Lenovo’s ISG Defies Gravity, Lifts Profits High Above PC Challenges

In the fiscal year 2022-23, ISG emerged as a profitable high-growth engine for Lenovo. ISG's revenue soared to nearly US$10 billion, marking an impressive 37% year-on-year growth, accompanied by an all-time high operating profit of US$98 million.
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Lenovo Group announced its full-year financial results today, with Group revenue soaring US$62 billion and net income of US$1.6 billion, or US$1.9 billion on a non-Hong Kong Financial Reporting Standards (HKFRS) basis. Notably, both the gross margin and the operating margin achieved 18-year highs, while the non-HKFRS net margin remained stable year-to-year.

While the company’s device market faced some challenges, Lenovo’s non-PC businesses experienced a significant boost, accounting for nearly 40% of the company’s revenue and marking a fiscal year high. This growth was largely driven by Lenovo’s Solutions and Services Group (SSG) and Infrastructure Solutions Group (ISG), which recorded outstanding revenue of US$6.7 billion and US$9.8 billion, respectively. SSG and ISG saw year-on-year growth rates of 22% and 37%, further solidifying their position as vital growth engines for the company.

In the fiscal year 2022-23, ISG emerged as a profitable high-growth engine for Lenovo. ISG’s revenue soared to nearly US$10 billion, marking an impressive 37% year-on-year growth, accompanied by an all-time high operating profit of US$98 million. The server business witnessed remarkable growth, with revenue surging by almost 30% year-on-year, securing Lenovo’s position as the world’s third-largest server provider. 

The storage division also achieved a record-breaking year, tripling its revenue from the previous fiscal year and jumping from the 8th to the 5th position globally. Additionally, software revenue grew by an impressive 25%, setting yet another record for Lenovo.

Lenovo and AI

To gain deeper insights into the business landscape and opportunities in India, Analytics India Magazine recently reached out to Amit Luthra, the Managing Director of Lenovo ISG in India. Luthra emphasized the pervasive presence of analytics in today’s world and its impact on optimizing distributed workloads. According to him, Lenovo’s entire approach revolves around analytics, as technology now goes beyond adopting the latest tools and streamlining operational inefficiencies.

In Luthra’s view, technology is now primarily focused on extracting valuable insights from data. To make informed decisions, organizations require a robust analytics framework. Luthra believes that analytics is driving the emergence of new applications, workloads, and use cases. He notes that data is growing at an unprecedented rate, emphasizing the increasing mainstream adoption of analytics.

Lenovo has over 1000 Infrastructure Solutions Groups (ISGs) dedicated to analytics. Their role is to provide cutting-edge platforms and empower software and application vendors to leverage Lenovo’s infrastructure and run their precise insights on top of it. Lenovo does not aim to compete with these vendors or develop its own AI algorithms. Instead, the company strives to offer affordable platforms that enable them to effectively utilize their own technologies.

Lenovo in India

According to Luthra, organizations in India are progressing in their maturity cycle and becoming more proficient in classifying workloads and determining the most suitable storage location. They consciously choose between public and private cloud solutions based on their specific requirements. 

Luthra points out that approximately 50% of businesses in India are scaling their infrastructure through public cloud solutions, based on data from IDC. The adoption of public cloud services and the storage of data within them, whether in private cloud environments or on-premises, follows a split of roughly 50-50 or sometimes 55-45 or 60-40, depending on the quarter. This trend reflects the classification of data based on specific service level agreements (SLAs) that need to be met.

Luthra personally believes that a hybrid approach, combining both public and private cloud solutions, is the way forward. This sentiment aligns with the data management playbook developed by Lenovo, which involved interviews with numerous customers.

Overall, Luthra observes a positive trend in the adoption of technology, including hybrid solutions, in the Indian market. It is no longer just about storing data; it is about how organizations leverage that data. “Even Tier 2 and Tier 3 cities are experiencing high adoption rates of hyper-convergence, data management, and cyber recovery solutions,” Luthra said. 

He said that the organizations now recognize the significance of having the right platform and strategy to effectively manage workloads. “They understand the importance of an architectural framework that enables the delivery of valuable insights to decision-makers,” he said.

Luthra finds the Indian market incredibly exciting, brimming with opportunities. When engaging with customers, he says that the biggest challenge often revolves around integrating existing infrastructure and technologies with new solutions. Lenovo says that the goal is to add value by facilitating a seamless coexistence and assisting customers in creating a framework that addresses both their traditional and cloud-native workloads.

“Many customers actively seek solutions that bridge this gap, and Lenovo aims to provide them with the right framework to support their diverse workload needs,” he said.

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