SME Toolkit

From IBM caterpillar to Lenovo butterfly?

Andrew Donoghue ZDNet.co.uk

Published: 29 Sep 2005 17:10 BST

Lenovo's acquisition of IBM's desktop division for £920m last December may not have been the most expensive deal in the history of IT buy-outs but it caused political waves unprecedented in the technology industry.

Selling a key chunk of one of America's oldest tech firms to the Chinese had US senators crying foul and trying to block the sale for fear that the world's policeman may lose some of its technical advantage.

But despite the protests, the deal was approved by regulators in May. Based on both companies' 2003 sales figures, the joint venture will have an annual sales volume of 11.9 million units and revenue of $12bn (£6.8bn), increasing Lenovo's current PC business fourfold.

That's the theory anyway. The reality is Lenovo faces a tough transition period to integrate IBM's international heavy-weight enterprise-focussed business with Lenovo's Chinese consumer brands. Rather than concentrating on one sector, Lenovo is hoping to provide the complete range of PCs from low-value consumer machines to high-spec business equipment.

ZDNet UK met with Lenovo's UK managing director Gareth Hansford to discuss plans for taking on HP and Dell, and hear about the new technology that will drive the PC market for the next six months.

Interview highlights:

On moving away from just selling to businesses:

"There is a low-end notebook market that we just don't compete in today with our Think products — with our Lenovo products we expect to be able to do that from the beginning of next year."

On the X41 Tablet PC:

"You might say that we are a little late getting to the market with a tablet but when we did it we brought out something that is the thinnest, lightest, has the longest battery life – the most highly rated tablet in the market."

On Linux:

"We do work with some of our larger enterprise customers with Linux and in those cases we do offer it preloaded to them."

On whether the release of Windows Vista will lead to more evaluation of Linux:

"Every time you give people a change point like that then they will probably take the opportunity to consider their options, and Linux could come out as strong contender in that case."

Moving from US to Chinese management:

"They have a very considered, long term strategic view for the company; they made decisions within the company with the aim of becoming a global organisation."