Lenovo aims for expansion in Middle East’s data centre industry

Exclusive: In the region there are other new players emerging including SAP, Microsoft, Alibaba Cloud, Amazon Web Services and Oracle

Marco Andresen, chief operating officer and vice president - EMEA at Lenovo, Courtesy: Lenovo

Lenovo, the world's largest manufacturer of personal computers, is aiming it enhance its data centre offerings in the region as the company battles it out with global giants such as SAP, Oracle and Alibaba in this space.

"The Middle East offers plethora of opportunities in data centre industry … we see enough room for Lenovo to expand its business in this sector," Marco Andresen, chief operating officer and vice president, Europe Middle East and Africa (EMEA) at Lenovo, told The National.

Lenovo became a major data centre player in 2014 when it bought the x86 server business from New York-headquartered IBM. This year has seen the strongest growth for Lenovo since the acquisition.

The company posted data centre revenue of $1.5 billion in the second quarter ending September 30, up 58 per cent year-on-year. This was the fifth consecutive quarter of profit growth with a double-digit growth in EMEA.

To capitalise on emerging opportunities, Lenovo will be announcing some big offerings in data centre business in 2019, said Mr Andresen.

In the region there are other new players emerging including SAP, Microsoft, Alibaba Cloud, Amazon Web Services and Oracle.

Lenovo, which is mainly a device company, is gradually shifting its focus on to the service industry.

“We don’t think we are doing enough good at this moment [as a services enterprise]. Overall, you will see Lenovo getting more active in services in the coming months – on both commercial as well as consumer sides – that is the future,” stated Mr Andresen.

Although Lenovo has no specific offerings customised for any particular geography, overall services offerings will be "comprehensive" said Mr Andresen.

In the past quarter, Lenovo reported its service revenue reaching close to $700 million, around 5 to 6 per cent of its total business revenue.

As a group, Beijing-headquartered Lenovo recorded overall revenue of $13.4bn in the second quarter, up 14 per cent year-on-year. For the third consecutive quarter, the firm achieved double-digit year-on-year revenue growth and this quarter's revenue was the highest quarterly result in nearly four years.

“We are at very strong position in terms of PC business ... but of course one could be more profitable. In 2019, we aim to outgrow the overall market growth,” said Mr Andresen, without disclosing specific figures.

“We see more growth coming from ‘smart’ … smart IoT, smart office, smart home - everything that is connecting devices in a more meaningful way, will offer more potential for growth.”

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In the second quarter of 2018, Lenovo’s PCs and smart devices business surpassed the $10bn revenue mark for the first time – up 18 per cent year-on-year. The company has invested nearly $1.5bn on research and development in the past fiscal year.

Currently, Lenovo has the largest global market share in the PC industry at 23.7 per cent, according to the International Data Corporation, a US-based researcher. It is followed by HP and Dell at 22.8 and 17 per cent market share, respectively.

Lenovo focuses on public sector, retail and consumers as its top growth markets.

“Country like South Africa, UAE and Saudi Arabia are main potential markets but it is difficult to rank our key territories. Whole EMEA is our focus market and we see opportunities everywhere,”  said Mr Andresen.

“Whole Africa is obviously a big market for all vendors – where we have huge population but relatively very few devices per individual."