Lenovo looks to Windows 10, servers and mobile to grow business

Lenovo is the global leader in PC shipments according to figures from IDC, but the Chinese firm has also recently acquired IBM's x86 server division and Motorola's former smartphone business, and is looking to grow its share of the market in these segments too.

In an interview with V3, Lenovo's vice president and general manager for Northern Europe, David McQuarrie (pictured), said the firm has seen increased interest in new PC systems from business customers thanks to Windows 10, and that Lenovo plans to keep the familiar Motorola brand for its smartphones and target businesses with new handsets.

McQuarrie, who has recently taken over the additional role of managing Lenovo's UK and Ireland business, also said that Lenovo is looking to grow its share of the x86 server market, where it currently occupies third position behind HP and Dell.

Windows 10's official launch is coming at the end of this month, and McQuarrie said that he expects to see an upswing in sales, as new systems such as its ThinkPad 10 and Yoga models are expected to deliver a better experience for the new features in Windows 10.

This follows reports of a recent dip in PC shipments, as buyers wait for Windows 10, even though owners of Windows 7 and Windows 8 systems will be able to upgrade for free for the first year after it is released.

"When you look at what Windows 10 has to offer there is every reason that it should drive an increase. It is a dramatic improvement in the user interface and the features that take great advantage of new hardware," McQuarrie said.

"There will be a percentage of users who will take advantage of that free upgrade, but not everyone wants to go through that upgrade process, and if you really want to take full advantage of what Windows 10 has to offer, you will want to move to touch, and new systems that have the graphics and performance to make a difference."

So-called multimode systems like two-in-ones and convertibles that can function as a laptop or tablet are expected to be the form factors in most demand, McQuarrie predicted.

Meanwhile, the level of interest in Windows 10 from business customers has come as a surprise, according to McQuarrie.

"This is the first time in years that they have evinced an interest in the latest OS. Normally, they are fairly conservative, they wait," he explained.

"Windows 8 was a struggle to convert commercial customers to; they saw no compelling reason to move from Windows 7. But we are seeing an increased interest in moving to Windows 10 against the same period in the run up to the Windows 8 release."

Part of the reason is that Windows 10 offers "the best features of Windows 7 and Windows 8", McQuarrie said, and will work well with new thin and light convertibles that have been finding their way into businesses and which enable users to make optimum use of touch alongside a traditional keyboard and touchpad.

Mobile moves

Meanwhile, Lenovo has so far given away few details about its plans for Motorola Mobility, which the firm acquired from Google last year.

McQuarrie said that Lenovo intends to keep the Motorola band name, and will in fact seek to rebuild the popularity that Motorola phones enjoyed in the past.

"These businesses are like our children. The PC business is one of our children, the server business is one, and now the Motorola phone business is one, and we want to give all of them the level of care and attention they deserve," he said.

"Motorola has hovered between two and 3.5 percent in the UK, so it's very small right now. We know that the market is dominated by two very large players. We also know that Motorola has a great brand that was well regarded in the past, and we are focused on re-establishing that brand."

Lenovo will seek to take advantage of its existing reseller channel partners and relationships with telecoms firms and large organisations to drive uptake of new Motorola handsets.

"We have the scale and the reach and the ambition to do something that will make us a strong challenger in this rapidly growing industry," McQuarrie said.

Currently, Motorola's line-up is exclusively Android-based, but Lenovo has been promising to deliver a Windows-based handset in its home territory of China for some time.

So will we see a Motorola handset based on the upcoming Windows 10 Mobile in the UK and Europe, especially given the synergies with the PC version of Windows 10 that Microsoft is promising for the platform?

"There is an ongoing evaluation of what platforms we should be offering. We are a huge Microsoft partner on PCs, tablets and servers, and we continue to evaluate the ecosystem. If it makes sense, you could potentially see a Windows phone from us," McQuarrie answered.

However, he added that, given Android's dominant position in the marketplace, it made perfect sense that Android should be a priority for Motorola, even for business customers.

"With the phones that we have today, and the move by Microsoft to make Office applications freely available on Android, the gap between a Windows PC and an Android device shrank dramatically," he explained.

"I use an Android phone and a Windows laptop and now I can open all my Office documents on my phone in a Microsoft app. The fact that it isn't a Windows Phone is irrelevant, so the move by Microsoft has made it far easier for us to sell a combined solution to business."

Server success

On the server side, the integration of IBM's former x86 server division is going well, according to McQuarrie, and the firm is optimistic about its ability to grow its share of the market in Europe and elsewhere.

"One of the jewels in that business has been the strength not just of the product portfolio but of the team. Many of the people in that business have been there for a long time and know the technology and the customers inside out," he said.

"We're the number three in the server market, and that's not where we want to be, so we're very focused on changing that.

"We believe that the changes happening in the server market - the commoditisation, the move to software defined everything - plays in our favour, and we can bring efficiencies to that space, which has effectively been a duopoly for some time."

In other words, Lenovo is aiming to perform an encore of the trick it performed 10 years ago, when it acquired IBM's PC business and managed to expand its share of the market and keep the kudos of the ThinkPad brand, despite predictions to the contrary from some in the industry.

"When the ThinkPad brand came into Lenovo, there was concern that it would not get the same focus it had at IBM, that the quality and other attributes would begin to fade away. But the opposite happened and we didn't lose customers, we gained them, and the same dynamic is in place here with the servers," McQuarrie explained.

And while the server market is changing, with many companies looking to outsource some of their IT infrastructure to cloud providers, overall demand for server compute power is not decreasing.

McQuarrie said that there are two key trends developing in the server market: the commoditisation of servers due to cloud computing, and customers wanting more targeted solutions.

"There's a whole class of managed service providers who are smaller than Microsoft, Amazon and Google, who are popping up and providing smaller scale offerings but with a much tighter solution," he said.

"So they'll serve a vertical industry or a region, and so there continues to be significant demand. The profile changes, but the amount of compute being bought continues to increase.

"There is an element of that growth that we want to capture. Our market share is somewhere between eight and 13 percent. If we want to get to 15 percent, we don't have to be all things to all people.

"As it turns out, we have entry-level one- and two-way rack and tower, all the way up to density and blade where we can address the most complex setup that might be.

"At the entry level, our number one focus is expanding our channel to get the coverage we need to be available to everyone who wants access to our products. In cost, efficiency, performance, whatever metric you pick, we want to be the most attractive choice.

"On the other side, we have a significant amount of technical expertise that has just come into the company from IBM, focused on solutions. Whether that's storage, networking, HPC, you pick the area, wherever IBM has traditionally been strong, and we want to protect and expand that space."

Source: Lenovo looks to Windows 10, servers and mobile to grow business