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Amar Babu
Managing Director
Lenovo India
Year 2008 began on a high note. Growth from the previous year continued, and we observed the advent of more stylish and feature-driven products, especially in the consumer segment. The popularity of notebooks remained healthy through the year. This segment was dominated by colorful designer notebooks, bold designs, touch-sensitive controls and unique textures combined with rich technology features.
The trend continued with excellence in PC innovation demonstrated once again with the emergence of ultra-thin notebooks. This segment was virtually created last year by road warriors with their demand for superior portability and performance. We also witnessed new technologies and trends in the notebook segment: solid-state drives, ultra-long battery life, backlit displays, and enhanced wireless connectivity for the always-connected mobile user.
While these trends in notebooks were primarily aimed at the consumer segment and enterprise user segment, another segment was just about maturing—the SMB. As this segment matured, so did its need for products.
The segment enjoyed increased attention as leading IT vendors offered customized products that met its unique needs. SMBs prefer solutions that are user-friendly and easy to operate. Complications that appear in the process of deployment and operation are a pain-point for SMBs which do not want to invest money to gain new skills.
Meanwhile, the overall market felt indications of the economy slowing down from the third quarter onward. The fourth quarter had a larger impact on the economy because of the US market meltdown, the effects of which are still being seen. As a result, customers became more cautious about their purchases, including IT hardware products.
The last quarter saw the advent of netbooks, which offer low-cost technology on the go. Given the slowdown in the market and the need for value products, these netbooks were able to boost the momentum in the PC market.
Market outlook
Organizations will have to reorganize their processes to reduce the duplication of resources in order to maintain profitability. Innovation will be the key to triumph, both in products and in business models.
While companies will look at alternate means to address the slow business period, consumers will look for greater value in every purchase they make, and more consciously than before. We believe that enterprise customers will continue to invest in IT even though it is predicted that the slowdown will bring down their IT spending. But they will demand more value in their purchases, and pay more attention to savings. It is here that we anticipate energy-efficient products and service packs becoming priorities. In the consumer segment, netbooks should generate widespread interest.
Advice for channels
At this time of cautious spending, the biggest challenge for partners will be to maintain profitability and liquidity. IT vendors need to support their partners by enabling better margins and credit options. Lenovo is currently working on giving rebates on each sale for certain products to increase the liquidity with the partner, and offering service options which ensure complete peace-of-mind for the customer.
We see potential to tap the growing SMB and consumer segment in C- and D-class cities. Targeting the first-time consumer in these cities with feature-rich, competitively-priced and innovatively-engineered products should be among the priorities in the next few quarters to even out the fall in demand from metros. That is what we will be doing—extending our sales, service and support reach in C- and D-cities.
Technology outlook
2009 will define the use of solid-state drives, safer and more powerful means of security at different levels, a variety of form factors, and personalization of notebooks to a greater extent with the arrival of multiple colors, multiple textures and multiple screen sizes. Energy efficiency and Green IT will be a top priority for technology innovators and adopters.
It will also be an interesting year for desktops. Consumers can expect classy, rich-in-feature products that combine the CPU and monitor in a single unit. Style will be of the essence in the consumer segment. The distinction between consumer and enterprise PCs will narrow as products featuring the best of both worlds emerge. We will also see a stronger focus on innovation toward delivering more battery life in notebooks.
Technology will remain critical for companies as the engine for innovation and efficiency. History has shown that during tough times, companies which are bold enough to take quick and decisive action are rewarded. We believe the best course for business during challenging times is to stay focused on the fundamentals.
Takeaways for channels
Staying close to your customers is going to be critical. To understand their needs and their pain-points will be imperative for partners to succeed. As your customers re-examine their spending, you want to be seen as a core investment for them and not discretionary spending. You can do that only if you are listening to them and delivering what they need. Here are a few tips:
- Drive all the efficiencies you can, without sacrificing your quality or your brand promise.
- Continue to invest in innovation. Innovations that deliver more productivity or savings are what will keep customers—and keep them coming back. If you stop investing, you will have nothing to offer customers when the business cycle inevitably turns back upward.
- Focus on high-growth markets. We believe that C- and D-class cities will be the high-growth markets as people there are eager to catch up with the latest technologies.
Bottomline
If you stay close to these customers, you’ll know what they need. If you have invested in innovation, you’ll be able to build what they want. If you’ve driven all the efficiencies you can, you’ll be able to build it at a price they can afford and at a value offering.
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