Changes and Consolidations
Lenovo will also centralizing its desktop team in China to improve efficiency and, in turn, will move its base of corporate operations from Purchase, N.Y., to Raleigh, N.C., where it already has significant research-and-development facilities and staff, all acquired via the IBM deal. Many analysts, following the appointment of Amelio, had expected the company to consolidate its operations in one way or another."Everyone has expected cost reductions for a long time." At the same time, "Amelios description of the cost cuts is eminently rational and hes doing it in all areas at the same time. It seems like a comprehensive plan," Kay said. The changes, Kay indicated, will allow Lenovo to focus on the task at hand, which is moving forward following its IBM deal. Buying IBMs PC business catapulted Lenovowhich until then had been the largest PC vendor in Chinainto the position of worlds third largest computer maker. Along the way, it acquired the ThinkPad line of notebooks, Think Centre desktop business and the ThinkVantage management software. But its still working on making a name for itself. Creating better brand recognition will be a key factor for Lenovo, its officials said March 12. The company was a major sponsor of the Winter Olympics last month, and hoped to use the Games in Turin, Italy, as a coming-out party for the company onto the international stage. It used the Games as the launching pad for its new line of desktops and notebooks, with the brand name Lenovo 3000, some of which will offer processors from Advanced Micro Devices. Amelio said Lenovo plans to take much of the projected $250 million in annual savings and drive it back into programs designed to create new products and increase brand recognition. "Our global strategy will remain focused on developing high-growth markets such as SMG and emerging countries," he said. "In the current stage of the strategy execution, substantial strides forward have been made in all key areasinnovation, customer satisfaction and operational excellence. I believe our action plan will drive additional successful strategy execution toward our goal of profitable growth." Still, some observers may be waiting for the other shoe to drop, Kay said. But "My sense is not for nowthat this is a good operational base," he said. "I expect theyll assess [the changes] for the next couple of quarters in order to see if theyre having the desired effects." Check out eWEEK.coms for the latest news in desktop and notebook computing.
Thus "My reaction is that this is good news," said Roger Kay, president of EndPoint Technologies Associates in Wayland, Mass.