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IT & Systems Management

Ten years after buying IBM's PC biz, Lenovo targets hardware leadership

Lenovo UK and Ireland general manager Marc Godin does a polite double-take when, over breakfast in leafy Richmond, south-west London, I describe Lenovo as a Chinese company.

“It’s not that we’re not proud of our roots but we challenge the statement because we don’t believe were a traditional Chinese company,” he says of the company that has come from relative obscurity to become the world’s number-one PC maker. Instead, he suggests, Lenovo is really a new sort of company that is inherently global and lacking the strong prejudices most companies project from HQ.

Speaking excellent English with a distinct French undertow, Godin is himself an interesting polyglot. Born in the US, raised in France, he worked for many years at IBM, including global roles, and then spent three-and-a-half years in Raleigh, North Carolina (“no Paris but I enjoyed it very much”) after Lenovo bought IBM’s PC business. Today he lives in London, having transferred when IBM sold its PC business to Lenovo. The tenth anniversary of the closing of that deal will come in May this year, the agreement having been announced in December 2004.

That transaction was remarkable in a few ways. First, it meant that the IBM Personal Computer, one of the great products of the 20th century, moving away from its original maker. Second, it meant that the PC unit went from a huge US business to a Chinese company, underlining the dramatic rise of that country’s economy. Third, it was a tacit recognition that the PC had become such a low-margin business that it better suited countries with lower cost models and leaner supply chains.

The culture shock of moving from IBM to Lenovo must have been significant, I suggest. Yes, he answers, but it’s not so much to do with Chinese versus North American culture.

“For the first year I was in charge of the creation of Lenovo, the so-called ‘integration project’, but basically there was no integration because there was no structure; we were creating Lenovo in Europe. Obviously we were in regular contact with the Lenovo executive team and they were absolutely listening. That was impressive because when one company acquires another you expect to be told what to do.

“But Lenovo has a strong culture of empowerment and delegation with local terms fully in charge and accountable. We have local people, local teams: people who know the ecosystem, culture, customers. Whereas other companies might have a more centralised approach…”

Other companies such as, say, IBM?

Godin says he admires IBM but it was very much a US company:

“You really felt that what mattered was the US first and that what was good for the US would be good for the rest of the world. Moving to [Lenovo] it was a shock to realise the most important country wasn’t the US and China as a market was becoming a bigger market than the US.”

Back to that notion of Lenovo as an international brand, China accounts for about two-thirds of Lenovo business but 60% of its phone business is outside of China. Godin says that the international language of the company is now English, with Chinese executives having to learn if they didn’t already.

“I remember going into a room in Beijing and preaching to the board and it would be translated. Things have changed since then. People matter and views from the ground are taken into account.”

There were other changes as priorities changed: notebooks/laptops were overtaking desktops and Lenovo was targeting consumers as well as business sales. And being in the PC division at IBM and then Lenovo meant moving from being a part of the company to becoming the core business.

Godin looks back on 10 years that have shot by. IBM’s PC division was the sick man of the company but at Lenovo market share has grown steadily and the company in recent times has expanded its horizons by picking up another legendary pioneer, Motorola’s mobile phones business, and IBM’s volume server business, both in 2014. These are supplemented by a LenovoEMC, a 2013 joint venture in storage that is focused on the former Iomega business.

And even if Lenovo has diversified, it still has a strong focus.

“Our product is, fundamentally, hardware and we are about being bold and innovative. We’re not in the software business and we’re not in the services business so it’s all about supply-chain effectiveness, bringing out the best product and being efficient. We’ve moved on from being a company selling PCs in China as Legend [Lenovo’s former name]. Accelerate 10 years and we’re the number-one PC vendor, number three in smartphones, tablets and servers.”

The aim is to have a full hardware line, including storage (with R&D coming from a Brazil facility), with integration in usability and management across the board.

“If you view it as an end-user there are some benefits to having a seamless view across the entire portfolio,” Godin says. “Microsoft is moving in exactly that direction with Windows 10, saying they’re going to provide a single consistent user interface from phones to tablets to PCs. If you’re a large organisation and you have to manage [a mixed estate] that’s creating complexity, and companies want to move fast.”

Does that mean Lenovo will offer Windows Phone products? Godin says that’s “obviously something were looking into” but reminds me that even on tablets Lenovo offers both Windows and Android products so the company can’t be said to be a pure Windows ‘shop’.

And with that our time is up and Godin is off, plotting the next stage in Lenovo’s cosmopolitan progress.

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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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