History of the Global PC Industry1970s - IBM introduced its first PC.1982 – Compaq made $111 million in its 1st year cloning IBM PCs1983 – Compaq raised $67 million in an IPO.

launch of software program LOTUS 1-2-31984 – Dell entered the market by offering customized PCs at a lower price.1990s – Internet boom, Microsoft and Intel set the standard for the PCs

Consolidation 2001 – HP acquired Compaq for $20 billion.2004 – Gateway acquired eMachines for nearly $290 million,

creating a company with 7% market share in US.2004 – Lenovo acquired IBM’s PC division for $1.75 billion.

Market Share2004

Dell Hewlett Packard LenovoAcerFujitsu-SiemensOthers

50.8% 17.9%

15.9%

8%

3.6%3.8%

2005

49.8%

18%

16%

7.7%

3.8%4.7%

The Rise of LEGENDDuring its 1st 20 years it evolved from a small distributor of imported computers into China’s leading

computer firm

In 1984, Chinese Academy of Science provided $25000 for 11 of its computer scientist to form the NEW TECHNOLOGY DEVELOPER, Inc(NTD)

In 1987, company introduced its first original product named the LEGEND character card.

NTD was renamed LEGEND computer company in 1989 and launched its own brand PCs in 1990

Pioneer in home PCs concept in China and a retail network in 1993.

Brought out its first laptop model in 1996.

Came with pre loaded one year Internet Connection in 1999 along with chinese voice recognition software and a graphic pad for writing chinese.

By 1999, had a market share of 21.5% in china

Problems in Maturity Methods stage Adopted

China’s entry into WTO.

Dell’s introduction of Direct Sales Model in China.

Haier, an appliance maker, introduced its own brand of PCs.

Brought famous chinese personalities as brand spokespersons.

In 2002, they spend $6.6 million on advertising for the home PC segment, half the Dell’s advertising budget for China.

Here comes LENEVOIncreased domestic competition forced LEGEND to explore new

markets outside China.

Brand name problem

Word Lenevo was derived from “LE” for Legend and “novo” signifying new or innovative.

Bacame the exclusive provider of computer equipment and services for the Turin Olympics Winter Games in 2006 and the Beijing Summer Olympic Games in 2008.

THE DEALOpportunity to shed an unprofitable operation and concentrate on consulting services.

Right to use the IBM on products for 5 yrs.

Product Offerings : Well established IBM ThinkPad laptop and ThinkCentre desktop brands.

Lenovo promised not to compete with IBM’s services and consulting groups.

The Think Pad Legacy

• IBM and ThinkPad brands were hard to separate• ThinkPad i series was the first notebook

introduced in 2000, which set new standards for its balance of power and portability.

• But at the time of the acquisition many questioned whether Lenovo could sustain the ThinkPad brand equity ?

Lenovo IBM

Product 85% desktop 60% laptop

Client base 80% small business & consumer

57% large enterprise/ mid markets

Coverage Mostly China Strong around the world but relatively weak in China

The opportunity and challenges for the deal

• Quick International market.• Global distribution.• Innovative products and broader product

portfolio of IBM.• Major overlap was in company cultures.• Reactions of IBMs existing customers ---who

demanded the highest quality products & services, towards the new ownership mgt.

Bringing heaven to earthSuccess could be achieved through coordination and integration throughout the combined organization.

Message spread throughout the organization was to trust and respect each others position.

Yang’s decision of restructuring management integrated Lenovo and IBM organization.

Focus on winning helped both the organizations to integrate successfully.

Brand Strategy

The new company had the challenge and opportunity of making Lenovo a successful brand outside Asia.

IBM helped Lenovo in earning $10 billion as revenues around the world.

Turin Olympics sponsorship gave Lenovo a solid platform to showcase its capabilities to the world.

Chinese and some other Asian firms score low in trustworthiness in comparison to firms of other countries..

GETTING TO KNOW THE MARKETDecision makers in China, Japan and India have greater awareness of LENOVO acquisition than those in the US and Germany.

US Germany Japan India China0%

10%20%30%40%50%60%70%80%

Series 1

The team of Lenovo looked for 4 branding alternatives:

A •Use of MASTER BRAND

B •HOUSE OF BRANDS Strategy

C •SYNERGY APPROACH

D •LEXUS/TOYOTA Strategy

One-two punch

• Lenovo followed fairly simple strategy with 2 elements:

1)Build up Lenovo as a strong master brand 2)Continue to strengthen ThinkPad product

brand

Differentiation from Competitors

Strong efficient base in china

5% after-tax profit

Global infrastructure

Product Lines

III phase advertising plan

Ran world wide advertising campaign from may to September2005 where each ad signed off with “Thinkpad” instead of Lenovo

Ran campaign “Thinkpad unleashed” during opening ceremony of olympics 2006.

Ran campaign during olympics 2008 at Beijing stressing on its innovation

Telling the story1) Taking the risk

Making the new Z60 appealing and innovative.

Introducing the new titanium cover.

Innovating with a well established brand might threat it’s very reputation.

Lenovo received credit for making the thinkpad even better.

2) Raising awareness

Biggest challenge to create brand awareness.

Conducted quaterly field brand tracking studies.

Sponsorship of turin winter olympics brought recongnition.

Exploring unconventional ways of positioning.

The 3000 family

Lenovo launched it’s branded pc series 3000.

Targeted the small business enterprises.

Conducted in depth market research.

Laid emphasis on distinctive and attractive designs.

Questions for Discussion

• What is lenovo’s point of differentiation? Innovation? Efficiency? Both? Something else?

• Why did Lenovo choose to name its first non thinkpad product a number(3000) versus a name?

• How would lenovo be positioned: as a new type of chinese company? A unique combination of east and west? An international firm?

Mayank Basra

Ruby Jhangra

Vidit Goyal

Aahna Khatri

Srilaxmi

Siddharth Singh Tanwar