IBM Troops Pave Path for Lenovo

 
 
By Jeffrey Burt  |  Posted 2005-01-10
 
 
 

As IBM CEO Sam Palmisano took the stage Dec. 7 to announce the sale of the companys historic PC business to Chinese computer maker Lenovo Group Ltd., behind the scenes the company was mobilizing more than 2,000 IBM representatives in a massive customer outreach mission.

Shortly after the presentation, 2,400 IBM personnel, armed with information packets outlining the $1.75 billion sale, took to the skies and the streets to meet with literally thousands of the companys largest customers and hundreds more business partners, officials at IBM, in Armonk, N.Y., said.

They also flipped the switch on a massive online campaign, contacting even more customers via telephone and e-mail, and soon after hosted a Web conference in which customers and partners were encouraged to voice their concerns with IBM executives.

"This really has been the overwhelming work weve been doing globally," said Robert Galush, vice president of marketing for IBMs Personal Computing Division. "It was important that [customers] know immediately that these are the same IBM PC products, the same service and financing, so in the eyes of the buyers, nothing will change."

IBM lost $1 billion on its PC business in the last four years. Click here to read more.

That level of sensitivity and preparation has helped IBM not only move swiftly through the post-announcement phase of its Lenovo deal but also quell advances from rivals Dell Inc. and Hewlett-Packard Co. into its customer base.

In contrast to the initial rush of concern and chatter among IBM customers immediately after the sale was announced, there has been little buzz since, said Robert Rosen, president of the IBM user group Share Inc., in Bethesda, Md. Rosen attributed much of that to IBMs efforts to explain the deal.

"It really seems to be a back-burner issue," said Rosen. "Its not generating much of a noise level. Its back to business as usual. Its an interesting phenomenon. Its nowhere near what we saw when HP bought Compaq [Computer Corp. in 2002] or even compared to when Compaq bought Digital [Equipment Corp. in 1998]."

Pitches from Dell and HP have also dwindled in recent weeks, he said.

But educating and assuring customers is only part of the strategy, which continues to unfold. IBM has an extensive checklist of tasks it still needs to accomplish before the Lenovo deal closes in the second quarter—including reworking contracts with customers and partners to ensure that Lenovo can sell to them, preparing employees who will soon become Lenovo workers, and outlining distribution strategies in China.

Despite its preparation for the customer outreach mission, execution of the plan was hampered slightly when news of the upcoming deal was leaked to the news media days in advance of the announcement, officials said. Still, within hours after IBM and Lenovo executives took the stage to roll out the deal, representatives were fanning out across the globe to meet with their largest accounts.

IBMs Galush said an official from one of the companys largest customers, with thousands of IBM PC products, telephoned him about the news leak.

"I told him I didnt have anything to tell him then but that I would contact him first the minute I could tell him something," said Galush, who will assume the same position—vice president of marketing—with Lenovo when the sale is completed. "The deal was announced around 7 [p.m. Dec. 7], and I was calling him at 9:30. I finally reached him at 6:30 the next morning, and when he went into work, he had the information he needed [to speak with his boss]."

How successful IBM is in retaining its customers will depend on how well it and Lenovo execute the deal, said Jim Garden, an analyst with Technology Business Research Inc., in Hampton, N.H. "The customers have been quite calm and rational about it," Garden said. "Theres a lot of pragmatism. Theyre going to wait and see. The devil is in the details now."

Check out eWEEK.coms for the latest news in desktop and notebook computing.

Rocket Fuel