Lenovo: Channel strategy important to success

Chinese PC maker increases emphasis on its resellers; considers possibility of selling direct to Asian consumers.

BEIJING--Following a stellar performance in its recent fiscal 2006/07 earnings, Asia's number one PC maker Lenovo says it plans to continue its upward momentum with heightened focus on its reseller and channel strategy.

Speaking Monday at the company's inaugural business partner conference held in Beijing, China, David Miller, Lenovo's senior vice president and Asia-Pacific president, noted that supporting a reseller strategy is key to the company's success. "Without channel, we can't get there," Miller said.

For its fiscal 2006, ended Mar. 31, 2007, Lenovo's revenue grew 10 percent to US$14.6 billion over the previous year, while EBITDA--excluding restructuring costs--grew 9 percent to US$414 million. EBITDA refers to the company's earnings before interest, taxes, depreciation and amortization.

Miller added that it is not feasible for companies to function on a sales model that does not include channel partners. "The answer is we can't [do it without the channel]. It's not possible ," he said. "We cannot be successful without our partners providing the bridge... [They're] simply an extension of who we are."

Lenovo underscored that belief when the company on Monday unveiled plans to enhance its Asia-Pacific partner program. According to the PC maker, the initiative is aimed at growing its reseller network and to provide more focused support. It includes key elements such as providing added infrastructure support and increased collaboration with business partners.

"Our partners--more than 5,000 of them across 11 countries in the region--are an essential part of our business," Miller said. "The enhanced programs announced [Monday] are aimed at helping our partner grow and succeed with Lenovo." He added that the company will broaden its portfolio of products so its partners can better address growing markets, such as the SMB (small and midsize business) and consumer spaces.

On whether Lenovo plans to introduce the direct sales model--one that Dell Computer has long championed--Miller said the company already has an online presence that sells its products directly to customers in Japan and Australia. He added that the Chinese PC maker will "look at" the possibility of extending this model to other markets in the Asia-Pacific region.

Meanwhile, one of Lenovo's strongest competitors Dell, is reportedly planning to break away from its direct-to-consumers sales model, which Dell had accredited to have helped the company become the world's top two PC maker. In June this year, Dell will start selling two of its Dimension desktop models in more than 3,000 Wal-Mart stores across the United States.

Lenovo currently holds the No. 3 spot in the global PC market.

Lynn Tan of ZDNet Asia reported from Beijing, China.