Lenovo, which took over IBM's ThinkPad business in 2004, became the country's number one PC vendor recently. With ThinkPad completing 20 years, and Lenovo's sustained growth in the enterprise segment, Amar Babu, Managing Director, Lenovo India, talks to Sohini Sen about the strategy going forward and the challenges they must overcome. Edited excerpts:
What is the strategy going forward , especially in the enterprise segment, for India?
Out strategy worldwide has always been 'protect and attack', which is to protect our strength and attack our opportunities. So clearly, enterprise is part of our business. When we took over the IBM business six years ago, we were worried whether we would be able to live up to the think heritage. It stood for reliability, ruggedness, performance, durability... it has always been regarded as the marquee laptop brand. But I think we have proven that we have not just been able to live up to the brand but have taken it forward to the next level. We have been able to balance usability, durability and price. Especially with the new ThinkPad X1 Carbon.
What is the market share you enjoy right now?
Our market share is 35%, and market share in the notebooks is 40%. This goes on to show our ‘protect and attack’ strategy. We have a bunch of loyal customers who continue to buy from us, and at the same time we have acquired a new set of customers.
But even in the enterprise segment, you were a little behind in the education and government segment. What have you done to change that?
We put in some more focus; we got special products for that segment. In some places they were related for value related products, whereas in some other places they were looking at space.
SMB (Small and Medium Business) is not your strong point. What are you doing to tackle that?
SMB comes in the other part of the strategy - namely 'attack'. There are two segments - consumer and SMB. And this is not the traditional IBM strength; we are building the business in this sphere. In consumer our share has moved from 7 to 12%, whereas in the SMB space we have grown from 3 to 7%. So we are growing much faster than the market... but there is still a huge opportunity for us.
For SMB specifically, we have done two things. First we realised that SMB customers' requirement is a bit different from the enterprise requirement. One they don't have the big IT departments, so it needs to be a bit easier to manage. Second, they normally also use it for their home. So the multimedia features might be more important for them, as against that of an enterprise customer. For SMB, the initial purchase cost is very critical. So what we did was, we took the ThinkPad range and added features for the SMB - and created a 'ThinkPad-H' and a 'ThinkCentre-H' range of products. Second, the SMB are catered to by a lot of value added research and small system integrators. And we realised we don’t have much partners for that. So now we have expanded our channel to ensure that we are reaching a reasonable number of value added resellers who will help us take the product to SMBs.
We are also looking at how to make the ThinkPad more accessible through retail. Out of a thousand-odd store, around 150 are exclusive large format stores and flagship stores. We have also launched 'Think’ exclusive stores in Pune and Jaipur. And going by their success, we plan to have 30 more such 'Think' stores in another six months.
What are the factors which are for and against Lenovo India?
Lenovo India is one of the most successful regions worldwide - one simple indicator is that in the worldwide space we are number 2, but in India, we are number 1. Our worldwide market share is 15, in India we are 17. But in a way, Lenovo India's success mirrors the worldwide success. The success has been very balanced. In china, for example, we had 28% share three years ago. Today, we have 35% market share and its a huge market, where the next four vendors put together are smaller than us. But the share of our China Business, in Lenovo has gone down from 55 to 42%. Which means, that the rest of the business outside of China has grown much faster. We have gained in US, Russia, India, emerging markets. As a brand, outside of China, India has the highest awareness of the brand.
For emerging markets we invested in the brand and we invested in creating the retail outlets. What we have to do now is to sustain the top position; it is not about being number one at a point and time. I think specifically the opportunity comes to us from SMB. To me that's really the primary challenge that Lenovo faces right now.
Coming to today's launch, what will you say is the USP of the ThinkPad X1 Carbon?
The USP, according to me has to be the combination of lightness, due to the carbon used, and reliability. So it is the lightest 14 inch, and yet beats eight military specs of the US army. So the balance between utility, form, design and ruggedness, durability, lightness and reliability which I think is the key. And being able to do that at Rs 85,000. Yes, that is not cheap; it is at the premium end of the market. But it is very affordable and for a enterprise which looks at the total cost of ownership, it is not a significant amount. Also, what I liked about it practically was the rapid charge. For 35 minutes it charges 80% of the battery. For someone like me who is on the road all the time, this is very convenient.
