It is always fun to look at a bit of conflict and in this case I’m not talking about Lenovo vs. HP; I’m talking about IDC vs. Gartner. You see, IDC includes workstations in its PC numbers, and HP has a massive and leading workstation business. Gartner does not include them.
The workstation business is also a much higher margin business so HP can argue that it is number one while retaining margins. However, analysts tend to look at trends and Lenovo has jumped from nearly insignificant to challenging for number one over the last decade and that is damn impressive. Both HP and Lenovo got to where they are through acquisitions — HP by buying Compaq and Lenovo by buying IBM’s PC company.
NEC also got to number one through merger (Packard Bell) and both HP and Lenovo have done better because NEC is hardly in the PC business anymore. Let’s focus on what Lenovo does better than anyone else and why it is almost unique in trending positively in the troubled Windows PC segment.
Lenovo is focused solidly on the client. Yes, it has a small server business, but unlike its competitors, it isn’t trying to fight a large number of other companies at once. This allows it to focus all of its resources on solving the unique needs of the user and IT professional buying laptops and PCs. This is why the ThinkPad remains the gold standard for professional PCs and has unique features (for example, fast recharge batteries) that address the unique needs of this segment and appear to have been missed by others. Like Apple, it is tightly focused and that focus has paid dividends for both firms.
David Roman, who is Apple-trained, is the strongest PC marketing executive in segment. What makes him the strongest isn’t that he is creative with advertising alone; it is that he is also creative with funding. The big difference between Apple and the Windows PC vendors is that Apple funds marketing fully and makes it a priority, while PC vendors often look at marketing like an avoidable expense and underfund their efforts significantly, getting most of the money they do use from Microsoft and Intel co-marketing programs.
David Roman, while at HP and faced with this problem, figured out a way to get resources from HP’s charitable giving pool without adversely impacting what went to charities. In fact, he not only improved the impact of PC marketing, he actually improved the impact of the campaigns by tying them more tightly to celebrity efforts that co-funded them. To date, this effort at HP remains unmatched.
Roman was forced out of HP and ended up at Lenovo where he has been a major driving force behind that company’s growth. Lenovo, recognizing the power of marketing to generate demand, has better funded him and the result has been impressive growth dividends.
Several vendors have these, but Lenovo remains the gold standard for running both analyst and customer councils regionally. While most vendors pull customers and analysts together to brief them, Lenovo along with a few companies like Panasonic pull these same groups together to define new products and refine marketing campaigns. This creates advocacy for Lenovo’s products with key influencers who favor the resulting offerings because they helped create them. This level of engagement is very rare and incredibly customer-focused. And it may be more sustainable than even Apple is because it used Steve Jobs as a proxy for this and while he clearly was more effective while alive, it has been unable to replicate this role after he passed.
ThinkPad rivals Apple for both name recognition and the impression of high quality generally, and exceeds Apple’s brand in business. This is the brand created by one of the best branding teams IBM ever fielded and the value of this brand likely exceeds anything else Lenovo has ever purchased. Unlike other companies that kill popular brands (Palm comes to mind), Lenovo fully funded the protection of this one and its merger process with the IBM PC company rivals and preceded the one that Dell currently leads the market with. Lenovo bought a brand and actually improved it. That, unfortunately, isn’t a common outcome.
One place Lenovo is the undisputed leader is in China, which many believe will pass the U.S. as the most powerful and lucrative market this decade. Learning the Chinese market has been difficult for every vendor not located there and only Lenovo, of the multi-nationals, has been hugely successful, largely because the firm was birthed there. Unless China falters, and it is currently in better economic shape than the U.S., Lenovo is almost assured to reach undisputed leadership world-wide in PCs before mid-decade.
Whether or not Lenovo is actually number one may be in dispute, but the fact that it is contending for it given it was almost insignificant a decade ago is not insignificant. Getting there took a ton of effort by employees and executives working together, one of the strongest marketing talents in the technology segment, and a tight focus on both the target product segment and on building advocacy with analysts and large customers.
Lenovo’s continued growth in the face of a troubled market showcases the successful execution of the powerful strategic vision that got it to buy the IBM PC company in the first place. It is and likely will remain the leading example of set of best practices to be used to take over a market from behind.