Our objective is to grow non-PC revenue: Lenovo’s Pascal Bourguet

Lenovo has traditionally been seen as a PC company. How are you balancing that core strength with the growing momentum in non-PC solutions? 

We are currently one go-to-market, serving three business groups. In the past, we have been hardware and PC-centric but are evolving towards also being a services and solutions company. In Q1FY26, our non-PC revenue grew to 47 per cent of the total revenue, driven by the infrastructure solutions group (ISG), which we grew 36 per cent YoY after significant growth in the cloud service providers and the enterprise-SMB space.

This PC business has three segments — consumer, which is roughly 40 per cent of the volumes, SMB at 30 per cent and the enterprise at 30 per cent . Our PC business has performed strongly in recent years, with nine consecutive quarters of positive premium-to-market. According to the latest IDC data, we hold a 24.6% market share, and our profitability is 1–2 points higher than that of competitors.

How does the hardware–software split look globally versus in India? Is hardware still dominant here, or are you seeing stronger demand for software solutions from enterprise and SMB customers?

Pascal: Intelligent Devices Group (IDG) has PC and phones. ISG has infrastructure and storage, while SSG is Solutions and Services. The PCSD business unit has visuals, dockings, workstations, and accessories, which are hardware-made but non-PC related. Mobile phones are a growing part of Lenovo, which is mostly hardware, with a small portion of services.

The infrastructure segment is primarily data centers, with some contribution from storage. Our penetration rate is probably in the 20 per cent range on infrastructure. On the PC side, our penetration rate globally is below 10 per cent . In Q1, the group revenue was $18.9 billion, of which IDG was $13.5 billion, ISG was $4.3 billion, and SSG was $2.3 billion. This would be at a 60-25-15 per cent split.

Arvind: In India, non-PC growth is leading the overall growth, largely led by the infrastructure and SSD.

Are you focusing on growing the non-PC business, or will you retain the current balance?

Pascal: The objective is to grow non-PC revenue. AI has a TAM of approximately $2 to 4 trillion today, of which only a small portion is related to hardware.

Lenovo’s long-term ambition is to be the global IT powerhouse, meaning we need capabilities in businesses around AI in general — whether it’s PC-related, hardware-related, infrastructure-related, or service-related. AI agents are where the company wants to go. Tianxi is a personal AI super-agent.

In the hybrid AI infrastructure strategy, the enterprise AI super-agent is Lexiang. We want to provide hardware, solutions, and services that support personal or enterprise AI agents across devices. The strategy is to deliver the end customer a personal AI agent and the enterprise an enterprise AI agent.

To get there, you need endpoints, whether it’s a laptop, phone, visual, workstations, or other hardware layers. Services will maintain the hardware and the agents, while infrastructure, whether cloud-based or hybrid AI-based, will support them. That is the company’s vision.

With SMB and enterprise each at 30% of your volumes, are you equally bullish on the SMB segment globally and in India? 

Pascal: Absolutely. There is a balance between consumer, SMB, and enterprise from a go-to-market and a geographical standpoint. With the market opportunity around digital transformation, specifically on the endpoint side, growth has been quite strong on the consumer and enterprise sides due to post-COVID refresh, Windows 10 end-of-life, and AI adoption.

Those were the major market drivers. SMB growth hasn’t been as strong as consumer and enterprise, but we expect the SME market to stay resilient next year, while consumer and relationship segments may see slower growth. There is a significant market opportunity around AI digital transformation that the Infrastructure Solution Group will benefit from.

Here, we think there is a double-digit growth opportunity, if not more, due to AI digital transformation. Specifically, for SMBs in India, due to the AI digital transformation, there is a bottleneck for data processing – it can’t all happen in the cloud or on-prem servers.

Some data processing and inferencing will have to take place on the edge and on the endpoint. This means that the market opportunity around AI PCs, AI ecosystem, infrastructure or services on the SMB side might be strong.

Arvind: In India, many new startups are falling in the SMB segment. Since IT is a core part of their businesses, those opportunities are always growing. IDC has called out that the SMB growth, in terms of the market forecast, is better than the other two. In India, SMB growth is driven by new business opportunities, while enterprise growth comes mainly from refresh cycles and routine scale-ups.

When it comes to AI PCs, is the growth stronger on the consumer or on the enterprise and SMB side? What share of your volumes do AI PCs currently represent?

Pascal: AI PCs account for 30 per cent of our global shipments, where we lead the market with a 31 per cent share, compared with 25 per cent for overall PCs. The adoption has been stronger on the retail side. On the SMB and enterprise side, we are still working with ISVs around business cases and proof of concepts that will make the usage of AI PCs mandatory.

Within three years, we believe that a large proportion — more than 80 per cent of the PCs will be AI PCs with different degrees of performance. It doesn’t mean that the PCs will be adopted similarly by all the companies in the world. The business case will have to bring more tangible results. 

What’s your current market share in data centers/infrastructure? Are you planning to expand further?

Pascal: There are two market segments — cloud service providers and the enterprise and SMB business. In infrastructure, we hold a 5 per cent revenue market share — slightly higher at 6–7 per cent in servers — though data center volumes are harder to track at this stage.

The plan is a double-digit premium-to-market, which will bring us to a 10 per cent market share. Over time, we will establish ourselves as a credible and leading player in data center, infrastructure, and storage solutions.

How is Lenovo working with its channel partners to drive growth?

Pascal: We’ve been equipping a large proportion of cloud service providers, and in data repatriation, helping customers evolve their AI digital transformation from cloud to on-prem, based on data security, privacy requirements, or regulation. Our strength in terms of technology, from cloud to infrastructure to endpoint with edge, is a strong asset for partners.

A large proportion globally, at 80 per cent , and 90 per cent in India, of our business is going through the channel. From a strategic standpoint, we’ve been evolving our Lenovo 360 channel framework to support partners in growing the infrastructure solution business with us.

They are already strong on the PC side. A large proportion of our legacy PC partners have been shifting with us on infrastructure solutions. While the number of our partners hasn’t changed much,from a revenue standpoint, we have grown high double-digit at more than 30 per cent year to year. This growth has been consistent in the last 2-3 years.