Lenovo’s going full-tilt in its endeavor to carve out a bigger slice of the SMB PC pie. By Prashant L Rao
The SMB slice of the Indian PC mart works out to about 27%. The consumer segment’s the biggest at 50% while the enterprise bit of the market is the smallest at about 23%. In terms of unit shipments, the Indian SMB PC market accounts for 800,000-900,000 units/quarter of which about 500,000-600,000 consist of desktop PCs and the rest is accounted for by sales of laptops.
Lenovo’s got a reputation for being strong in the enterprise segment thanks to its Think brand, which is known for its build quality and product innovation. In the consumer segment, the company has been quite aggressive with its Idea brand. Now it’s got the SMB segment in its cross-hairs.
“We are running on a $1 bn annualized run-rate. The relationship business is doing well and it has consistently been the market leader for some time. The consumer side is also growing rapidly. From an overall business perspective, we are number three and growing. About two-three years back, we invested in the consumer business and now we are quite big there. That leaves us with the third and final bastion, which is the SMB segment,” said Rajiv Rao, Director – SMB Business, Lenovo India.
The vendor’s doubled its share of the SMB PC segment from 3% in 2010 to over 6.5% in 2011. Now, it wants to keep up that pace for the duration.
To get this far, Lenovo extended the Think brand with its launch of the ThinkCentre Edge and ThinkPad Edge product lines last year in the July-August timeframe. The Edge lineup is priced aggressively in the Rs 30,000-45,000 bracket, which is the sweet spot for SMBs.
The obvious question that springs to mind is, are the Edge products as good as the conventional Think products in terms of build quality and durability?
Rao said, “We have close to 200 tests that we conduct on the Think products. The Edge products go through similar tests and come with warranties of one to three years.”
Lenovo’s tried to add features that make sense for SMBs notably dual array microphones for VoIP, while keeping classic features such as the keyboard and trackball from the ThinkPad line intact.
Go to market strategy
In its quest for SMB sales, Lenovo’s built up its team which has tripled/quadrupled year-on-year. It also has a large contracted field force that allows it to reach out to more partners.
A fundamental shift in how the company does business with SMBs has been that it’s augmented its distribution-led strategy with a focus on VARs and a rather interesting retail strategy to tap the smaller SMBs. On the VAR front, Lenovo’s going all out to train and incentivize them. “We plan to have 300-350 VARs working with us,” commented Rao.
There’s also a telemarketing engine that provides leads and does various closure activities with the VAR channel.
On the retail front, the vendor’s built up a humongous retail presence with close to a thousand stores. These are for consumers and, in the past, the company had leverage about a hundred of these stores to sell SMB products. Now it’s decided to create an exclusive retail format for SMBs. The difference here is going to be that the sales staff will be better trained, better paid and it will be a cross between a retail POP and a VAR. The stores will be branded with the Think brand colors of black, white and red.
“The partner who engages with us in this format has to be of a different type with the mindset of a retailer and a VAR. This is like a specialty store, therefore, the person working there feels proud of being part of the business. We will ensure that the sales staff are well paid and incentivized. The first store started in Pune and we are looking at expanding into SMB clusters in towns like Coimbatore, Pune, Surat, Ahmedabad, etc. These stores will sell ThinkCentre desktops, ThinkPads as well as SMB software and peripherals,” said Rao.
A combination of Think Retail, the VAR channel and the traditional RD channel are expected to be the vendor’s three growth pillars for the coming year. “Today we contribute about 10% of Lenovo’s overall numbers. Our intention is to ensure that the SMB business propel the next phase of growth for Lenovo India,” concluded Rao.
