Lenovo Group, the world's fourth largest supplier of personal computers, and NEC Corp. are reportedly planning to create a joint-venture that will sell PCs in Japan. The two companies will jointly develop and build PCs in order to reduce their costs through economies of scale.
Lenovo is projected to acquire a majority stake in NEC Personal Products, a PC unit of NEC. The companies aim to boost their competitiveness through economies of scale by combining development, production, materials procurement and hope to become more competitive against large manufacturers of personal computers, reports Reuters news-agency citing Nikkei news-paper.
At present Lenovo Group commands about 10% of the worldwide PC market, while NEC only sells its computers in Japan and controls about 18% of domestic market. According to the report, Lenovo has 27% Japanese PC market share, hence, Lenovo and NEC combined will easily become the largest supplier of personal computers in Japan with 45% of the market.
It is clear that NEC will get a lot of benefits from working with Lenovo Group. Meanwhile, it is not known what kind of advantages Lenovo expects to get from a joint-venture with NEC. It is expected that NEC-branded PCs will remain on the market, therefore, Lenovo's brand will not get additional presence. Perhaps, Lenovo just needs to boost its sales and getting a stake in a rival is one of the ways to do so. Another possibility is that Lenovo wants to use certain technologies from NEC on other markets.
Lenovo and NEC did not comment on the news-story.