We are aggressively focusing on consumer and SMB segments

Lenovo has renewed its corporate strategy in terms of geographical
approach and target segments. Babu speaks about how they are recognizing the
importance of the SMB customer's needs while creating a particular product

What is your channel expansion strategy for 2010?

Lenovo is committed to enhance growth in emerging markets like India. We are
adopting the best practices from our China experience to build clear and
streamlined business models in India. Over the last three quarters, Lenovo's new
organization structure globally and in India has focused on driving speed,
performance and efficiency.

Our core channel strategy in India is to build a strong channel base, getting
closer to our customers quicker, with an excellent product portfolio and setting
the stage for more streamlined operations with our business partners. As per
this renewed strategy, the go-to-market structure will clearly define priorities
and roles and enhance channel relationship and interlock. Our priority is to
build core channels, drive market expansion into tier-2 and tier-3 cities,
expand our product portfolio, especially in the lower end of the price band, and
offer customers improved levels of service across more service centers in the
country.

In the consumer PC segment, we aim to establish our core channel strategy
with our existing base of 7,000 channel partners. We want to provide excellent
service and grow with our partners instead of focusing on growing the network.
As per the re-jigged strategy in India, we follow a two-tier model. Four
national distributors serve exclusive outlets and retail chains, and regional
distributors operate at a tier-2 level for the upcountry cities. We intend to
apply the integrated operations model which has been very successful in China.
In this model, all functions from product development to marketing, sales,
supply chain and services are closely linked for speed and efficiency. Our
recent marketshare gains in the last three quarters are a result of our revamped
strategy.

In the SMB segment, Lenovo's channel strategy follows a three-pronged
approach. At the tier-2 level, we reach out to retail sellers, SIs and VARs.
They in turn enable our reach to SOHO customers at a tier-3 level. We aim to
grow our base of retail sellers from 375 to 1000, SIs from 250 to 500 and VARs
from 24 to 50 in the year.

Since the Baddi manufacturing unit is shut now, what is your expansion
plans for the Puducherry unit? Would you be looking for an alternate
manufacturing location elsewhere?

As part of our global corporate strategy announced in 2009, the Lenovo
management has worked on steps to drive growth and profitability and enable
further efficiency in the company's operations. To improve efficiencies, we
relocated our Baddi manufacturing operations to our Puducherry facility, which
has adequate capacity to meet our customer's demand. This move successfully
occurred over nine months ago and we are currently finalizing the regulatory
paperwork. In its strategic priorities to improve performance, Lenovo has
adopted a 'protect and attack' approach in its emerging markets and in India
over the last four quarters.

As far as setting up another manufacturing center is concerned, we are not
planning to establish another manufacturing plant in India at the moment, as the
Puducherry unit suffices all requirements.

What are the latest developments in Lenovo's worldwide marketing center in
Bengaluru?

Lenovo's Worldwide Marketing Services division plays a very critical role in
driving brand and marketing effectiveness for the company globally.

Today, it drives core marketing communications for the Lenovo Group. It is
the center of integrated marketing communications (IMC) and creative
development, and provides marketing services for Lenovo worldwide. For example,
developing of Global Campaigns and Product Launch Kits, Geo Marketing tactic
execution, Market Research, Product Messaging and Launch, Marketing Analytics,
RoI analysis and alliance compliances.

How much does Lenovo plan to spend on R&D this year?

Lenovo is highly driven by its R&D mantra of innovation and exceptional product
designs. We believe that our exceptionally engineered products speak for
themselves in terms of style, reliability and quality. While we cannot quote
exact figures, our R&D focus is evident in our award-winning 'Think and Idea'
product range.

What is your plans for this year and when are you planning your next
product launch in India? Also, what is the estimated growth Lenovo India is
looking at by the end of 2010 (product specific)?

Last year, Lenovo renewed its corporate strategy in terms of geographical
approach and target segments. It is clear for us that in a market like India, we
are aggressively pursuing growth segments such as consumer and the SMB. Our two
major product launches in the last three quarters reflect this. In July 2009, we
introduced a completely new range in our Idea Pad and Idea Center range of
consumer PCs, with a focus on thin and light products and across different price
points. We believe the future of desktop computing is in convergence. All-in-One
PCs will represent a significant part of our portfolio, for all types of
customers.

We would also recognize the importance of the SMB customer's needs. Last
month, we announced the ThinkPad Edge Series and the ThinkPad X100e business
ultraportable laptops, which address the needs of a typical SMB customer.

The ThinkPad X100e on the other hand is a pioneering product in the industry
as it offers ultraportability. The ThinkPad brand promises an entry-level price
point. This creates opportunity for high-quality ultraportable laptops to ease
into the mid-executive level in the enterprise and SMB segments.

Lenovo will be extensively focusing on innovation-based products for the
consumer and SMB segments in the year ahead, along with maintaining leadership
in the enterprise segment as well.

Bharat Sharma

bharats@cybermedia.co.in