New Lenovo takes shape

The nouveau Lenovo wants to shake up the PC market's status quo.

Fran O'Sullivan,
will be COO of
Lenovo International

Lenovo Group, China's top PC maker, is moving ahead with its plans to acquire and incorporate IBM's PC business, despite the deal being the subject of an ongoing review by the Committee on Foreign Investment in the United States, a federal interagency panel chaired by the secretary of the Treasury.

The new Lenovo has already formed a team of top executives and established an integration plan; it has also begun evaluating ways to market Lenovo-designed computers outside of China--all with the intent of being ready to compete as soon as the deal, scheduled to close in the second quarter, is done.

"We are chomping at the bit to have the deal close," said Fran O'Sullivan, a 22-year IBM PC executive who will become chief operating officer for Lenovo International, which will handle the company's business outside of China. "It's more exciting now than it was then," she said, referring to her time at IBM during the go-go days of the early PC market.

News.context

What's new:
The new Lenovo aims to become a PC giant that can compete globally with Dell and Hewlett-Packard. A team of top executives is lining up to take over, and an integration plan is in place, along with a catchy motto: "Status quo is a no go in the new Lenovo."

Bottom line:
Even assuming Lenovo does everything right, it still has a mountain to climb. Among the challenges: Its brand name is untested outside of China. How will it measure up?

More stories on IBM and Lenovo

The new Lenovo, as its executives have referred to it, aims to combine its own business in China with IBM's in the rest of the world, creating a PC giant that can compete globally with Dell and Hewlett-Packard. Lenovo is set to become the world's third-largest PC maker, after Dell and HP, when the multibillion-dollar deal, announced last December, is completed.

The company also aims to bring Lenovo PCs, now available only in China, to the rest of the world. These machines have some attractive features; several of Lenovo's machines, such as the Tian Jino A desktop, which includes a built-in voice over Internet Protocol telephone, look more like they might have been built by Apple Computer, rather than a company like IBM.

But even assuming Lenovo does everything right, it still has a mountain to climb. Dell, the king of the hill, and HP aren't likely to cede market share willingly. Moreover, they can use the uncertainty created by the Lenovo deal as ammunition in an attempt to woo away IBM's corporate customers, analysts have said. Despite Lenovo's fresh-looking designs and the potential for the new company to offer lower prices thanks to its greater scale, its brand name is untested outside of China.

Lenovo is "basically as good as anybody else, but people don't know that," said Roger Kay, an analyst at IDC. "The challenge is to acquaint people to Lenovo. The other issue on the reverse side is retaining IBM's enterprise customers, who might be concerned that the change in management means something's disintegrating and that IBM's best technology is coming from its other groups."

O'Sullivan admitted that between now and the close of the deal, the new Lenovo has a lot of work to do. But she said it will move swiftly, operating under the new slogan that "status quo is a no go in the new Lenovo."

Having settled its executive ranks, Lenovo's main initiatives now involve taking advantage of its larger scale--something that can bring better prices on the parts it needs to build its PCs--and establishing the Lenovo brand name. It has begun working on ways to sell Lenovo-