IBM, Lenovo Complete Deal

 
 
By Jeffrey Burt  |  Posted 2005-05-09 Email Print this article Print
 
 
 
 
 
 
 

Lenovo Group Ltd. has completed its $1.75 billion purchase of IBM's PC business, creating the third-largest personal computer vendor in the world and giving IBM greater entree into the rapidly growing Chinese market.

Lenovo Group Ltd. has completed its $1.75 billion purchase of IBMs PC business, creating the third-largest personal computer vendor in the world and giving IBM greater entree into the rapidly growing Chinese market.

The deal, completed last week, in many ways is more of a merger. Lenovo will gain control of IBMs Think Centre desktop and popular ThinkPad notebook brands, as well as the thousands of customers who buy those products.

However, the new Lenovo will have a strong IBM presence. Many of the top executives have moved over from IBM, including Stephen Ward, the former vice president and general manager of IBMs PC group and now CEO of Lenovo.

In addition, 10,000 of Lenovos 19,000 employees are former IBM people, and IBM will continue to offer sales, service and support for the IBM products. Lenovos headquarters will be in Armonk, N.Y., and IBM also bought an 18.9 percent stake in the new company.

Customer reaction to the deal when it was first announced in December was mixed, but IBM executives were aggressive in getting out the message that the quality of the products, services and support would not change.

"A lot of effort went into making sure that from a customer standpoint, and even a business partner standpoint, they did not have to worry about flipping the box over and saying, OK, when was it manufactured? Is this a Lenovo box or an IBM [Personal Computing Division] box?" said Bill Owens, vice president of service and support for Lenovo International. "They process the same, they behave the same, they work the same."

Some customers are taking a wait-and-see approach to the deal, though.

"We are still purchasing IBM products, but we are looking at other vendors, especially when we have the need for something other than our standard PC configuration," said Carol Knouse, vice president and CIO with The Donna Karan Co. LLC, in Carlstadt, N.J., and an eWEEK Corporate Partner. "It is important that their support and service does not deteriorate but, in fact, improves as a result of the merger."

Lenovo will operate two divisions—Lenovo International, which is essentially the old IBM PC business, and Lenovo China, the companys Chinese business, Owens said.

 
 
 
 
 
 
 
 
 
 
 

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