Chinese PC maker Lenovo has quietly grabbed the leadership position in the enterprise market in the country in the latest quarter, sneaking ahead of Dell and HP.
The company attributes this performance to a two-pronged strategy of going back to basics through brand-building which the company had taken for granted and aggressively chasing new clients.
For long, Lenovo was flitting between number 2, 3 and 4 slots – this is the first time Lenovo has claimed the #1 position in the enterprise segment to capture a market share of 21.8 per cent (IDC estimates; October-December quarter) at 1.2 lakh units. Dell comes second with 19.2 per cent at 1.06 lakh units. The enterprise segment comprises very large enterprises (which employ over 1,000 people), large enterprises (500-1,000 people), government and education.
Lenovo's enterprise offerings consists of the ThinkPad range of laptops and the ThinkCentre desktops – ‘Think' came from the IBM stable after Lenovo's acquisition of IBM's PC business in 2005.
“In the last few years, we had taken our biggest strength in the corporate segment – the ThinkPad brand – for granted, assuming all our customers knew about it. But some of the customers were actually hesitating to give us a premium. Lenovo's corporate range is priced 15 per cent higher than competition, due to high design features and R&D costs. Some customers were even giving us a 20 per cent premium,” says Mr Rahul Agarwal, Executive Director – Commercial Business.
Brand Thinkpad
So, it was really important to communicate to the market about the ThinkPad brand, the product features, and why paying a premium was important. In the last one year, Lenovo has been focussing on evangelising the product not just to customers and resellers but also to its salesforce. “A big effort has gone into training our salesforce through presentations, brochures, video links and demos.”
Typically, Lenovo works with 1,000 customers each quarter. A year ago, repeat customers accounted for 90 per cent of business. “While high loyalty is good, on the flip side, the whole organisation got used to getting business from the same customers and we were not gaining market share.”
To tackle this, the company identified 1,000 very large enterprises and gave targets to its sales managers to get business from these new accounts. “The entire organisation rallied around our sales managers and geared up for client acquisitions. For the last two quarters, we have been bagging 75 new customers each quarter.” New clients now account for 20 per cent of Lenovo's enterprise business.
“Last calendar year, the market grew at 40 per cent, while our enterprise business grew at 112 per cent. For the last four quarters, we have been consistently gaining share – 14.6 per cent, 17.3 per cent, 20.9 per cent and 21.8 per cent.”
Large enterprises
Lenovo's strength is very large enterprises as “they value quality and technology”. But the company is also trying to penetrate the large enterprise, government and education space, which are “price driven.”
Mr Agarwal concedes one cannot read too much into the performance of a single quarter. “Leadership numbers keep changing quarter on quarter. Next quarter we could probably slip to #2. Our aim is to gain market share consistently and grow above the market. While the enterprise PC market is slated to grow at 16 per cent this year, we are looking at 25-30 per cent.”
Enterprises account for 60 per cent of Lenovo's business in India. Lenovo has a 10 per cent share in the PC market (including consumer segment) in the country which is estimated at 11 million units.