Lenovo: From a hardware supplier to an IT solution provider

Ben Ng August 25, 2020 08:29

Lenovo (00992), the world's biggest maker of personal computers, has been ramping up efforts in its transformation from a primarily hardware supplier to a solutions provider amid the coronavirus pandemic, according to its top executive.

“We are emerging as more than just an IT vendor to sell devices and hardware, and instead, seen as a solution provider capable of helping our customers address their most critical needs,” said Yu Jie, Vice President of Intelligent Device Group, Global Services, Lenovo, in an exclusive interview with EJ Insight.

Earlier this month, Lenovo reported strong sales and profit growth for the quarter ended June 30, with the revenue up by almost 7 percent year-on-year to US$13.3 billion.

While the PC and smart devices division accounts for US$10.6 billion in Lenovo’s revenue, a key highlight of the result would be a 38 percent year-on-year growth in Lenovo’s software and services revenue, to more than US$1 billion.

Despite the hit from the coronavirus lockdowns on business activities, Lenovo has quickly regained momentum from the impact of the pandemic and is capturing the new opportunities emerging from remote working, education and accelerated digitalization, according to Yu.

“Before the COVID-19 outbreak, we already started this 'service-led transformation’ journey, from being a supplier of data centre hardware to software and IT solutions,” said Yu, “as our customers are moving to cloud-based services infrastructures, Lenovo is evolving to empower them, large and small organizations, to work anytime, anywhere, with any devices that they choose.”

Banking on an exciting long-term growth in Lenovo’s software and service business, Yu emphasized in the interview Lenovo’s “3S” strategy for the next decade, referring to “Smart Internet of Things”, “Smart Infrastructure” and “Smart Verticals.”

Yu also highlighted Lenovo’s new “Device-as-a-Service” offering, tailored to meeting the needs of small and medium-sized businesses, which provides them with customizable solutions and a monthly-fee subscription model, with no upfront investment.

“Particularly amid economic uncertainties, our customers would like to keep their operations leaner,” said Yu, “they would like to shift away from the capital expenditure (Capex) model to an operating expenditure (Opex) model, which they pay for their monthly use with no up-front acquisition costs, and maintenance is a part of the ongoing operating expense.”

She told EJ Insight that the customers’ demand for this Device-as-a-Service offering has been even accelerated, especially after the COVID-19 outbreak.

"Challenges of COVID-19 have accelerated the efforts of our customers to take digital transformation more seriously, such as our retail clients, who are actively working with us to shift to their O2O business model," said Ronald Wong, Lenovo’s general manager of Hong Kong and Macau.

“Leveraging our technology capability, we work closely with Microsoft to bring the global best practices of businesses’ digital migration and intelligence transformation to our customers in the local market.”

As one of the specific business cases, Wong said Lenovo has worked with major food delivery platforms in other markets to offer technology solutions, helping them streamline back-end processes such as onboarding restaurant partners.

This helped them to rapidly expand their business scale to meet the surging market demand during the coronavirus outbreak.

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Ben Ng

EJ Insight writer