We just came out with our ThinkCentre Tiny, the smallest desktop out there. We're a leading all-in-one player; all-in-one has become a bigger part of the desktop market. So we're investing in desktops and growing desktops and driving innovation in desktops, which I think differentiates us. Between IdeaTab [tablet] and ThinkPad, the numerous products we've come out really keep our leading edge. So we're doing well around innovation, but innovation is more than [just products].
Last week we announced U.S. manufacturing coming to North Carolina. That's an innovation for us and it will be a key differentiator for us long term, not just because we have a U.S. manufacturing plant, which will resonate with people as a good thing by itself, the way green resonates with a certain part of the audience.
But I'm equally or more excited about bringing the teams together, pulling the manufacturing side together with the product development teams and the marketing organizations and my team, and asking what can we actually do within the four walls? How do we come up with creative services that make sense to [deliver] in the factory and differentiate the customer experience in a way that others can't compete with because their supply chain is outside the U.S.?
I believe I'll be able to come to market with innovative ways to deliver things that customers will value. That will offset the slightly higher cost of manufacturing. It is slightly higher, but I'm betting that there's enough value there that at the end of the day the value either through services or the value from a velocity standpoint that I bring more people into the Lenovo family, will offset the slightly higher cost of manufacturing.
Q: I was going to ask you that. I mean is it good economics or good politics to build...
A: It's economics. I'm a bad politician, so I wouldn't do well running for office.
The world of possibility in front of me is 93% of the market. And I stand back and say -- okay, how do I get at those? People who are already buying Lenovo, loving Lenovo, are going to continue to buy. We've got high brand loyalty, especially if you look at the enterprise customers, as ThinkPad has been around and is consistently a strong brand name in that space. But what I need to do is get other people who aren't in the Lenovo family excited about Lenovo. U.S. manufacturing may get a foot in the door. But to me it's the services.
I want to make sure I have a differentiating customer experience, not just that I have a plant here and I employ people. Don't get me wrong, as an American I'm very proud of that. In this economy any time you can talk about jobs, the fact that we had Democrats and Republicans on the same stage with us doing this now, it's a feel-good factor. But being a business leader I've got to make sure at the end of the day I've come out with something you as a professional want.
That's my challenge and I actually fundamentally believe there are services out there that can more than offset the fact that it's a slightly higher cost. It's not dramatically higher cost, but it is a slightly higher cost. And so I've got to get people to value services I can make some money on to offset it, or if I get to 10% or 12% market share because people value this along with the services, that will more than pay for the higher manufacturing cost. So it's both a velocity play, believing I can bring more people in. At the same time, it's a services play to offer things that you can't offer because the factory isn't in your [four walls], right?
Q: You said you weren't a politician but you very skillfully deflected my question about HP. Is there an opportunity now because of their flip-flop on first selling off the PCs group then not selling it off that creates a different mindset among the enterprise buyer at this point?
A: What I think is any time, regardless of the company, any time you create uncertainty for your competitors there's always a potential advantage. But at the end of the day at Lenovo, we've got to focus on what we do well and not get distracted.
I've been in this business a long time and I've worked for multiple players in this business and the key is when you're having success, never become arrogant. Never expect that success will always continue. Because the minute you think that, Murphy's Law takes over. Our competitors may have good quarters and they may have bad quarters. They may do some things that are great and they may do some things that are not so great. And every time there's an opening, of course you have to go take advantage of the opening, that's just business. That's why we come to work.
But what you've got to do is focus on what you do well. What you can't do is get overly focused on the goodness or the badness of what your competitors do because that will distract you. Your success really has to be about hitting your message hard, delivering on your value proposition. If the competition isn't performing as well at the moment in time, you're going to bring people into your family.
In our business we win a lot of bids and we lose a lot of bids. We're professionals. There are some times we will lose customers. But what I tell my team is that you don't get pissed off. You treat that customer as well as you ever treated them, even though you lost the business. Because when our competitor drops the ball the first time, I want that call to come right back to Lenovo and I get our opportunity to re-engage.
It's no different here. I don't want to get arrogant, I don't want to have hubris, I do not want to talk down. At the same time, I'm not going to show the competition any quarter. I'm not going to be nicer to them because they may be having trouble. What I'm going to do is seize every opportunity I can, but I'm going to focus on what we do well. I never walk into a customer and say they need to do business with us because X, Y or Z company is having trouble. That means you're arrogant.
Q: I want to talk more specifically about what are you doing to help IT leaders deal with this consumerization trend in terms of things to help manage, control and deal with all of the changes that they're facing?
A: There are two things. One centers on our ThinkPad and our ThinkPad Edge line -- Edge being geared more to small and medium business. We're trying to make those products more consumer friendly, as we talked about earlier, but still keep the guts. IT professionals need all of the things that they've always needed. They need to bring secure products onto their network. They don't need to worry about data and security and viruses. They want some control.
But we clearly hear the pressure from the end users -- hey, I have these cool devices and I want to bring them onboard. What we're trying to do is to give them choice. We're trying to make sure our products, specifically Edge and ThinkPad Classic, appeal to that end user and they say: 'Hold up, why haven't you looked at the X1 Carbon [ThinkPad X1 carbon fiber ultrabook]?' I know you're talking about X product, but why not this one, it's the lightest weight ultrabook out there, really cool sexy design, does everything that you would ever do on any consumer box. Why isn't this one the one you want?
We're trying to make it appeal to the end user from the look, the feel and the design. At the same time, even if you look at our consumer products, we're trying to make our consumer products robust in reliability and durability.
Hopefully over time, with our new products coming out, there is an alternative that meets the requirements of enterprise professionals. They can put it in front of the end user and say: 'Now, why doesn't this meet your requirements?' That's the battle I think we have to fight.