Libby Macgregor (Lenovo)
Credit: Lenovo
Lenovo New Zealand has emerged from the COVID-19 pandemic and supply chain crisis stronger while still trailing arch rival HP.
Lenovo’s local PC and device business doubled revenue since 2019, from $91.4 million to $183.4 million, while HP’s local revenue remained relatively flat over the same period and declined by just over 10 per cent in 2021.
Credit: IDG While Lenovo’s infrastructure group, Lenovo Global Technology, does not appear to report its New Zealand results separately, that business has also grown across Australia and New Zealand (A/NZ), from $171.6 million in 2019 to $243.5 million in 2021.
In line with global results, HPE reported relatively flat New Zealand revenue of around $130 million over the past few years, in what appears to be a substantial lead over Lenovo’s local infrastructure business once again.
HP NZ and HPE NZ both report their results to the end of October while Lenovo reports to 31 March.
Lenovo NZ country general manager Libby Macgregor said she was unable to comment on the specifics of the local business’ financials or on competitors. However, she was prepared to talk about local initiatives and the local market, including channel development initiatives such as Lenovo 360.
Understanding the challenges
“Our focus has been in understanding the specific challenges our customers and partners have faced within NZ during the pandemic and we’ve worked closely with the channel to identify how we could help operationalise essential services and NZ businesses quickly and sustainably,” Macgregor said to Reseller News.
“Our ability to leverage global and local expertise meant we were able to pivot quickly to leverage innovative product design, advanced supply chain methodologies and services that are developed at a global level but adapting accordingly for the NZ market.”
This flexibility coupled with the local Lenovo team’s ability to articulate the needs of NZ businesses within the organization helped many companies through “a very difficult time”, she added.
Credit: IDG The traditional IT landscape was changing but this transformation had been happening well before the pandemic, Macgregor said.
“For example, we are seeing companies evaluate the cost of working capital and considering alternative ways of investing in IT infrastructure such as Lenovo Global Technologies’ TruScale, which offered data center hardware on a pay-as-you-go model,” she said .
“Lenovo’s goal is to provide solutions that solve humanity’s greatest challenges and we are tasking our teams to think differently about how to achieve this in NZ across all aspects of our organization, from the pocket to the data center.
“We know competition is good for consumers and we have made a conscious effort to expand our NZ team across all aspects of our business, including our Intelligent Device Group business with expansion of our commercial teams, our Infrastructure Solutions Group teams and our services and solutions group.”
An analyst’s perspective
IDC market analyst Anmol Bajaj said the pandemic caused a massive uptick in demand for PCs across the globe as people needed devices to work and study while being locked up at home.
“The biggest challenge for IT vendors during the pandemic was ensuring adequate supply coming into the country to meet this sudden demand,” he said.
Most vendors faced disruptions, Bajaj said. For HP this resulted in a loss of market share and competitor Lenovo taking market leadership for the third quarter of 2020 and 2021, excluding workstations.
HP’s reported drop in revenue for 2021 was mainly due to supply disruptions as well as foreign exchange losses, the analyst claimed. At the same time, Lenovo’s shipments grew an “impressive” 63 per cent in the third quarter of 2020 compared with a 34 per cent quarterly drop at HP.
“One of the reasons for Lenovo to gain market position was that it was in a better supply position,” Bajaj said. “They are also one of the key players in the Chromebook space and were able to leverage the uptick in demand due to the pandemic for those products from the education segment as well.”
However, as supply disruptions eased, HP regained its market leadership and has held it since.
Macgregor said Lenovo was expecting the market to return to pre-COVID levels in 2024 after some possible short-term softening.
In terms of what’s driving the market, ESG (environmental, social and corporate governance) is a core consideration across NZ businesses, just as it is globally.
A Lenovo study of CIOs in 2021 found 91 per cent said their roles have expanded beyond IT and half said they have to lead sustainability and ESG initiatives including diversity, equity and inclusion.
Lenovo has been reporting on our ESG goals since 2009 and achieved its 2020 emissions reduction goals set in 2010, she said. New emissions reduction goals have been set for 2030.
Locally, Lenovo had launched a carbon offset program for commercial customers which helped channel partners start conversations about ESG. A number of NZ customers had committed to the program, which Lenovo also uses internally.
Channel innovations
For partners, Lenovo has launched a channel development fund (CDF) to help its channel with sales and marketing programs to increase brand awareness and gain mindshare.
This has proven successful across both the infrastructure and the device business units, Macgregor said.
In addition to partner led promotions, roadshows and demand generation activities, three different distributors also partnered with Lenovo to offer events and promotions within the channel.
New Zealand also pioneered the rollout of Lenovo 360 in the Asia-Pacific region, Macgregor said.
Lenovo 360 saw a re-engineering of Lenovo’s channel structure to bring the company’s three business units, covering infrastructure, devices and services, together.
“The rollout focused on three core pillars of people, programs and tools both internally at Lenovo and externally with channel partners,” Macgregor said.
“Under this new approach, the channel has seen double digit growth in NZ and is on track to deliver across each of these three core pillars.”
A new phase of competition between these eternal rivals is now upon us.
In October, HP country manager Oliver Hill told Reseller News supply chains had strengthened and HP’s US$3.3 billion acquisition of collaboration and communication technology vendor Poly in March had energized channel partners.
“We are back in terms of supply, which means we are on the front foot driving the business rather than managing supply and being logistics specialists,” he said at the time.
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