Lenovo's Chris Frey: PC Market Is Still 'Very Healthy'

Following another quarter of strong growth and market-share gains, Lenovo 's channel chief said the PC market is still "very healthy."

Chris Frey, Lenovo's vice president of North American commercial channels, spoke with CRN following the computer maker's third-quarter earnings call and said SMB channel sales in North America were up 30 percent in the third quarter. In addition, Frey said Lenovo's desktop business saw double-digit growth year-over-year in the North American channel.

"The common question we see is, 'How long can Lenovo keep this up?' because we've outgrown the market now for four years," Frey said. "The PC market is still very healthy from our perspective."

[Related: Lenovo Q3 Profit Jumps 30 Percent, But Warns Acquisitions Could Hurt Future Earnings ]

Lenovo, which reported record revenue for the quarter of $10.8 billion, said it shipped 15.3 million PCs worldwide during the period. The company also shipped a record high 3.4 million tablets in the quarter, a 300 percent increase from the same period one year ago. Frey said the results show that tablets aren't cannibalizing PCs and that the two form factors can co-exist and complement one another.

"Tablets are great companion devices but we don't see them replacing PCs," Frey said. "In general, SMB customers are carrying more devices than ever."

Another good sign for Lenovo, Frey said, was in the increase in activity for its partner financing program. Frey said the number of Lenovo partners taking advantage of the vendor's 60-day interest-free financing jumped 40 percent year-over-year during the quarter. Frey said he expects the PC growth to continue for Lenovo as the industry approaches the April deadline for Windows XP support.

"I don't think the XP upgrade has reached its peak yet," he said. "In fact, I think there's going to be a tail effect long after April, and we'll continue to see customers finally getting the message about security and application support benefits throughout the year."

While Lenovo has said the IBM x86 server business and Motorola Mobility acquisitions may impact earnings in the short term, Frey said Lenovo's channel team is working hard to make sure the deals don't disrupt the company's partner business.

"We're spending a lot of time right now making sure our sales reps and partners don't get distracted," he said. "We want to make sure we keep doing what we do best and not lose our focus."

While Frey said it's too early to tell what kind of channel strategy there will be around Motorola's smartphones, he believes there's synergy between IBM's server partners and Lenovo's own partner base that will help ease the integration of the x86 server business.

"I believe there's good overlap with the IBM server partners," Frey said. "I think this portfolio will allow us to add more partners and help take existing Lenovo partners to more server opportunities."

The key for both continued PC growth and the acquisition integrations, Frey said, is consistency; the company has no plans to make any major changes to its partner program or channel strategy, he said.

"You can change your recipe here and there but you don't want to create a whole new one," Frey said. "That's a major disruption for partners, so we try to keep the recipe pretty much the same."

PUBLISHED FEB. 14, 2014