Blog powered by Typepad
AddThis Social Bookmark Button

« A Chinese Al-Jazeera - Five Reasons this is a Good Thing | Main | The Yin, the Yang, and the Bang-Bang »

February 05, 2009

Comments

Scott Sykes

At the time, this seemed like a sensible merger for both IBM and Lenovo. IBM was increasingly moving away from the commoditized PC business, and despite having an amazing product in their ThinkPad laptop series, found it challenging to make money at it, operationally. Lenovo wanted to expand outside of China, and got some great IP and access to IBM WW sales channels as part of the agreement. Marriage made in heaven right? Maybe not so much. Mergers are never easy, and this one is bearing out. Questionable whether Lenovo has capitalized on the potential benefits of the deal, so at this point it's looking like a much smarter deal for IBM.

Will

Apropos of M&A not being a global marketing strategy, Geely tries to shut down the rumor mill that has been reporting their possible interest in Volvo: https://online.wsj.com/article/SB123382449506651613.html

B

Nice piece looking at the marketing side of the Lenovo retreat. IBM did own the brand name for PCs outside China - before PCs were PCs they were 'IBMs' or 'IBM compatible'.

I'd argue that in the last years of IBM having its PC business that it was well known in the business/govt sectors but not a favourite with consumers. Lenovo made PCs for everyone inside China/region.

Personally I think the new marketing of 'Think' and 'Idea' convey the message about the different PCs for different users well. In fact, maybe better than IBM did back in the day. What Lenovo maybe haven't done as well is convey the message that their products are of the same high quality as the IBM products were (even if it is the same factory/people making the same products)

However, I wouldn't overstate the IBM branding issue over other things which have happened to Lenovo of late:

* The global economic state - recently they cut more than 2,500 staff and consolidated areas like the China and Asia-Pacific business to the Asia-Pacific and Russia business. APAC headquarters moved from Singapore to Beijing.

* The effect of the Acer/Gateway deal making Lenovo 4th in a competitive market.

* Lenovo's relationship in business/govt area post IBM, especially with IBM Global Services contracts/relationships.

* PCs are a commodity market. What's the unique point of difference? A computer running Vista slow, a computer running Vista a bit faster? Aesthetics?

I'm sure there are other reasons but this reply is long enough already and moving into rant stage. But, as you say all eyes will be on the new top brass this year to handle these challenges. In fact, they may just use the cost cutting to look into expanding further - rumours of Lenovo shopping for Brazil's Positivo Informatica have been constant (though denied) and Fujitsu have also been rumoured to be on the shopping list.

Thanks again for a solid read and insight.

Mike Rogero

David,

What you don't talk about is the shift to lower quality post the acquisition. In talking with the General Manager of one of the BlueX repair centers in Beijing (the default authorized repair center for Thinkpads), he was very candid about a significant drop in quality of components and workmanship post the acquisition.

The company's statements that they will focus on the China domestic market which is known for its focus on low prices, obviously a tradeoff to quality speak to the reasoning behind this reduction in quality. The statement of changing the focus to the consumer segment instead of the corporate segment that IBM's brand was built on leads to the same conclusion. Lenovo paid for a brand which meant "quality and reliability" at the top end of the market and the price range, and is turning it into a cheap consumer brand with quality to match.

Could there be anymore misalignment of brand and product plan than this?

Mike Rogero

David,

What you don't talk about is the shift to lower quality post the acquisition. In talking with the General Manager of one of the BlueX repair centers in Beijing (the default authorized repair center for Thinkpads), he was very candid about a significant drop in quality of components and workmanship post the acquisition.

The company's statements that they will focus on the China domestic market which is known for its focus on low prices, obviously a tradeoff to quality speak to the reasoning behind this reduction in quality. The statement of changing the focus to the consumer segment instead of the corporate segment that IBM's brand was built on leads to the same conclusion. Lenovo paid for a brand which meant "quality and reliability" at the top end of the market and the price range, and is turning it into a cheap consumer brand with quality to match.

Could there be anymore misalignment of brand and product plan than this?

The comments to this entry are closed.