After acquiring IBM’s personal computer business in 2004, Lenovo Group has relentlessly added new brands and companies to itself in order to gain market share. The success of this strategy is obvious: the company is now among the top PC suppliers on the planet. But in a bid to not only grow, but to develop the most relevant products to its customers, the firm will split itself into two global products group.
Yang Yuanqing, chief executive officer and the chairman of Lenovo Group, admitted in an internal e-mail (which was published by Sina.com.cn web-site earlier this month) that Lenovo and IdeaPad brands are only successful in the fields of mainstream and low-end PCs and have failed to gain significant results in the market of high-end products; in the meantime, Think-branded devices are not only strong on the market of high-end and business-oriented PCs in general, but are also among a few brands on the market that can actually compete against Apple.
As a result, effective this April, the company will be split into two global business units: Lenovo business group (LBG), which will concentrate on entry-level and mainstream mainstream desktops, laptops, tablets as well as smartphones and smart TVs; and Think business group (TBG), which will focus on higher-end desktops, notebooks, tablets, workstations and servers.
Both groups will pursue both consumers and commercial customers, but their offerings will differ from each other with prices, technologies and other differentiators. The LBG will have to create strong offerings for business customers, which is not something it is known for; whereas the TPG will have to develop competitive offerings for consumers, which will also be a challenge.
“Different businesses require different business models and skills. Consumer PC business requires speed and efficiency. Reliable enterprise-class PC business needs the best quality and customized services. Both groups within the scope of their business models will have to be innovative and highly integrated from product development and design, to marketing and supply chain management to meet the specific needs of their clients,” Mr. Yuanqing wrote in the email.
Thanks to the realignment of business structures, it is possible to expect Think-branded lineup to get a significant redesign both in terms of the number of offerings as well as their capabilities. The Lenovo-branded family will likely continue to grow in order to cover all market segments. What remains to be seen is what is going to happen to various local brands that are controlled by Lenovo, such as Medion, NEC, CCE and some others.