Listeners of the Tech.pinions podcast will have heard me talk about this on last week’s episode, but I wanted to outline some thoughts about what Lenovo’s Superfish problem really says about the company. Tim had a piece on Wednesday, but I wanted to go a little further.
The root of the problem is a lack of differentiation
The real root of Lenovo’s problem here is a lack of differentiation. In the enterprise world, Lenovo has been able to benefit from the power of the ThinkPad brand. In the consumer world, it hasn’t had the same brand to lean on and has instead had to focus on other potential differentiators. But Lenovo suffers here from the same problem that plagues all Windows OEMs — on the software side, they’re all shipping the same thing, Windows 8 (soon to be Windows 10), with all the same features and functions. This obviously pushes them to try to differentiate on hardware, but there’s only so much you can do when the OS is the same and requires many of the same components to make it run. Battery life, screen resolution and other features vary somewhat between devices, but they mostly vary by price band rather than by manufacturer.
All this leads to the relationship PC OEMs have had with third party software vendors. Looking at things charitably, these OEMs are looking for positive ways to set their software experiences apart from competitors (and that’s certainly what Lenovo claimed it was doing with Superfish). Less charitably (but arguably more realistically), these OEMs need these third parties because they help push PC OEMs out of the red and into the black financially. But that’s only necessary because their inherent lack of differentiation doesn’t allow them to charge a premium and therefore leaves them with very low margins. However, the software they do pre-install doesn’t actually differentiate them in any positive way, while Microsoft is ironically able to command a premium for the Windows devices it sells without any third party software pre-installed.
Parallels with Android and lessons from Motorola
There have been lots of stories over the years about the parallels between Windows and Android – two platforms which dominated market share while Apple took minority share but most of the profits. I won’t rehash the parallels here, but there is one specific area in which Lenovo’s problem in PCs could benefit from its subsidiary Motorola’s recent success in Android smartphones. Motorola has differentiated some of its recent phones on the basis of stripping down the user interface to the barebones stock Android experience, while focusing on adding real value through software innovations of its own. This is just the kind of thing Lenovo ought to be looking to do on PCs too.
Windows PC vendors have struggled for years to add real value to PCs with their own software, and the reason is simple: none of them is a software maker by background and all come from a pure hardware heritage. Apple remains the one computer maker that successfully sets itself apart on both its software and hardware, and a large part of that success is down to the tight integration between the two with related services. Stripping down the pre-installed third party software is only part of the answer. Lenovo needs to find ways to provide real value through its own, exclusive software above and beyond what Windows itself provides. This is going to get tougher as Microsoft builds more functionality into Windows in Windows 10: Lenovo has experimented with different “modes” for its Yoga laptops, but that will now be taken care of by Windows 10 itself. And Windows 10 will also come with some Office functionality built in.
Lenovo has built some of its own software in the past and currently pre-installs this with some of its devices. But this software is largely along similar lines to the third party stuff PC OEMs have traditionally bundled. It’s naggy, not very useful, and clogs up the machine. I don’t think Lenovo, or any other Windows PC OEM, has the wherewithal to successfully develop its own software today. But, as Microsoft is demonstrating, it’s certainly possible to acquire good software makers if you’re so inclined. Lenovo has been very focused on hardware acquisitions, building scale and, to some extent scope within that narrow sphere. But I think it’s time it started making software acquisitions. This is going to be a key area for future differentiation, both on the PC and on the smartphone, and Motorola has made a decent start on the smartphone side. But it’ll take a far bigger investment in software to really set Lenovo apart. As long as Samsung continues to try to do this organically, I think there’s an opportunity for Lenovo to really do something different across both its major hardware categories.