Navigating the Path Forward with Intelligent Transformation
[Music] thank you hi this is Pat Moorhead and we are back for another day of the 6'5 Summit day two we hope you enjoyed day one this is your first time here go back and look at all those videos from day one but uh maybe you should stay for this one Daniel great to see you man here we are another 6'5 Summit another day we made it through day one we did it was a great start really great to hear from Hawk tan who kicked off the event but day two is going to be another really exciting day Patrick and and like you said there's so much content here but the way we've set this up is that people can get it when they want it it's on demand but of course all you that are watching live thanks for tuning in that's right um we have had so many incredible topics uh so far this week and yeah I maybe have some personal favorites when it comes down to uh the multi-cloud but infrastructure is hot infrastructure makes all of the consumer applications and B2B SAS applications uh go round and well we just happen to have Kirk with us from Lenovo who happens to run isg for Lenovo Kirk how you doing doing well thanks for having me yeah it's been so much fun chronicling uh your growth here at Lenovo and I think what makes it even more fun is I knew you at your previous two jobs uh uh as well uh and it's been really great to get to know you and see you and get to know your team and you know quite frankly the growth has been impressive and I'm so glad you know you can share bits of wisdom uh talk about kind of where you're headed and and the market is headed so thank you so much yeah thank you yeah it's great to have a new alumnus to our day opening and so you know with that Kirk you know this year was all about kind of navigating what the market had expected to be Rough Waters so our theme of the show after multiple years of wild crazy Innovation and growth frothy Market zerp zero interest massive Investments stock prices with multiples that nobody could ever possibly understand we kind of saw a rebalance now ironically we're Midway into this year of 20 uh 2023 and here we go again new new bubble AI we'll talk about that with you here in a little bit but I want to set the stage a little bit about kind of the macro the overall perspective you as a company have Diversified very much um you know PCS to systems to infrastructure to Services uh you're kind of watching and each part of the business has been affected a little bit differently give us kind of the overall perspective that you have as one of the top leaders at Lenovo of the overall market and then talk a little bit of course about your business and kind of how it's holding up given all the complexities that we're seeing in 2023. yeah well thanks um certainly the pandemic was significant for uh for us we grew 10 billion dollars good business yeah yeah yeah no I I think uh 10 billion dollars of growth for two consecutive years in a row um which was you know challenging for us all and really tested all of our supply chain Acumen uh the last year was great for infrastructure we just got done with our uh fiscal year end at the end of March and grew 37 year on year uh PCS are still digesting from an inventory perspective but we're confident it'll get back to growth in the second half of this year as people consume their inventory but we kind of look at the activation data on that side and know that it's much better than the actual the sell-in into our channel so we're confident of that and then as we've got a diversified growth engine now 40 of our business is actually non-pc so the phone business from Motorola we're hoping to be the third largest phone company outside of China and then the infrastructure growth you know the fourth quarter we do 56 percent so we can talk about that but Lenovo overall we're trying to diversify into a Solutions and services company taking advantage of the supply chain we have but building into uh to more of an end solution provider yeah it has been uh incredible to watch and I had a relationship with Lenovo previously named Legend uh back when I worked for a chip company and it really just it started off as a PC company right no apologies did Super well uh buying up the IBM server business and then the Motorola Motorola smartphone business and there were a couple years where it's like wow this is this is kind of challenging here uh company's credit um growth in smartphones like you said number three outside of China coming up uh and infrastructure I mean it really is I mean the tens of billions of dollars growth uh engine there in a market that isn't isn't going up into the right from a market growth so you're obviously taking share taking share different servers taking sure in storage some of this market growth and I you know it's funny sometimes we talk about data being this new thing I mean when I started my career over 30 years ago we were talking about data okay it was smaller data it was harder to manipulate uh inside of you know big monolithic databases but but it was there and people were trying to take advantage of it here we are over 30 years later or maybe two percent of that data is is being acted upon right whether it's analytics whether it's AI machine learning generative AI still two percent what is lenovo's play in this uh essentially the 98 of business that were not the amount of data that we're not doing anything with yeah so I think in many ways we're very early in the stages of infrastructure because the data we're looking at the amount of data in the world will double actually in the next three years whereas you said we're only Computing two percent of that data today so when we're looking at this AI phenomenon we're looking at it number one is the world's largest super computer company more of that driving to AI for things like cancer research and weather prediction and these kind of things so congratulations and picking up a few more incremental spots this year on the top 500. yeah thank you and it's something we've definitely focused on over the last several years um so we think about AI from a super competing perspective we think about it from a digital twins perspective we're building as Jensen said in the GTC keynote uh one of the largest ovx clouds in the world along with Microsoft and Nvidia as we see manufacturing kind of being revolutionized with digital twin infrastructure and then from an edge perspective we created a new Edge division two years ago where we have now this think portfolio we're moving AI to where the data is versus data going to where the AI is so 75 of that data we think will be computed at the edge and that business for us is growing over 170 percent year on year right now as we move that that compute to the edge so you can't really talk about data and AI without talking about the the probably most prolific and expedient Trend that I've seen in my career now my career is not as old as yours thanks buddy yeah I just want to call that out thank you um but I bet it's called wisdom I'm multiple decades in now and I've never seen anything proliferate as quick as generative AI so we've been talking about AI for a while we talked about AI because we've been you know on the big data Trend we've been on the analytics we've been on the ml we we've we all got this but this was coming but the inflection has been wild I mean back I think I was asking a friend just the other day I said back in October of last year have you ever heard of generative Ai and you know just the average person's like no it's like so within six months basically in six months you went from nobody ever heard of it to it is the biggest thing on every News Channel every TV program every you know and so I have to imagine a company like Lenovo is looking at this and saying it's going to reshape our business it might reshape everything from how you design a PC to how you're going to supply infrastructure to hyperscalers uh to how you build uh the next super computers talk a little bit about first of all your perceptions of the trend and then second of all I would just kind of like to understand how does Lenovo at least at this early stage for C generative AI being part of its growth yeah well one of our benefits is we say we're pocket to cloud or Edge to Cloud because we have the phone and the PC business it's the world's largest PC company but we're also selling the a to the top 10 hyperscalers in the world and we're getting the perspective as the largest super Computing in the world so we have a lot of different perspectives here um I would say if you look at at uh AI over over time probably a little bit overhyped but you know um no doubt that growth is is incredible like a little or a little I'm just curious well I would say it's the lead conversation we can do the the AI and the cloud all the way down to the visualization from us as one of the largest workstation providers down to even uh you know different phone applications and PC applications that we're seeing so definitely prolific you know the areas we're seeing in it on retail manufacturing Healthcare you know we're one of the larger call centers in the world and we just had a review with uh some data from Stanford and MIT where they're saying we can get 14 productivity out of our call center just by using more generative AI we're working with fast food chains around the world to automate their drive-throughs work on food safety just how long is the food there before it becomes an issue automating you know the Friars of fast food you know all the way up to predicting you know energy and and modeling all the 5G networks that are going out around the world so it is pretty prolific I don't think I need to tell you guys that but we're seeing it from all different angles so let's not forget about the edge when we're talking about Ai and I know that you know the edge most the training is done in a very large data center most the inference is either done in a data center or on the edge and depending on your definition of the edge right some people want to look at it as the the PC and devices some people want to look at it as the data center edge where it's more managed at retail at fast food smart Transportation smart warehousing I'm curious do these two worlds uh Collide in in areas I I know they do today in elements like like video but as we look into the future and the applications and the customers that you're working with are these two playing off of each other even more in the future yeah I mean definitely we see a hybrid Cloud world and again this Edge to Cloud that we've built we're a unique company in that in the infrastructure side 50 of what we do is on-prem and 50 is in in the public Cloud so we have this odm plus model that we can talk about where we're basically an odm building custom designs for the public cloud and their AI requirements all the way down to the edge when we built our our think Edge portfolio we wanted to combine five different divisions into one so we think we're the simplest company to work for there right um but anywhere from like an atom based smart sign or kiosk all the way up to a four GPU Edge server that's doing you know traffic detection or something like that in a smart city so I think it's going to be a hybrid Cloud world for sure and we're kind of putting together our Services Group now also enabling everything through true scale or as a service offering to kind of simplify these Ai deployments and it's not just Hardware from Lenovo right we've done something called lyco and Loca so Lenovo open Cloud automation and being able to you know deploy the hardware say hey I'm a fast food I either have a drive-through I don't have a drive-through I have kiosks in my store I don't have kiosks in my store and then loading that personality directly from the cloud with all that security on board so that's been a huge Advantage leico is about orchestration or what goes to a CPU and a GPU right out there to to help you know Drive the right workload optimization so I would say a lot of our differentiation has been on the software side and the services side to help simplifying this for people yeah can we I don't know if everybody's familiar with your odm plus model but as you said you're in eight of the top ten hyperscalers which is kind of a mine mind blower because people think of this as oh that's that's the world of odms and a and a certain set of of Manufacturers but somehow you've been able to put together not only uh the capabilities the technology uh the offering and and the business model that has enabled you to flourish and drive some serious scale that I'm I'm certain it also helps you on the on-prem and the edge as well because so can you talk about what that is yeah so I think last year we we had uh 30-year anniversary of ThinkPad and think system on our server side and a lot of people don't realize but we do do a lot of our own motherboard design and Manufacturing on the ThinkPad side uh starting with the latest generation of Intel and AMD 100 of our designs are done in-house for both our general purpose as well as our Cloud so with our largest cloud customers you know typically when they're half a billion or a billion dollars will do you know a full Custom Design sometimes they'll own the IP sometimes we'll own the IP um but that enables to build full customization for the largest hyperscalers we do track about 588 next wave companies as well but I guess what's unique about Lenovo is we have 35 manufacturing plants we have 22 million square feet environmental manufacturing so that's why we're able to growth so fast during covid is we had that supply chain flexibility um super excited that we were just ranked in the Garner number eight of the top 25 Supply chains in the world um us and Schneider are the top two headquarters outside of the U.S and we're number three in all of Tech so that odm plus means design we can do a motherboard we can do a system we can do a full solution in some cases we're even designing the data centers for people now in the cloud it's ironic how unique that is today to be vertically integrated in this space because and I you know I was part of it we were parceling uh everything out but I think if nothing else during the the pandemic you really showed who could deliver the goods and who couldn't right so my favorite quote is DreamWorks you know we're doing all their movies for them uh on our warm water cooling Neptune technology they said we couldn't buy toilet paper but we could get in the super computer installed on time here in the US so so that was a great quote from them so it says something about a well-run supply chain and trust me as we work through the pandemic and out on dozens of investor and earnings calls to hear what was going on we certainly saw that there was a Continuum of very well run to very less well-run Supply chains and and winners and losers were decided during a period of time you said Cloud um and you know you know Kirk is someone that I've had a lot of opportunity to spend time with I've kind of heard how you think about the business Pat and I like to talk about the hybrid multi-cloud quite a bit and that's a big theme within isg I am sort of curious sort of how do you see this all playing out we've got this kind of you know I know we talked about the AI arms race but we kind of have this Cloud debate that has not yet been settled if it's going to see more and more workloads you've heard things like repatriation you hear things where hyperscalers are building you know racks and shipping them on on-prem making them you know not only your client but in some ways a you know competition how do you see the cloud sort of shaking out over the next few years um is multi-cloud the you know going to be the kind of outcome of the future I'm just kind of curious your take on that well we definitely believe in a hybrid Cloud world and I would say you know our vision for my division is to be most trusted so we're being customer first we definitely see some customers you know needing to deliver an on-prem private Cloud we see some customers wanting to move we're close to the public cloud and then obviously the trend has been hybrid Cloud so we're very neutral in that we have a open honest conversation with the customer we have true scale as a service where everything available from lenovo's available as a service and that's growing for my business you know over 600 percent year on year so we can deliver devices a service all the way through a hyper-converged infrastructure is growing you know dramatically our storage business has been growing dramatically from all from a hybrid Cloud perspective because if we if we look at that you know it's really customer choice but if you look at our storage business we've gone from number eight to number five of global storage but we're also number one in the entry storage under 25k which is about 60 of the units of storage out there so we can deliver cloud-based storage we can deliver you know on-prem software defined hyper converge or traditional so that's just an example where we're probably very unique in the industry that we spam and you know such a broad range but the end end result I think is going to be a hybrid Cloud world if you want cloud-like economics we'll have true scale if you want to move to full custom in the in the public Cloud we can have that as well yeah it is interesting how you benefit regardless right you you benefit whether it's in the hyperscaler public cloud or it's on Prem or on the edge because you have it you have it all spread across there so one thing I know we're also in agreement on is it takes a village right the hybrid multi-cloud requires a lot of Partners okay if you're going to make uh connecting Cross Public cloud and you're going to be connecting from the public Cloud to the private cloud and to the edge you're going to have to have Partners right uh and that's really been your heritage right one of the things that that you've really pointed out is your software Solutions especially and also your ability uh to leverage the channel uh you know for boxes for Solutions and all that and I'm curious what are some of the newer opportunities opportunities for your partners uh going going forward that are getting them excited or or you have on your mind right now yeah so I think part of our most trusted vision is we're Channel first and uh you know well over 90 of our business you just take the tier one Cloud out is going through our Channel Partners uh but you know we know in the Enterprise especially you can't do this alone so we're trying not to compete with our core software Partners I mean we're proud if you look back over the last couple years we were vmware's Innovation partner of the Year twice in a row we were in uh nutanix's go to market partner of the year or Microsoft's device partner of the year last week we were veeam's partner of the year so you know I think that's really resonating with people that we can bring solutions to Market uh most recently we we had a relationship with weka around distributed file systems for high performance analytics and and AI so I think our partner ecosystem is probably the strongest both from our go to market Partners Downstream with system integrators with Channel Partners as well as our ISP partners and I think by the way this is you know editorial here but I think when it comes to hybrid multi-cloud customers are going to look for partners because I don't think there's any way they can handle the velocity of of the options and you know whether you pick you know a certain Cloud for a certain application or based on the country that you're in or you make an acquisition these companies need people to to pull this all together and I'm increasingly believing that and not just from a software partner point of view but from a channel partner point of view even if they're you know some of the big multinational uh firms the world is just getting so complex and last time I checked there's going to be no magic API to share services and data between all the big uh hyperscalers out there so I like that I like that direction and I think you've been pretty steadfast on it too when I've seen a little bit of wavering back and forth maybe over the last five to ten years and okay you know should I take this direct oh I have to take this direct even though it used to be maybe partner Focus the previous five years because in this market consistency matters especially you know quite frankly Lenovo comparatively is relatively new to to the infrastructure to the to the infrastructure game so I'm seeing some of the positive elements of it uh external and hopefully you can you can keep keep the ball rolling because I know it is a is a trade-off between uh ownership one throat to choke profitability the ability to deliver a complete system yeah we moved our Solutions and services groups report directly to our CEO kind of as our 3s we have the smart devices we have the smart infrastructure and then we have Solutions and services and within that we have three towers we have the maintenance you know business where we're you know break fix break fix warranty we have managed services with truescale and then we have Professional Services and the Professional Services space we're very much just trying to fill the gaps out across all of our partners and simplify the complexity of all these Solutions we've talked about today yeah so we're down to the last few minutes here with you Kirk and and I just want to thank you again for being part of our our day opener here on day two um I always like to ask the macro questions it's just kind of my thing you know we've talked a lot about the business and and it seems there's a lot going on but a lot of these things are going to affect the way you run your business meaning you know we talked about the hybrid multi-cloud we talked about generative Ai and AI we're talking about you know you've got a global company with employees all over the world I'm just kind of curious what is your sort of feel about running a business in an era of generative AI with work from anywhere kind of how are you thinking about leading the team to the next wave of growth and and you know are you optimistic overall about kind of you know how technology will continue to drive the economy well I think Lenovo is a very different company than it was a few decades ago right now more than 40 of our business non-pc so it's the Diversified growth engines that's helping us sustain the growth we've been on um but from a pure leadership perspective I think it's been about hiring kind of a a global set of leaders we're in 180 markets now you know North America is our fastest growing uh and largest market now but it's very Diversified you know pretty much where the the total available Market is so that means we've had to have kind of a global local approach we want to take our 62 billion dollar business and all that procurement power we want to negotiate with our suppliers to give and pass that through to the to the End customer but local we want to look very local you know work with the governments work with the manufacturing you know um and the leadership team to really understand the local market so if you look at the makeup of you know who we are as a company it's very Diversified from Chip companies to systems companies to software companies that makes up my executive staff and it's also globally Diversified there's just too much change sure happening in the world that you know I think one of the best things we have going for us is velocity that we're able to kind of understand the End customer Trend and then very quickly turn it into um you know into solutions for our customers what about sustainability I know that's been a big Focus within Lenovo can you talk a little bit about what you're doing there sure I mean obviously we're a global operation in 180 markets and we're controlling 35 manufacturing facilities so it's a huge topic for us we're very proud that we were just ratified by the science-based Target initiative on our 2050 Net Zero goals so from a overall you know science-based gratification of what we're off doing I think there's good progress there from us I think we were the first PC company in the world to do that from a product perspective I would say that the major Trend that we're seeing now is around just how do you reduce the power especially around all these AI models we talked about and our Neptune warm water cooling technology now is delivering 40 lower power and we're seeing that proliferate first it started in super Computing but now it's getting into you know any place where energy is a big Focus area we're seeing a huge amount of warm water cooling technology as well and then just looking at packaging right how do we go put all this together from bamboo packaging and vegan leather and and all those kind of things around our products as well so it's a huge Focus as it is for all of us and we've got a good story I think will you be writing emails back to me or will they be written by your generative thought I'll test five and you tell me which ones came first and which ones for sure yeah sure thanks so much for uh making this day special and and bringing your wisdom your experiences and again it's really great to catch up with you uh so often and have known you for for so long I don't know what that adds other than maybe trust or or yeah I mean it still matters at 90 1996 I think was the first time we met but uh it's great to see you this many years later kicking butt at levels that uh you know I would have expected when I met you uh the first time and Lenovo is very lucky to have you thank you and congrats on the summit it's been growing as well appreciate it yeah yeah thank you so much all right here we go with day two we really appreciate everyone tuning in remember what we said all these sessions are available on demand so feel free to check in and watch the videos from yesterday but we also want you to stick with us today we've got a lot of great sessions today we've got more great sessions tomorrow thanks for tuning in we'll see you all really soon [Music] thank you foreign
2023-07-04 10:58
