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Lenovo, which last week completed its acquisition of IBMs Personal Computing Division, is now moving to establish its new product lines and marketing strategies around the world.
Although Lenovo Group Ltd. is still poring over market research and finalizing many of its plans, one thing is for sure: The ThinkPad name will maintain its prime real estate atop the lids of Lenovo notebooks long after the IBM moniker fades. The same can be said for its ThinkCentre desktop brand.
The “new Lenovo,” as its executives refer to it, intends to promote its most powerful brands—ThinkPad, for one, is one of the best-known names in the computer industry—as part of a plan to introduce itself.
Its a fairly straightforward approach, designed to build on its IBM acquisition. But it underscores some of the new Lenovos greatest challenges.
Although Lenovo will keep the IBM name on its products for the foreseeable future, it can only do so for a maximum of five years, meaning it must strengthen ThinkPad and ThinkCentre, while at the same time promoting its new name and products without alienating its existing customers and partners or turning off potential future customers.
Right now, “There are some things that are pretty clear. One is, when you look at ThinkPad, the level of awareness is pretty high. One of the actions weve started to take is to strengthen the ThinkPad and ThinkCentre product brands,” said Deepak Advani, Lenovos senior vice president and chief marketing officer.
“ThinkPad is the brand that everyone talks about and everyone raves about. There will be no doubt that ThinkPad is made by Lenovo, just like iPod is made by Apple. People dont want an Apple iPod—they want an iPod.”
Thus, over time, the IBM ThinkPad name will simply become ThinkPad and IBM ThinkCentre will become ThinkCentre, all while it launches new products and enters new markets.
By extension, Lenovo will become known as the company that makes ThinkPad. But little else is likely to change for big IBM customers, one analyst recently briefed by Lenovo said.
“The ThinkPad and ThinkCentre product lines are not going to change,” said Leslie Fiering, analyst with Gartner Group. “The only likelihood that I see is pricing is going to get better.”
Having gained some heft and shed the overhead of IBM corporate, Lenovo should be able to become more aggressive on prices in its efforts to grow.
The company told analysts that its aspiration is to grow become one of the top two computer makers by 2010, Fiering said.
“And theyre serious about it,” she said.
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Giants Stand in the
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Two giants, Dell Inc. and Hewlett-Packard Co., stand in the way.
Dell, for one, isnt waiting to see what Lenovos plans are. The Round Rock, Texas, PC maker has been promoting low-price PCs in China, Lenovos home market, recently, Reuters reported on Wednesday.
Indeed, “Lenovo will have to pick its battles,” Fiering said. “But when they do hit a market, I think theyll hit it with force.”
Whats still up in the air, however, is how Lenovos brands will work together, if at all.
The company has begun to introduce itself and its new name. It has put up a new Web site and hired Ogilvy & Mather, which has long been an IBM ad firm, to launch an ad campaign to introduce the Lenovo name.
Print ads began running this week and aim to position Lenovo as global company that focuses on design and customer service, Advani said.
But the way Lenovo applies its name at the product level—something that also ties in with how the company might introduce new machines to new markets—is still under consideration.
The company is working through whether it should have two brands, perhaps one for consumers, one for enterprise, or one for premium products and one for less-expensive boxes, sort of like the way automaker Toyota uses its premium Lexus brand, is still being made, Advani said.
“I think they should emphasize Think as a commercial brand, which is essentially where it is now… and use Think and ThinkVantage [IBMs suite of add-ons for that assist in security and maintenance of its PCs] to promote the good works of IBM,” said Roger Kay, an analyst with IDC.
“They then need to come up with a consumer brand, which could be anything. Lenovo, over time, could become the master brand,” Kay said.
“In the simplest-possible terms, theres something black sold to enterprises, which sounds like ThinkPad, and something silver thats consumer and is sold through channels or maybe direct, and theres really no overlap between the two.”
Lenovos product plans are still coalescing as well. The company offers a sneak peek at two Lenovo-designed computers on its Web site, but has cautioned not to read too much into their presence on the site.
“Instead of just starting with products, were starting with the markets. Were working our way backward from saying, Where is the opportunity?” Advani said.
Still, Lenovo is likely to enter the consumer market in the United States and Europe in some way.
It is also likely to expand its business market presence.
Lenovo could beef up its product line for SMB (small and midsize businesses), for one, with either all-new products or some of its machines that once only appeared in China.
“In SMB, where we have pretty good market share, we can increase our presence by offering a broader portfolio,” Advani said. “Thats a very natural thing to do but, again, were stepping back and looking at the entire landscape of opportunities. From a strategy perspective, we want to take a very focused approach, because the markets we enter we want to win.”
Thus, look for Lenovo to be careful about where it places its effort, Fiering said.
“Theyre going to look for logical extensions of what theyre doing rather than huge break,” she said. “Theres a tremendous opportunity in emerging economies, SMB and places where the Think brand means something.”