Lenovo chiefs chortle over decision to buy IBM's PC biz IBM may think it was a grand plan to exit the PC game by flogging its biz to Lenovo, but the Chinese vendor does not concur, as its Q1 sales rises show. The concerted turnaround efforts continued for the seventh consecutive quarter since Lenovo dumped former CEO Bill Amelio, with sales up 15 per cent to $5.9bn and operating …
It was silly to sell off the home/office hardware division. Even if it was making small or no profit, it spread the brand.
IBM once had huge potential brand placement in homes and workplaces.
People would see the big blue logo whereas now they see "Lenovo" or, more likely, "Dell"
I am sitting here with a Thinkpad, and while it has a tenuous link to the "Think!" IBM campaign and Thinkpads of old, in terms of quality it isn't as robust as the old machines were, and functionality wise it has no real distinctive features. It is like the BMW hatchbacks and SUVs that are marketed as "Mini"s.
As a once-IBM employee, I fear that this generation are the last for whom IBM is a household name. I fear the next generation and the generation after that will not know of the back-end servers and business software that IBM now peddles, and would say "who?".
`IBM once had huge potential brand placement in homes and workplaces. People would see the big blue logo whereas now they see "Lenovo" or, more likely, "Dell"'
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IBM never had brand placement in homes, that was lost long ago to Intel (inside) and (genuine) Microsoft Windows. The name IBM did one time mean something to the busines sector which is where it had its first brief dominance of the personal computer market.
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"Lenovo recommends Windows 7"
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http://www.pc.ibm.com/us/think/thinkvantagetech/rescuerecovery.html
I had a friend had an IBM 386. The monitor and desktop quite clearly had IBM logos all over them.
The other half's sister has one of the last IBM LCD monitors. Every time you use it, the brand IBM is visible.
That is pervasive advertising. Now lost.
Yes I agree that Intel and Windows are the true platform since about 1990 onwards, but it was still possible until a few years ago to buy a true IBM PC.
Lenovo didn't just dump Amelio, they also dumped about 90% of the people they "bought" from IBM. Since then, it's become a business where any challenge is solved by 1-n Chinese-with-a-spreadsheet. And still they haven't even come close to regaining the marketshare position IBM had even during the times of greatest losses.
That is now the nature of the PC business, cost + the lower end of single digit margin
The value is in add-on services, imaging and sysprep. Lenovo have to work with 3rd parties to deliver those value adds. Lenovo's recent partnership with the Stone Group is a prime example of why the margins are so very low. Someone has to make a profit from the value add, and it's obviously not the manufacturer.
@Mondo the Magnificent - As this the overall company's quarterly report, it would include "add-on services, imaging and sysprep" and every other thing and way that Lenovo made money. Microsoft, Intel and AMD marketing monies too. Even after all that, Lenovo earned a profit of $8 on a $400 laptop. And they're happy about that. Ecstatic.
No wonder HP wants out of here. These people are just crazy. When Windows 8 hits this is just going to implode. Much better to get your shareholders to safety while you can. IBM was the bigger winner here, at least getting some money out of selling their PC biz before it was too late and skipping out on exposure to Vista entirely.
There will be more companies in the near future who will lack the intelligence and drive and motivation to push for ideas and profits. This is the wave of the new profit makes.
Forget the people in USA that work there and just sell company to another someplace somewhere sometime. When this does happen and you let it happen then you should go along with the company and never set foot on USA soil ever again.
Watch Ford do this in 20 years.
Ford did this in the 60s and 70s.
I see what you're saying, but think about this: would you, as an American, rather have 10,000 people working in a high-volume low-profit-margin business that is susceptible to small changes in the economic environment, or 10,000 people in 20 new businesses in a variety of industries spending their intelligence and effort on new things that may be more profitable?
The slightly sneering tone of the initial sentence of the article, and some of the subsequent comments, misunderstand what IBM has done. That someone else can claim success with a business you've sold might be construed as proof of the validity of your decision, not evidence that you could have achieved the same thing. IBM is no Apple, and this is a high volume, low margin business that added little to the company's capabilities. Ultimately, it is a testament to IBM's understanding of its purpose as a company that it felt able to decide that this business was not part of its future.
IBM pocketed almost $2bn from selling off a business unit which made comparably little profit. IIRC IBM's revenue to profit ratio is better than 10:1, Lenovo's PC business is around 50:1 - after 6 years in the market. I'm not saying Lenovo isn't profitable, but it is comparatively marginal.
I'd rather invest in the business which nets me a 10% margin than a 2% one. Did IBM make the right choice? Absolutely.
It's a difficult time for hardware vendors, just how do you plan for the next 2 years? What I do know is not everyone is like me and wants to tinker with their machines. They just want something that gets them on line with a minimum of fuss. And so they should.
For Business, it's a bit more difficult, but there is one trend that's emerging and that it's attractive on so many levels to virtualise the desktop so that employees could in theory access the corporate image from anything. For business, running PC's for employees is an expensive distraction. If users bring their own kit in and access securely then everyone's a winner.
For consumers, someone looking after the health of their device is a minimum requirement. Why would my Grand Ma want to take an afternoon to clean up the registry. People will pay for this service.
Something 'like' the Chromebook model (though not the Chromebook) is the answer ultimately. You buy a device, log in and your away with all your previous work, photo's, etc . Drop the device down the toilet by accident, no problem, go to a vending machine, get another out, log on and your away. Need to access proprietary apps for work, log on to virtual desk top, multiple Vendor licences for work related applications, that's my employers problem.
So in summary, something with the format flexibility of the Asus Transformer, because you just need a keyboard, a removable touch screen as it's a great way to interact, and sub £200 so it isn't the end of the world when you lose it as all your data is elsewhere. Perfect, but not if you are a vendor as there is little margin. The OS? Who cares, so long as it lets me access a well managed applications market.
The only problem, is that although cloud devices and virtual desktop are here, the infrastructure isn't. WIFI is patchy and painful when out and about and 3G is not much better.
My problems are, I need the combination of;
- I have to use a Lenovo T410 with Win7 and Win apps as that's what my employer needs/wants
- At home I love my Netbook with Ubuntu and long battery life, it's fast, lightish and it just works
- I love my 7" Android capacitive screened device for messing about with and couch surfing
- I have to use a desktop XP/Linux desktop to cope with high end Photo processing
Build quality has been dwindling since Lenovo took over, and then they went ahead and bought NEC and Medion. Two shitty brands with major build quality issues being merged into what will ultimately become the worst, and that is the day the Thinkpad name has died for the last time.
The S series are a joke and most of the T series have to make do with tiny odd resolution displays. Not to mention the total lack of non-widescreen displays since Lenovo took over.
Cutting corners, Lenovo!
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