IBM thinks Think line strong
(China Business Weekly)
Updated: 2005-03-27 09:50

"Have ThinkPad customers been switching to other brands?"

That is the one question Connie Meu has heard most often over the past three months, since Lenovo Group, China's leading PC manufacturer, announced its plans to buy IBM's PC unit on December 8.

IBM's competitors began urging Think customers purchasers of the ThinkPad notebooks and ThinkCentre desktop computers to switch products.

Some people have expressed concern about Lenovo's ability to provide the same level of services and quality as IBM has consistently delivered for years.

In the past three months, IBM's Personal Computing Division (PCD) and Meu, its marketing executive for the Chinese mainland, Hong Kong and Taiwan, have been trying to fight back competition, which peaked with the major product launch last week.

IBM's PC division last Wednesday unveiled its first product, the ThinkPad T43, since the firms sealed their merger deal.

The notebook is also IBM's first product on the latest Intel Sonoma processors.

Meu said her company will unveil another 20 models this month or next. Those products will include eight more models of notebooks with Intel's Sonoma microprocessors.

IBM last week also announced shipments of the ThinkPad computers in China reached 1 million units in the year's first quarter. It was the first notebook brand to reach the 1-million mark in China.

Although it has been reported IBM's competitors were trying to take advantage of the Lenovo-IBM consolidation process to "steal" IBM's PC customers, Meu said every company faces that threat everyday.

"When you are luring one customer from another firm, you may ignore the fact other competitors are trying to get three from you," she said.

A global survey by IBM indicated more than 90 per cent of IBM's customers remained neutral or positive about the merger of IBM PC business and Lenovo.

Lenovo and IBM on March 7 announced an advertising campaign in China in a letter by Yang Yuanqing, who will be the firm's chairman, and Steve Ward, who will be chief executive officer.

They promised there will not be any changes in Think products.

The two companies will send sales teams to customers in the country to ensure them the future of the new Lenovo and learn their needs.

IBM China will also use its resources to support Lenovo.

Although IBM will not have a PC business directly under its control, Henry Chow, general manager of IBM's operations in the Chinese mainland, Hong Kong and Taiwan, said that does not mean IBM will not sell computers.

In fact, he added, that will enable the US-based giant to provide more competitive solutions to its customers.

Last Wednesday, he said IBM, the world's biggest information technology company, will be able to provide its customers with Think products with the same quality.

Liu Jun, who is likely to become co-chief operating officer of Lenovo, said earlier this month Lenovo Group will use IBM's resources in notebook design and manufacturing, as well as combined procurement.

IBM's PCD sales last year neared US$9 billion, while those of Lenovo neared US$3 billion. That means combining procurement will give them greater bargaining power.

With the combination of the firms' resources, Meu believes the sales of ThinkPad notebooks will remain on track in 2005.

US-based market research house International Data Corp (IDC)'s data indicate IBM was the biggest notebook vendor in China in the first half of last year.

IDC predicts China's notebook market will grow more than 20 per cent, year-on-year, this year.

Although consolidation of the two PC businesses overseas will likely be a tough task, Simon Ye, a computer analyst with US research house Gartner, suggests Lenovo may face greater marketing challenges in China.

Overseas, he said, Lenovo's strength in manufacturing and mid-range and low-end products will be complementary to IBM's.

In China, however, both units have a complete array of products, and have been in competition for years. So, the consolidation will be quite difficult, and they will face the daunting task of retaining current customers.

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