Back in January 2014, Lenovo, the world's number-one PC manufacturer, reorganised itself into four business groups covering PCs, mobile devices, enterprise and 'ecosystem & cloud services', and later that year closed deals to acquire Motorola Mobility (from Google) for $2.91 billion and IBM's x86 server business for $2.1bn.
As part of the same January 2014 reorganisation, it was announced that Peter Hortensius, previously in charge of Lenovo's Think Business Group (ThinkPads, ThinkCentres and ThinkServers), would become head of research and development, and chief technical officer. ZDNet caught up with Hortensius in London last week, and began by asking whether being CTO and in charge of R&D was the best job in the company. "It's certainly the most exciting job in the company," he replied, adding that "my boss makes it pretty clear that seeking 'the next big thing' is my job."
R&D at Lenovo
In its Q4 2014/15 quarterly results, Lenovo's PC business generated the majority of revenue (63.7%), followed by the mobile (24.8%), enterprise (9.7%) and software/services (1.8%) groups. But of its $11.3 billion Q4 revenue, only $424 million, or 3.7 percent, went on R&D. That's in marked contrast to companies like Intel, Microsoft and Google, all of which regularly spend 15-20 percent of revenue on R&D per quarter. So are we going to see Lenovo spend more in this area as it seeks to develop 'a new generation of innovative products that are both more exciting and more useful for our customers' (as the company's latest annual report puts it)?
"It [R&D spending] will go up as we see the full-year impact of our acquisitions [Motorola Mobility and IBM's x86 business] -- we picked up a lot of engineers there," says Hortensius. "Also, we've always been pretty flexible in terms of partnerships: if you look at Tech World, we have some things where clearly we were doing it all ourselves, and others where we were working with industry partners to extend what they have and make it a little bit more useful -- this is how we keep our innovation up without having to spend ridiculous amounts of money."
Lenovo Tech World
Lenovo's first Tech World show, held in Beijing in May, "was deliberately constructed to give a view of some things that are near-term, coming very soon, and some things that we think are definitely further out there," says Hortensius.
Among the more speculative devices on view at Tech World was a concept dual-screen smartwatch called Magic View, which sports a 'virtual interactive display' built into the strap: you bring the small prism up to your eye to get a private virtual display over 20 times the size of the smartphone's regular screen, according to Lenovo.
Another impressive prototype shown at Tech World was the Smart Cast smartphone, which has an integrated and adjustable pico-projector that also incorporates infrared motion detection and gesture recognition, allowing you to turn a tabletop or a wall into a touchscreen. Demos included projected keyboards -- of both the QWERTY and musical variety.
These particular implementations may or may not make it to market, but, says Hortensius, "the whole idea of trying to address dual screens, and the interface issues that go with them -- we think that's a very interesting area, and something we need to figure out."
Lenovo and the IoT
As far as the Internet of Things (IoT) is concerned, Hortensius makes a clear distinction between the enterprise and consumer markets: "In the corporate marketplace, everything will be driven by some kind of return on investment, and fitting into some kind of architecture. So you'll see controlled roll-outs with a clear return on investment. The home is where it will get very interesting, because the home user doesn't buy according to an architecture; they buy something that's convenient, or offers a function that they want, and then ask: 'how does this work with that?' So standards will need to be put in place or the market will stall because not enough things work together -- and that's where we're quite active."
"There clearly is the opportunity for lock-in and lock-out in this space," acknowledges Hortensius, "but I think there are some interesting issues that will get resolved over time."
The question of governance over consumer IoT data, and data generated by wearables in particular, is also very important, says Hortensius: "These things are attached to your body, and so potentially know everything about you. So beyond the technology, there's an equally difficult set of policy questions that go with it."
As far as Lenovo's own IoT back-end/big data efforts are concerned, Hortensius is clear: "There is a definite value-add that we can bring to bear here, and we're very focused on applying clean and clear privacy principles and obviously making it as secure as we possibly can."
Lenovo and Windows 10
Of more immediate concern, perhaps, to the world's number-one PC manufacturer is the imminent arrival of Windows 10 and its sales-boosting potential. "We've seen a positive response from our customer base to the testing we've done, and to the extent that Windows 10 is successful, it's got to be good for the PC business, so we're quite excited by that," says Hortensius, adding: "To the extent that Windows 8 wasn't well accepted by the customer base, that obviously wasn't good for the business".
"The big thing in Windows 10," he continues, "is that it's not trying to do two things at the same time. With Windows 8, the problem was 'do I live in the Modern interface or do I live in the desktop?', and sometimes getting flicked back and forth, and not really feeling in control of your system. And to be frank, you couldn't fully live in the Modern interface, and you couldn't fully live in the desktop. -- you actually had to go across those barriers. Windows 10 gets rid of all that, and it's clean. People make a lot of the Start button, but the fact is, it was just a simple way of doing something. That's really the philosophy of Windows 10 -- to become again that simpler system that logically flows to what it is you want to do."
Lenovo's flagship business brand, and Hortensius's previous charge, is the ThinkPad range of notebooks and tablets. The company has already announced a refresh of the ThinkPad Tablet 10, a device that embodies Lenovo's trademark multi-mode design philosophy by adding accessories like a docking station, external keyboards and a stylus to the base 10-inch tablet. "You'll see us do more and more of those things," says Hortensius, adding that "thinner and lighter just continues to get more emphatic -- all-day battery life, those are all going to become de rigueur in all of those devices."
Lenovo's CTO wouldn't be drawn on the likelihood of the company delivering a Windows 10 smartphone, and gave perhaps the answer you'd expect on the prospects of Microsoft's converged-OS Continuum idea: "There are going to be people who will ask: 'I have my phone, why can't I just have a big screen and a proper keyboard?' Now, it will not perform like a real desktop because it doesn't have the processing capability, the storage -- all the things that make a desktop a desktop. But if all I want to do is the same things I want to do on my phone -- like an email, look quickly at a web page -- it'll work."
What about the other hardware categories Microsoft talks about for the Windows 10 ecosystem -- massive wall-mounted touchscreen all-in-one PCs for collaboration such as the Surface Hub and augmented-reality headsets such as HoloLens? "Today we already sell 84-inch large information displays, and as headsets for AR and VR become more realistic to deliver, you'll see us do those things," says Hortensius.
The Superfish affair
We couldn't pass up the opportunity to ask Lenovo's CTO about the Superfish debacle that broke earlier this year. Although Hortensius wouldn't comment on whether the unfortunate adware episode had affected Lenovo's PC sales, he robustly defended the company's response.
"We tried to address that situation, as soon as it was clear what we really had in front of us, by being open and clear about what the problem was, and what we were going to do about it. We immediately removed Superfish, we provided tools to exorcise it, and I think you'd be hard pressed to find a company that reacted as proactively as we did to the problem."
"And as Windows 10 ships in a few weeks you'll be able to judge for yourself that we do what we said we would do. We were pretty clear: the preload will consist of the operating system and whatever else Microsoft includes with it; some of our own software that helps the experience; and if there's some unique hardware -- like a 3D camera -- that isn't supported in the operating system, then we'll provide something that allows you to use the hardware."
If Superfish serves to remind Lenovo and other PC vendors of the potential pitfalls and irritations of 'bloatware', then the affair may well have done the industry a favour in the long run.
Growing the IBM server acquisition
Finally, what are Lenovo's plans for absorbing and growing its recently acquired IBM x86 server business?
"We think the server business is going through probably the most disruption from a technology and marketplace perspective of any of our three large businesses. In servers, you're seeing fundamental changes -- all driven by cloud. For us, we look at that disruption, and it's the perfect time for us to enter because we don't have an installed base or an incumbency that we have to protect."
Where will the server group's focus be? "The trends are very heavily into converged systems, while flash will become the tier-one-level storage. If you compare us to HP or Dell, for example, I don't have a networking thing that I have to push because I'm in the networking business -- I'm free to partner with anybody. And I don't have a storage business that I have to push on everybody because that's my own business -- again, I'm free to partner with others."
So is the idea of 'software-defined everything' running on commodity hardware a scary concept for Lenovo? "No, we think it's a great concept," says Hortensius: "It's one of the reasons we did the acquisition. The reason is, if you look at the lasting element in that world, it's still about the server. The server now has disks that are close by, with networking sitting in the top of the rack -- it all brings it closer to the device, and we think it leans very well into what we've bought. Where the traditional server is defined by its RAS (reliability, availability, serviceability), in the cloud it's all driven in the application, so it makes the hardware much simpler and much cheaper. And so, for us, it's no big deal: we know how to do that very well -- we know how to make a buck in a lower-margin space, and be happy with it."