Sales of IBM PCs under new owner Lenovo have proven so successful that the company is having trouble filling orders for some models, according to a Lenovo executive.
For Lenovo Group Ltd. channel partners trying to fill customer orders, the product constraints are a hassle. Some partners worry their end-user customers will switch to other brands when buying systems.
Lenovo completed the acquisition of IBM’s Personal Systems Group in May and then embarked on what turned out to be a bigger-than-expected sales month in June, said Steve Mungall, Lenovo vice president of inside and solution provider sales.
“We caught ourselves with a very good sales month and we caught ourselves low on supply,” Mungall told The Channel Insider during an interview at IT trade association CompTIA’s annual Breakaway conference. The conference is taking place in Las Vegas through Friday.
Lenovo product constraints mainly are affecting midlevel ThinkCentre desktop models, specifically the A51 and A52, which are replacing the discontinued A50 line, said IBM partner Douglas Neumetzger, president of Palisades Sales Corp., a VAR in New Jersey.
“As of now I see virtually no inventory at any distributor for Lenovo desktop systems,” Neumetzger said. “For products where ETAs are posted, I see mid-September delivery dates. Does Lenovo expect me to tell customers that we can get them a desktop PC in six to eight weeks?”
Chris Redshaw, president of Future Vision Inc., a VAR in Raleigh, N.C., said she has been having trouble buying some Lenovo desktops for at least a month.
High-end models and units with Celeron processors are available, but those are not the machines her customers typically buy. Orders for the midlevel machines sought by her customers are taking two to three weeks to fulfill at the Mexico plant where they are assembled, she said.
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“If we go looking for a P4 entry-level PC with Windows XP Pro, they are virtually nonexistent as far as stock goes,” she said. “When I have a customer’s PC go down, they can’t wait two to three weeks. They will go elsewhere.”
In addition to higher-than-expected sales and the transition from a discontinued product line, parts supply issues also contributed to the inventory shortages, Mungall said. Some parts used for assembly of the systems have been in short supply.
However, Mungall said, he expects the supply constraints to end this month. “If it carries until September, it will be because our sales will have been even bigger than we thought,” he said.
Midlevel desktops are not the only models in short supply, he pointed out. The ThinkPad Tablet has sold so fast since its introduction that Lenovo quickly ran out of stock and is now working to catch up, he said.
The product, intended for vertical markets such as health care, has caught on in the mainstream marketplace, he said.
A further expansion of the popular ThinkPad line is on the way, he said, citing the planned September release of the widescreen Z series.
For partners, the inventory problems come at an inopportune time, just when Lenovo needs to prove the transition form IBM ownership will not cause major disruptions.
IBM channel partners, some of whom threw their loyalty behind the brand after switching from other vendors in recent years because of channel conflict, have by-and-large welcomed the Lenovo acquisition despite initial reservations. The product constraints, however, are making some partners wonder if they were too optimistic.
“I was content to follow the Lenovo/IBM party-line of ‘wait and see, you’ll be pleased with what we have in store for you,’” said Neumetzger.
But the ongoing lack of inventory is making Neumetzger question whether he has misplaced his loyalty by sticking with Lenovo, he said. He is even thinking about switching his systems business back to Hewlett-Packard Co., a brand he abandoned in frustration a few years ago.
Neumetzger was fed up HP’s attempts to compete with direct-selling vendor Dell Inc. by pushing a direct-sales strategy that he and many other VARs say creates channel conflicts. HP direct-sales rep have been known to contact even the smallest companies, even though when those companies turn out to be VAR customers, the vendor has resolved the conflict in the partner’s favor.
“We moved nearly 100 percent of our business away from HP and toward IBM,” Neumetzger said. “I was pretty pleased with that move until the Lenovo announcement, at which point I was concerned that I had placed my bet on the wrong horse.”
Neumetzger said unless he turns back to HP, he may ” have nothing to sell for the next couple of months.”
In coming months, Mungall said, Lenovo will embark on an aggressive customer acquisition push and a marketing campaign to build brand recognition. Much of the campaign will revolve around Lenovo’s supplying the 2006 Winter Olympics with computer hardware.
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