December 21, 2005 10:51 AM PST

Lenovo says changing execs is part of a plan

Lenovo's chairman says his company switched chief executives, not strategies, but analysts say an executive swap that brings in a Dell executive could spell problems for both companies.

Yang Yuanqing said the company has hired William Amelio, head of Dell's Asian operations until yesterday, to oversee the next phase of Lenovo's international push, which will include product design, marketing and improving supply chain efficiency.

Amelio
William Amelio

The company's three chief goals remain the same: increase growth and profitability, extend Lenovo's brand internationally and increase management efficiency.

"William Amelio has a good background and the appropriate experience, and is capable of leading Lenovo in its next phase," Yuanqing explained.

Lenovo late Wednesday announced that Amelio will replace IBM alumni Stephen Ward as CEO. Before working at Dell, Amelio spent a few years at IBM in its ThinkPad division, which Lenovo now owns.

Yuanqing also praised Ward for heading up the merger of Lenovo and IBM's PC unit. That deal, announced last December, was consummated in May.

Analysts, however, say the sudden change could create problems for both Lenovo and Dell. Ward was a respected figure in the industry. Some credit him with the relatively smooth merger of Lenovo and IBM's PC unit, and the presence of an IBM exec at the top of the new company reassured many IBM customers, analysts said.

IBM computer customers tend to be conservative corporate IT buyers. One of the questions hanging over the merger is what customers might do if the product quality of the merged company changes.

Lenovo, formerly Legend, tried to become an international brand for years, but quality problems, brand recognition and internal financial issues stymied the effort. Until the IBM merger, Lenovo sold only a token number of systems outside of China. The influx of western brands into China has also dented the company's growth.

Lenovo and Ward have said they are happy with the switch, according to Roger Kay, president of Endpoint Technologies Associates. The suddenness of the decision, however, indicates that conflicts existed between Ward and Lenovo. The Chinese company recently invited a number of marketing analysts to its new headquarters in New York state and danced around management issues, Kay said.

The move is also not good for Dell. Although the company has gained popularity rapidly in Asia over the last five years, growth slowed in the most recent quarter. Other executives have left recently as well, said Sam Bhavnani, an analyst at Current Analysis.

Michael George, who led Dell's home products group, left to become chief executive of QVC, the network known for its jewelry deals. Foo Piau Phang, who was co-president for Dell Asia-Pacific, along with Amelio, also left in November.

"Dell has not seen the success in China that it's seen in the U.S., and now its top two China guys are gone," Bhavnani said. "It's a crushing blow for Dell in Asia in the same way Johnny Damon signing with the Yankees hurts the Red Sox's chances this year."

Steve Felice, who helped grow Dell's services operation and has held other positions at the company since 1999, will take over for Amelio, Dell representatives said.

ZDNet China staff reported from Beijing. CNET News.com's Michael Kanellos contributed to this report.

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