March 23, 2006
 

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Posted: 07.01.05

So Happy Together

For partnering PC vendors Lenovo and IBM, the future looks bright.
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By Tim Bajarin




Not long after the formal announcement of Lenovo’s intent to purchase IBM’s PC business, I began getting calls from major players in the computer industry asking me to look closely at the deal and to advise them as to the long-term viability of the IBM/Lenovo merger.

I have had the privilege of serving on IBM’s Industry Advisory Council for 14 years, as well as working on various projects within IBM’s PC division since 1981. While I know the PC division and IBM quite well, my knowledge of Lenovo was minimal at best. I knew that it had been Legend Computing and is currently the major PC vendor in China, but given my focus on U.S. tech companies, I hadn’t followed Lenovo’s amazing growth in Asia very closely.

With that in mind, I welcomed the fact that IBM’s Industry Council held its recent meeting in Beijing, which gave me a chance to meet with top IBM and Lenovo officials, as well as visit Lenovo’s headquarters and factories in the capital city.

Although my time with the two management teams was short, I came away with a much better understanding of what the combined company will be once the deal closes, and, more importantly, I have come to some important personal conclusions regarding the merger as well.

The first thing that struck me was how much thought went into the merger and how sophisticated both teams are when it comes to the integration of the companies into a single business entity. Although they have both been run differently, it’s clear that their individual objectives are extremely synergistic and, in the end, could be blended together well as they combine management, strategies, R&D, manufacturing and sales.

I was also struck by how much IBM included its existing customer base in the overall research process. IBM officials said they spoke with over 4,000 customers worldwide and explained how the new company would continue to serve them, as well as what it could do for them in the future. Interestingly, IBM said that it received overwhelming support from these customers, and since the deal was announced, it has won some major accounts.

The opening test of this new company’s design and marketing prowess comes with the introduction of its first new product. The X41 Tablet Convertible marks the first time a top-three portable computing vendor is releasing a truly convertible tablet. It also comes at a time when the market for tablets is minimal at best. However, the X41 is by far the best of the breed to date. It’s 1.25 inches high and weighs 3.5 lbs., making it the smallest and lightest convertible available. Additionally, it boasts a 12.1-inch TFT wide screen with a 170-degree viewing angle, it can get up to 5.7 hours on the standard eight cell battery, and it includes IBM’s very popular fingerprint reader for security. Though tablets have mostly been adopted for use in vertical markets, this could be the first to appeal to a broader user market and could actually help jumpstart the larger market for tablets.

While I believe that both companies have done their homework and are going down a path that could make them even more competitive and powerful, it needs to be stated that the success of this venture is not guaranteed. There will be differences in management styles, clashes in cultures and, I believe, differences of opinion regarding what should be done to make the new company a world-class venture. However, I am convinced that the leaders of both companies have a real vision of what this new company can become, as well as a real commitment to make it work. •
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