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Lenovo Group first set out its strategic goal to "go beyond a PC maker" in 2017. Now that six years have passed, how is it going?

At the company's 2023/24 North American Kickoff Event held on Tuesday in Charlotte, North Carolina, the answer was given out.

"In the latest fiscal quarter, non-PC business contributed 41% of revenue, up 9 percentage points year-on-year," Yang Yuanqing, Chairman and CEO of Lenovo, said on stage.

The annual April Kickoff Event is an integral part of Lenovo Group's corporate culture, and it is held in the company's major markets, including China, North America, Europe and more. This year marked the first time the North American Kickoff returned to in-person since the pandemic outbreak, with over 700 Lenovo employees from across the US gathering at the venue.

Over the past year, Lenovo Group's PC business has faced significant challenges due to weak global demand. According to a report by market research firm Canalys, total PC (including desktops and laptops) shipments in 2022 were 285 million units, a 16% decrease from 2021. Although Lenovo maintained its position as the global leader with 68.125 million units shipped, it still represents a 17% decline compared to 2021.

Despite the difficulties, Lenovo Group's bet on non-PC businesses is paying off. The Solution & Services Group (SSG) and Infrastructure Solutions Group (ISG) maintained strong momentum, with revenue growth of 23% and 48% respectively in the previous quarter, both reaching new highs.

"SSG and ISG are expected to become the next profit engines for Lenovo Group. Especially ISG, which achieved a revenue of $2.9 billion in the latest quarter, marking the third consecutive quarter of revenue exceeding $2 billion," said Matthew Zielinski, President of International Markets and the International Sales Organization (ISO) at Lenovo, to PingWest.

Matthew is a veteran in the tech sales field. After joining Lenovo Group in 2018, he served as President of the North American Intelligent Devices Group (IDG), responsible for Lenovo hardware sales in the United States and Canada. Prior to this, he served as Vice President and General Manager of chip firm AMD.

As the pillar of Lenovo Group's 3S strategy, ISG provides customized services such as servers, storage, cloud computing, edge computing, and HPC for customers of all sizes. The 3S strategy includes Smart IoT, Smart Infrastructure and Smart Verticals.

The solid result of ISG business can be attributed to strong market momentum in edge-to-cloud servers, storage and software, as well as the company's investments in AI-driven edge computing and hybrid cloud, Matthew explained.

Taking a closer look at the ISG business: server revenue increased by 35%, hitting a record high, and Lenovo became the third largest server company in the world (after Dell and HP); storage revenue more than doubled, making Lenovo the fifth largest storage service company in the world; software revenue rose 52%.

The generative AI frenzy is expected to drive drive further growth in the ISG business. Whether it is the ChatGPT's highly human-like conversation performance, or the stunning image-creating power of Midjourney, Stable Diffusion, and DALLE, all rely on computing infrastructure, that is, high-performance servers, storage, data centers, and so on.

In addition, AI workloads are very different from traditional cloud applications built around web servers and databases, and therefore often require special hardware and software configurations to realize optimal performance.

And that's where Lenovo comes in. It is the only company in the world that offers everything from hardware design and manufacturing to IT infrastructure construction to cloud storage and cloud computing services, and has been vigorously developing products optimized for AI workloads for years.

In this new round of AI boom, Lenovo has undoubtedly become the most indispensable underlying service provider, providing tools and resources to other participants, just like the person who provides the shovel in the gold rush.

"We have the capabilities to design these solutions that customers want, and we have hardware that can plug in to these solutions that we build, and we are geographically diverse...We can be a one stop shop for all enterprise solutions, really from the pocket to the cloud," said Matthew.

As more and more companies adopt ChatGPT-like products, the demand for computing power will increase, and Lenovo Group aims to meet customer needs from edge to cloud with AI-powered edge and hybrid/multi-cloud infrastructure innovations.

Looking ahead, Matthew believes that the next few years to be significant for the acceleration of AI technology. "By 2025, data creation is expected to double - customers need a new IT architecture that goes beyond the data center to provide real-time business insights and drive transformation," he said.

In this context, the ISG business will continue to benefit from the global ICT infrastructure upgrade. "So we are very excited about the future. I think we are very, very capable of becoming the next $100 billion IT company," the executive said.

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Lenovo aims to be the most powerful tool provider in the generative AI gold rush - PingWest