We can rebuild it, says Lenovo. But if history is any guide, the company's new executive team will have their work cut out.
In a previous life, EngagingChina worked for a now defunct large European PC maker whose problems were, in many ways, similar to those now facing Lenovo: large losses, indifferent products, laggard performance relative its peers, a corporate culture ill-suited to its global ambitions and an unhealthy dependence on a large domestic market where it historically had not had to try too hard.
Olivetti, as the large European PC maker was known, sadly didn't survive. Neither did Bull, ICL, Texas Instruments, Compaq… the list gets pretty long. In April, Germany's Siemens will become the latest to throw in the PC towel when it hands over full control of its computer JV Fujitsu-Siemens to its Japanese partner.
Lets hope Lenovo can survive, if only for the sake of all those breathless “Made in China” business books that love to paint Lenovo as the standard-bearer for a new generation on Chinese multinationals that will rapidly rise to challenge western incumbents.
But Lenovo is in need of a big fix. EngagingChina has always admired Bill Amelio, the former Asia boss of Dell lured to lead Lenovo when it acquired IBM's PC operations in 2004. The idea of a “US computer company with Chinese characteristics,” laughable when spoken by others, seemed more plausible when Bill proposed it, despite the obvious challenges.
But those multicultural aspirations have now been shelved and Lenovo is returning to its roots. Liu Chuanzhi, the company founder who stepped aside after the IBM deal, returns as chairman and Yang Yuanqing replaces Amelio as CEO.
The shake-up is tacit confirmation that Lenovo has failed to build a global business around IBM's ThinkPad brand and the downturn in corporate IT spending in the west is presumably hitting this franchise particularly hard. So the board has decided to jettison Bill — officially he is staying on as consultant — and refocus Lenovo on low-cost PCs and emerging markets.
In China, where Lenovo is the largest PC vendor, it widened its lead over Hewlett-Packard last year, so the company's products clearly have appeal to Chinese buyers. But any company with ambitions to be taken seriously in the hi-tech industry cannot live off emerging markets alone, particularly not if it wants US corporate customers to buy ThinkPads. So when the cycle turns, I suspect Lenovo will once again flex its muscles on the western stage.
More on the reshuffle in this BusinessWeek article.
More EngagingChina stories on Lenovo here