In early September, Dell and HP both announced that they would begin carrying Microsoft’s Surface Pro family as part of their business product divisions. The terms and nature of the agreements MS reached with both companies are unknown, but we do know that Dell is bundling its own services and warranty support with the hardware, and HP will presumably follow suit. Now Lenovo’s president and CEO, Gianfranco Lanci, has told the Register that Microsoft approached his company, too — only to be sent packing.
Speaking at the recent Canalys Channels Forum, Lanci told the Register that “I said no to resell their [Microsoft’s] product. [Microsoft] asked me more than one year ago, and I said no I don’t see any reason why I should sell a product from within brackets, competition.”
At first glance, it might seem insane that Dell and HP would sell Surface’s, but the move to do so actually underlines just how terrible the PC market is. Dell and HP’s net margins are typically in the 3-5% range, and while business machines likely make better profits, these aren’t the $3000 workstations stuffed with Quadro or FirePro cards. Both companies rely on service plans and long-term agreements as a significant source of revenue. Hardware sales in the business segment are often a vehicle to drive lucrative products, not the lucrative products themselves. That said, neither company was thrilled about it — HP’s Dion Weisler told the assembled crowd that HP sales personnel would not be paid for selling Surface Pro and that ” “we will sell, service and support Surface if the customer absolutely insists upon it but that is not our first preference.”
Surface sales were fairly strong through the first quarter of this year (Microsoft combines Surface with other product segments, which makes it difficult to break out). The company’s recently announced Surface Pro 4 and Surface Book have both been well-received, but that’s likely why companies like Lenovo are deeply wary of jumping in bed with Microsoft. Redmond claims that it didn’t get into the hardware business to make money, but because OEMs had done such a miserable job of promoting PC hardware that anyone would want to use (Ballmer didn’t exactly use those words, but the point came through).
Ironically, the only hardware I’d ever recommend purchasing from Lenovo would be equipment with someone else’s brand on it. Lenovo’s Superfish debacle created the worst security nightmare in the PC industry since Sony’s rootkit disaster ten years ago. As recently as August, it was caught shipping laptops with crapware installers that could reload certain products even after a completely clean install.
Lenovo may feel that it can afford to flex its muscle; the company is making moves into phone technology and is the largest system vendor by volume. Then again, the products affected by the company’s shenanigans have all been consumer hardware — Lenovo’s business customers, who presumably buy Thinkpads or servers, haven’t been impacted.
