Did Lenovo Buy IBM's Laptop Business To Sell Phones?

Lenovo, one of many Chinese manufacturers little-known outside of China, shocked people last December when it bought IBM’s PC division. The deal seemed sweet one for Lenovo, and analysts concluded that if they could maintain the integrity of the IBM PC brands, they could be a serious contender against rivals like Dell. But an additional strategic benefit of the year-old IBM PC purchase is now emerging: Lenovo is now a famous name, which can help other lines of business. Lenovo said they intend to expand their mobile phone business, and have doubled sales over last year. We expect they will take this success to the export market. It’s no secret that Western carriers are reticent to purchase Chinese handsets from the likes of Ningpo Bird, ZTE, etc because of fears of lower quality or culture/communication challenges. But Lenovo can now say, “We understand Western business. You can trust our quality. We’re the people who sell the Thinkpad.” They can trade on a brand IBM built. This should help them in the global handset business, which now has annual volumes over 800 million, far exceeding PC volumes. Not a bad side-benefit for buying the Thinkpad line, and not entirely unpredicted, as Mike noticed while the IBM deal was just a rumor: “…so this purchase would certainly be a high profile way to make themselves known”.

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