New Microsoft Surface tablets: Is Lenovo screwed?

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In short not really. Lenovo has the leading worldwide market share in the PC market. They have been, both from a share and longevity standpoint, the leader in 2-in-1 PCs for well over a decade. This, I expect, is why folks may be concluding that Microsoft’s new Surface product line may represent a huge problem for Lenovo. But Lenovo isn’t the target of Microsoft’s effort. Apple is the target, and we have yet to see Lenovo’s new consumer and corporate lines which are expected to be far more in-line with the Surface products than its existing lines are.

Let’s talk about this.

Surface Pro 4 and Surface Book

It is easy to get excited about these two new products. They are brilliant. The line was specifically created to address the threat that the iPad in particular and Apple in general represented in business and this threat became more pronounced recently when Apple partnered with IT giants Cisco and IBM (IBM was the company that effectively carried Microsoft into the Enterprise and likely created the most concern for Microsoft).

When iPads largely failed to do the job Apple created the iPad Pro but it was still based on iOS which wasn’t Apple’s professional platform. That was the MacOS and what was happening was that folks often started with an iPad and ended up with a MacBook Air. Since the iPad Pro is also based on iOS Microsoft felt they could better position Surface, now in its 4th version, as an iPad Pro like device but with a professional OS not a consumer OS.

Realizing there was an additional risk that professionals, engineers, animators, and architects were favoring the MacBook Pro they created the Surface Book to move against that risk. In both cases the result was a highly packaged, beautifully executed, product targeted at a specific customer opportunity and sold both through Microsoft stores and through partners Dell and Accenture (to offset Cisco and IBM).

Lenovo

For the most part the PC OEMs haven’t been that effective competing against Apple. Apple’s strategy is a few non-overlapping products mostly focused on people that create. The PC OEMs instead tend to focus on the broad market and create equally broad lines that touch virtually every work case. Lenovo has been building 2-in-1s long before we called them 2-in-1s and they have been so effective in the market that they have been able to overtake HP from behind to lead the market. It is across retail broadly worldwide and has its own dedicated enterprise sales channels.

It is also a long time Microsoft partner and it is unlikely that Lenovo will position against Microsoft or that Microsoft will position against it. Their lines are dedicated and compartmentalized with ThinkPads targeting business and lines like Yoga targeting consumers. While there will be some overlap between Microsoft and Lenovo it is expected both companies will try to stay out of the other’s way as much as possible. Microsoft isn’t Lenovo’s focus and Lenovo is a Microsoft customer.

Finally, we have yet to see the new Fall lines from Lenovo and it has the same core technology sources like Intel Skylake that Microsoft does and is held to the same constraints. It is expected Lenovo’s new offerings, based on these technologies, will hit the market in the same time period as Microsoft’s.

Wrapping Up

While it is likely clear Lenovo would rather Microsoft not build PCs the fact is that both companies are mostly focused on different opportunities. Microsoft is focused on providing solutions to users and companies that might otherwise buy Apple and has created a powerful Apple like product line to address this. Lenovo remains a more traditional PC company with broad lines and it will likely continue to focus on taking share from real competitors like HP. In the end this is less about Microsoft competing with Lenovo and more about how Microsoft can address the Apple threat. As a result, Lenovo should be just fine.

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About Author

As President and Principal Analyst of the Enderle Group, Rob provides regional and global companies with guidance in how to create credible dialogue with the market, target customer needs, create new business opportunities, anticipate technology changes, select vendors and products, and practice zero dollar marketing. For over 20 years Rob has worked for and with companies like Microsoft, HP, IBM, Dell, Toshiba, Gateway, Sony, USAA, Texas Instruments, AMD, Intel, Credit Suisse First Boston, ROLM, and Siemens.

23 Comments

    • Nobody said anything or anyone is screwed. If you read what Rob wrote you’ll see that he doesn’t believe Lenovo is screwed. So I guess you’re on the same page. Side note: The operating system you choose to run isn’t relevant to this discussion.

    • I’m sure they do, although I wouldn’t advise it. What Yahoo Finance actually says about the Navy is that it has about 100,000 PCs– a fraction of the total computers in operation in the US Navy–left still running Windows XP and outdated versions of Office and Exchange and that it’s wasting more than $30 million of taxpayer money for the extended support just for those 100,000 PCs because it didn’t take action to upgrade them when it knew the OS was set to expire.

      http://finance.yahoo.com/news/microsoft-could-get–31m-because-the-u-s–navy-still-runs-xp-170015477.html

      • But these pcs run xp apps which may be too expensive to switch [not upgrade] to one of the 14 versions of windows OSs? Perhaps reasons for businesses and US Navy to continue with xp?

        • I agree the XP machines are probably running some archaic program that hasn’t been updated and locked the Navy into a corner. That doesn’t mean XP is better–just that someone at the Navy failed to plan properly–especially with the knowledge that XP support was expiring. Microsoft doesn’t care either way–it’s making a ton of money (possibly more than it would make from a Windows 10 or even Windows 7 upgrade) from the US taxpayers to support an outdated OS. It seems to me that it would be much cheaper than $30 million to just update the offending software to work with an OS from this decade rather than shelling out money every year to support the legacy OS.

          • Based on? Revenue is solid and the company is sitting on a stockpile of over $90 Billion (with a “B”) in cash. Windows 10 has only been available for 2 months and it has over 110 million installations. The Surface line is a huge success, which is why companies from Lenovo to Dell to even Apple are scrambling to develop similar devices. Plus Microsoft is making truckloads of cash from companies clinging to XP and paying for extended support. Microsoft won’t be going bankrupt any time soon.

          • In Windows 10’s launch quarter, PC shipments declined by a considerable margin compared to the same period a year prior. Year-over-year, shipments are down by 7.7 percent according to Gartner or 10.8 percent based on IDC’s findings.

          • Aside from the Surface line–which seems to be doing quite well–that isn’t Microsoft’s fault or problem. Sounds like Lenovo and other OEM partners may have some issues but Microsoft and Windows are doing fine.

          • Define “us”. Windows 10 is a free upgrade for licensed Windows 7, Windows 8 and Windows 8.1 users, so for the majority of Windows users the answer is “zero”.

            It will cost the US Navy money to upgrade off of Windows XP either to Windows 7 or Windows 10 (although I would recommend Windows 10 because Windows 7 support will expire in 2020 and then the Navy would be back at square one). I’m not sure what 100,000 licenses costs the US Navy based on its volume license agreement with Microsoft, but right now it’s paying about $100 per PC per year to keep using Windows XP and I would guess that the upgrade to Windows 10 would be a one-time expense of less than $100 per PC.

            Granted, the Navy will also need to invest in updating whatever software it is that has them tethered to an archaic expired OS but that too would be a one-time expense as opposed to spending $10 million a year just to keep 100,000 PCs running an outdated OS.

  1. They are losing my business. I was waiting for the new yoga thinkpad 460 until the news about the surface book. Pre-ordered that immediately instead of waiting on Lenovo. No qualms with Lenovo but it’s been hard to get the right mix of performance, size, and weight…. Microsoft is solving that with the surface book.

    • and I’m posting this as a guy who only buys Lenovo for some time now and never expected to buy anything other than Lenovo anytime soon. I post this from a Yoga ThinkPad 15. I was also using a Yoga 2 Pro for airplane use but the new Surface Book will combine both of these into a single machine with full power and perfect size/flexibility.

  2. As a tech fan first, the Surface book is an awesome step forward for Microsoft. But as a Lenovo fan, I have to side with Lenovo. The experience in the category has afforded Lenovo time to perfect their 2 in 1 devices to be not only sturdy and reliable but just an all around better design.
    The Surface book is cool….. But ugly and bulky

  3. Pingback: News about Tablets | IT and CNC Geeks' World

  4. Howard Abraham on

    Lenovo was busted for factory-installed malware… TWICE. And my top-of-the-line Yoga2Pro became completely unresponsive after 18 months. Do I really care if Lenovo never sells another computer?

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