The News: Lenovo recently announced a strategic partnership with PCCW Limited to form PCCW Lenovo Technology Solutions Limited (PLTS) targeting the higher-margin IT services market in the Asia-Pacific region. Read the full Press Release from Lenovo here.

Lenovo Expands Higher Margin IT Services Strategy in Asia-Pacific with PCCW Lenovo Technology Solutions

Analyst Take: Lenovo’s move to expand its higher margin IT services in the Asia-Pacific region by way of a strategic partnership with PCCW Limited, forming PCCW Lenovo Technology Solutions is no surprise, and something I view as a solid move for the organization. In early 2021, the company announced the formation of its Solutions and Services Group (SSG), a unit designed accelerate Lenovo’s services transformation that included isolating key vertical markets with products (e.g., servers, enterprise storage, etc.) and as-a-service solutions such as Device-as-a-Service (DaaS) and TruScale to name a few.

Based on PCCW Solutions’ vertical focus and solution competencies, coupled with where Lenovo intends to pivot, I see this as an excellent move for Lenovo. From a market size and growth perspective, the IT services market in the Asia-Pacific region is large and rapidly-growing. PCCW Solutions has been noted as a key player in the areas of system integration and custom application development, and the company has also isolated vertical markets such as financial services, communications, hospitality, public sector, retail, and logistics.

All of the aforementioned vertical markets are extremely data intensive and have strong needs to be digitally transformed based on the market forces they are exhibiting. And this is where the strategic partnership between Lenovo and PCCW forming PCCW Lenovo Technology Solutions makes so much sense. In the retail vertical, for example, this has the potential to accelerate the growth of Lenovo’s ThinkSystem high-density servers and ThinkEdge server lines as firms in this segment want to harness the power of artificial intelligence to amplify their in-store marketing strategies as they face pressures form notable online retailers. My expectation is this will also drive demand for additional consulting and outsourced services in segments like physical security and analytics-as-a-services for the PCCW Lenovo entity in the future, which creates further opportunities for PCCW Lenovo and its end clients in a number of ways, not the least of which is helping thwart costs, coupled with margin accretion strategies.

I see the newly formed PCCW Lenovo Technology Solutions as an excellent move for Lenovo since it’s a continued pivot toward higher margin segments and an alliance that also creates further entanglement and opportunities to serve their end customers, coupled with the ability to drive Lenovo’s hardware and as-a-service business. With Lenovo’s strength in the high-performance compute segment alone, it also makes sense that this alliance with PCCW should drive growth for Analytics-as-a-Services in the future. I believe we’ll see a continued increase in the number of organizations seeking to harness the power of data, and many will be looking to outsource analytics — they’ll need partners that can help them operationalize those strategies. I anticipate that Lenovo will continue to seek similar acquisitions or partnerships in the future in other regions, since most multi-regional organizations want partners with local presence. I look forward to watching Lenovo’s success focusing on and delivering IT services — both in this PCCW Lenovo Technology Solutions venture and beyond.

Disclosure: Futurum Research is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.

Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum Research as a whole.