well as Windows 8 -- is a viable operating system. And I think customers are evaluating both depending on their needs.

NEXT: Addressing The Needs Of The Commercial Market

CRN: What are those needs from a big picture perspective? Are we talking more about things like performance, customization and security?

Parker: Not just those things. Android tablets are great devices for, in some cases, point-of-sale applications. I've heard of them being used for everything from insurance claims to a replacement for magazines in a dentist's office, and just about everything in between. So those are some of the applications we're seeing for Android. When you move over to Windows 8, it's more appropriate for enterprises that need a true computing device in a secure environment and can be managed remotely. So they're more comfortable with a traditional operating system. Enterprises are evaluating Windows 8 and in some cases they're making the move. But I'd say we're still very early in that adoption curve.

CRN: Lenovo just introduced an Android-based desktop for the consumer market, but is that something that may have potential for the commercial market?

Parker: I think it will get people thinking. Part of the challenge of innovating new products is we don't know exactly all of the uses that customers will come up with. We clearly see it as a supplemental PC in the home for things like video streaming, Web surfing, and things like that. Could it be utilized in a business environment? Yeah, probably. I don't think we have a clear idea of what that would be yet, but we're always looking out for those kinds of opportunities. And here's something else that you might find interesting: Over the last six months, we've actually opened up the distribution of some of our consumer products -- including both Windows and Android products -- into commercial distribution. And that's because we've started to see business have a demand for those devices, and they have reasons for why those consumer products make sense for them over traditional ThinkPads, for example. Historically, we've kept the two businesses very separate from a route-to-market perspective. But we've started to blend that in recognition that the worlds are crossing over and we need to be adaptive to that.

CRN: Why do you think that is? What's driving the blending of consumer devices in the enterprise?

Parker: I think there are a couple of things. First, if you go back 10 years, the end user in the business environment had zero power. They were handed a laptop and if they didn't like it? Tough. That's just the way it was. And that laptop was going to be a basic, black, square -- like an old ThinkPad. And over the last 10 years, the IT department has lost some of the power, and that power has transitioned to some of the business departments like marketing and sales and engineering. And they have very specific preferences. So often the design of the consumer devices appeals to them more. Sometimes they're buying those devices with their own money as part of the bring-your-own-device trend. Ten years ago the IT departments would have said no way and refused to support those devices. But today the end users and the individual business departments have a little bit more power, and now they're having a meeting of the minds with their IT departments to see what's possible.

NEXT: The Touch Screen Transition

CRN: So BYOD is having a real effect, then?

Parker: It's definitely impacted the way computers are purchased, but I'll say that there are really not that many customers out there that we've seen that have really gone to a BYOD policy. But the IT departments are adapting so they can still have some control over those products, and part of that adaptation is opening up to products that are a little more consumer-friendly and are actually desired by the end users.

CRN: What about Windows 8? Have you seen a tangible effect yet from Windows 8.1?

Parker: I've seen data -- it's under NDA right now so I can't share it yet -- that shows customer satisfaction with the operating system improved dramatically with 8.1. That has not yet translated to a significantly different sales trend. But I think that as the word gets out and you have more 8.1 users, I do believe it will start to have a positive effect on sales. So overall I'd say it's moving in a positive direction, but it has not caused a dramatic change in the market.

CRN: Earlier this year Lenovo introduced a training push around touch-screen systems in the enterprise. Was the training successful, and have you seen a noticeable uptick in touch-screen-based PCs?

Parker: It has been successful, but it's been slower than what we wanted. The end users clearly want touch, and I think it's good for our industry. I've said this before -- for the first time in a decade, there is a reason to upgrade your computer for something besides a faster processor, bigger hard drive or larger screen. It's a whole new way to use these devices that we haven't been able to talk about in a really long time. And it's a lot easier and more intuitive to use. But I think the IT community is struggling a little bit with how to transition and how fast to do so. So we're making progress with partners, but it's slow and steady.

CRN: Is it reluctance from the channel partner or reluctance from the client?

Parker: We haven't had pushback or apprehension from the channel itself. As a matter of fact, for our Lenovo Combat Kits, we've never seen such excitement for a demo or marketing program before. We have to keep ordering more and more. There are a lot of customers out there touching these devices, so the uptick around customers willing to make that leap to touch has been positive, but it's not as fast as what we'd like. That will happen, and we know it will. And we want to be on the forefront of that transition to touch.

NEXT: The North American Mobile Market

CRN: For the last several years, Lenovo has been a competitor to HP and Dell. But as you introduce more mobile devices, tablets, and phones, do you see yourself competing more with the likes of Apple and Samsung?

Parker: Having now been in this business a number of years, I think it's dangerous to talk both internally and externally about exactly what competitors you're going after. And it changes so fast because of the nature of technology, so who we're competing against today might not be our competitor tomorrow. But I will say that the PC business is extremely important to us, and it will continue to be. In fact, I believe we are more committed to the PC business than any other company in the world. But we also recognize that the technology is changing, the growth rates are changing, and that other types of connected devices are becoming more and more important. So we're investing in tablets and we're investing in phones. And we have redefined our competitive products over the last 12 to 18 months to be what we call smart connected devices; I'd actually even throw smart TVs into that mix. So now we look at the whole universe and the market-share numbers, and that brings in a lot of other companies that we need to be thinking about, including Apple and Samsung.

CRN: Speaking of phones, is it still Lenovo's intent to bring smartphones to the North American market? [Editor's note: this interview was conducted at CES 2014, several weeks before Lenovo announced its agreement to acquire Motorola Mobility from Google]

Parker: It will happen in North America. We're committed to that. I will say that we have a lot of work to do before that. In North America we're still No. 4 in computers, with just over 10 percent market share. Tablets are still in their infancy for us in this market. There is a lot of upside in both those markets for us. We want to build our brand. I think that's critical with smartphones more so than the PC space. In the meantime, we’re developing a lot of capabilities and learning a lot from our smartphones in emerging markets. We're selling smartphones in 25 countries that represent half of the world's population. We're also developing relationships with the carriers here, and we're working through our product strategy, so when the time is right, we will be in this market.

CRN: Some people say the smartphone market here has matured and that Lenovo is too late to the party. Do you feel like the clock is ticking and there is a limited window of opportunity for smartphones here in North America?

Parker: I think a lot of people said the same thing about the PC market six or seven years ago. And look where we are today. The smartphone business is one that we think we can compete in there just as we have in the PC market. And it's not like we're sitting around without any smartphone offerings. We're in a dead heat for No. 3 in the world [for smartphone market share]. We just don't happen to be in this particular market. This is not a new business we're going to enter. It's a geographic expansion.

This article originally appeared on the CRN Tech News App for iOS and Windows 8.