What's Next After x86? Lenovo Channel Chief Speaks Out

Frey On The Hot Seat

With the addition of IBM's x86 server business and the 7,500 former IBM-ers joining Lenovo, channel partners should brace for change, said Chris Frey, vice president of commercial channel sales at Lenovo, North America.

CRN caught up with Frey, who shared how Lenovo's channel program will be impacted by Thursday's $2.3 billion deal. The sale is subject to approvals by the Hong Kong Stock Exchange, U.S. regulatory authorities and a Lenovo shareholder vote.

Deal Highlights: What Does Lenovo Get From IBM?

"The deal not only gives Lenovo IBM's x86 server business, but also Lenovo reps, the ability to resell IBM's Storwize disk storage systems, General Parallel File System software, SmartCloud Entry offering and elements of IBM’s system software portfolio, including Systems Director and Platform Computing solutions.

IBM said it will continue to provide maintenance and delivery for x86 servers on Lenovo's behalf for an undisclosed 'extended period of time.' About 7,500 IBM employees are expected to join Lenovo in major locations such as Raleigh, N.C., Shanghai, and Shenzhen and Taipei."

What Impact Will This Deal Have On The Lenovo Channel?

"This will benefit partners of all sizes. In 2005, Lenovo picked up IBM's ThinkPad notebook business. It was a great brand. Now we build on that IBM partnership. Our partners can sell the endpoint devices, but can move upstream and sell a host of new virtualized services. We see this acquisition as a way for partners to bring Lenovo into places they couldn't go before. We're talking bigger portfolios and bigger verticals. For health-care providers, this means endpoint to endpoint -- capturing data, networking, to back office management of that data.

Not only does IBM become a closer ally, but we build stronger ties with Microsoft, Oracle or VMware to create an ecosystem around our servers."

When Will Lenovo Partners Be Able To Start Selling IBM's x86 Server Portfolio?

"As soon as we have consummated the deal with IBM, we will be ready to go with servers in the channel. There are still a number of regulatory hurdles that must be cleared before the deal is finalized. As early as the fourth quarter 2014 or first quarter 2015 is when we expect the deal to win regulatory approval."

How Is Lenovo's Channel Program Going To Change Post Acquisition?

"There is nothing new here. This notion things are going to change is not the right way to look at it. We have great partners that already know IBM and sell IBM. We are going to build on those existing deep relationships that we have with IBM. Lenovo partners are familiar with IBM's brands and how the programs work.

There is more overlap than you think. A good percentage of our Lenovo partners also sell IBM. We have always said we want customers to sell as much Lenovo as they possibly can. That doesn't change. Now we have scale and our partners have scale. We want partners to sell all our solutions. That will include IBM assets and PCs, ThinkServers, RD rack servers and LenovoEMC storage."

Do You Expect Any Culture Shock? Will There Be A Collision Between IBM And Lenovo Partners?

"I don't see it as two channel ecosystems colliding at all. We have done this before and were successful at it. I don't look at this as a collision course. There are lots of synergetic opportunities for partners to use the channel, be it IBM or Lenovo. It's going to be collaborative and opportunistic."

What Type Of Product Overlap Is There Between IBM And Lenovo? Are There Plans To End-Of-Life Any Lenovo Servers?

"I don't see any product overlap between Lenovo and the piece of IBM's business we'll be getting. There is room for growth on all levels. We have seen 100 percent growth in our Lenovo server business. The commercial channel has been responsible for most of that growth. We have a lot of towers and racks at Lenovo, and I don't see our growth constrained at all. We have desktops, workstations, servers, storage, and now we'll move all the way up the stack to blade and visualization. With IBM, we scale higher. And dare I say we do it with agility.

Over the course of time, as we bring these two lines of business together, [we will] look for ways to find efficiencies and speed. As we always do, where we can find those efficiencies, we will take the appropriate actions."

What Can Partners Expect From Lenovo In Terms Of Transition Support?

"It's way too early to tell what our Lenovo channel enablement team will look like. Once the deal has been approved, I can come back to you and [tell you] a lot more of how we are going to enable Lenovo partners. It's been less than 24 hours. Certainly a lot is going to be different, and we'll give our partners everything they need to be successful. But it's far too early right now to get specific."

What Percentage Of Commercial Sales Goes Through The Channel Today And Do You Expect That To Change?

"Eighty-five to 90 percent of our North American commercial business is through the channel. We have been growing at 20 percent premium each year. We have consistently beaten the market quarter after quarter.

Lenovo is one of the most channel-friendly companies out there. Our company is our legacy. I don't see that changing with IBM's business. IBM also has a healthy channel. I don't know what percent of IBM's server business goes through the channel, but I know it's high."

Some Critics Say Lenovo's Channel Reps Lack The Sophistication To Sell Complex End-To-End Solutions.

"I don't know what the exact channel partner profile is. We have a lot of channel partners -- both big and small. But nobody should sell Lenovo's channel short. Nobody should ever underestimate Lenovo's channel to deliver valuable solutions to the customer that complement today's business needs for tomorrow. We have innovated and grown IBM's ThinkPad business to help us become the leading PC maker globally.

Our partners can do it, would do it, will do it, and are excited about doing it."