NY Times article about Lenovo's Amelio leaving

[warmstrong]

http://www.nytimes.com/2009/02/06/techn ... ss&emc=rss

What does this mean:

"In its statement on Thursday, the company said it suffered from a sharp drop in global demand for personal computers, a situation that is hurting the entire industry. The company said it would now focus on its China business, an area that Mr. Yang had helped develop."

Bill Armstrong
TP400 and several older ones used by various members of the family

[rkawakami]

My best guess is that "global demand" = "non-home (i.e. China) markets". One would assume that costs would be lower (and profits higher) to support "home" sales, as opposed to "foreign" ones. The worldwide high-tech industry seems to be in for quite a wild ride in the coming months...

[basketb]

http://www.nytimes.com/2009/02/06/techn ... ss&emc=rss ...

(free) registration required! fail. (<- this is intended at the nytimes, not the OP)

Here's a link to the story at NPR.

[Marin85]

The link of OP works for me (no registration required).

EDIT: Changes like the ones Lenovo is currently facing are sometimes for good. Remember how many folks complain - justified or not - about a decline in the ThinkPad brand after the acquisition from Lenovo. Let´s see what this will bring forth.

[basketb]

The link of OP works for me (no registration required). ...

Interesting. I checked again and nytimes.com also complains that I don't allow them to set a cookie. If I allow cookies, it shows the article.
No cookie, no article. BIG FAIL! (apologies for making these off-topic remarks)

[Marin85]

Interesting. I checked again and nytimes.com also complains that I don't allow them to set a cookie. If I allow cookies, it shows the article.
No cookie, no article. BIG FAIL! (apologies for making these off-topic remarks)

Ok, I see, I have FF3 set to automatically accept cookies, not sure if that is a good idea though, but I clean these things almost everyday anyways...

[bill bolton]

No cookie, no article. BIG FAIL! (apologies for making these off-topic remarks)

If you don't accept their cookie, they wont show your their content for free.

You have a choice as to whether you want to accept that condition of use or not.

Cheers,

Bill B.

[Radioguy]

EDIT: Changes like the ones Lenovo is currently facing are sometimes for good. Remember how many folks complain - justified or not - about a decline in the ThinkPad brand after the acquisition from Lenovo. Let´s see what this will bring forth.

Perhaps you glossed over this part of the article:

Analysts said the company needed to make a change because the personal computer business is being reshaped by lower-cost products that are increasingly outsourced for manufacture.

“This is a necessary evil in this kind of environment,” said Arthur Hsieh, a technology analyst at UBS. “The PC business is now a commodity business and Lenovo still does a lot of its production in-house. The trend is to outsource.”

The article seems to position that is the likely basis for this change. If true, that certainly does not bode well for future ThinkPad quality.

[Marin85]

Perhaps you glossed over this part of the article...

I don´t trust articles to judge important changes... When something like this occur, I try to be optimistic and positive about it. I´m not suggesting anything, but this guy had worked for DELL before Lenovo acquired the PC division from IBM...

[spuddog]

I am curious as to were a Chinese company outsources their work?

Scott

[dhung]

This is the news from an Australian website, CRN is an news site which provide news about IT Channel (Vendor, Distrubtor and Reseller)

Lenovo CEO resigns amid worldwide PC sales drop
http://www.crn.com.au/News/95730,lenovo ... -drop.aspx

My previos job is at one of Australia's tier one I.T. Distrubtor, look after Lenovo procurement. About late 06~early 07, they start to move admin day-to-day job to overseas (from Sydney office to Kuala Lumpur), e.g. order loading, back order tracking, price protection ...etc for distrubtion partners in Australia. They been cutting operation cost for a while already.

But the problem is with thier channel strategy (I'm only talking about Australia market, as this is what I expereicned), seems their guys have no ideal how to run the business, only focus to grab market share, and not working with channel partner to add value or other focus on the core value of their product.

We always been ask from our channel sales rep to buy more, buy more and more more!!! Buy more stock! load more orders!! AUD$3M per Qtr. No matter what the market real run rate...... and always end up having lot's of aged stock which need to dump into the reseller market which de-value the brand

anyway, just my two cents.....

[rleo25]

My first impression of the Amelio´s departure is not good. Does it mean Lenovo´s market strategy aims to attend inland (read China) demand? If so what would happen to Quality standars and the Thinkpad brand ? Is a major shift in the actual trends about to happen ? Let´s wait some new advancements to have more perspective.... mmm no good news indeed!

[Radioguy]

Just speculating here....but how likely would it be that Lenovo would sell off the ThinkPad brand? It seems they have used it to garner interest in their other PCs, but according to some they are diminishing the reputation of the TP brand in the process. It will have less value if that trend continues, so would selling it off be something they are likely to consider?

Also, how's IBM doing right now? Would they be in a position to reacquire if that were to occur?

Again, just playful speculation.

[Marin85]

Also, how's IBM doing right now? Would they be in a position to reacquire if that were to occur?

Again, just playful speculation.

Don´t give me such hopes As already stated, any change may be for good...

Marin

[rleo25]

OMG!!! Thinkpad coming back to old big blue? That would be extraordinary... Let´s keep dreaming. By the way how could be the future of Thinkpads in the hands of Dell, HP Toshiba or Acer? That would be a nice speculative exercise...

[dhung]

To be honest, I don't think IBM would like to get back into PC/Notebook business, I remember around mid 07' IBM allow Lenovo to sell rebagded IBM entry level x86 servers.

Would they be in a position to reacquire if that were to occur?

[basketb]

...Also, how's IBM doing right now? Would they be in a position to reacquire if that were to occur?...

Why would they? IBM is not in the business of low-profit margin commodity products. They got rid of the printer, hard disk drive and PC businesses for a reason.

[Radioguy]

True, but things have been in such an upheaval in the industry since they sold off that division. I just wondered if in-house design/production (well, it would likely be outsourced again) might boost the brand enough so it would be profitable enough once more. Likely not, but I wanted to know for certain.

IBM aside, no one commented on whether Lenovo is likely to consider selling off the TP brand in their current state. Anyone think that's on the table?

[Marin85]

OMG!!! Thinkpad coming back to old big blue? That would be extraordinary... Let´s keep dreaming. By the way how could be the future of Thinkpads in the hands of Dell, HP Toshiba or Acer? That would be a nice speculative exercise...

I admit this is a nice speculation, actually I have never thought of that, but as dhung, basketb and Radioguy pointed out that´s pretty improbable, even impossible. As for ThinkPads being in the hands in DELL, Acer, HP etc, well, we saw what happened in the last 2-3 years including this week with CEO from DELL... (only my speculation).

IBM aside, no one commented on whether Lenovo is likely to consider selling off the TP brand in their current state. Anyone think that's on the table?

Well, after reading those articles, almost everything seems likely. While I try to be optimistic, things don´t really sound good. Before Lenovo would close down the ThinkPad brand (God saves us!), they would try to sell it (of course) to someone else (maybe another Chinese company?). The only problem is that another sell of Thinkpad would greatly devalue the brand. I think after another resell Thinkpad just wouldn´t be the same anymore, it would get the status of a black sheep that in the end either won´t be the ThinkPad we know anymore or will be abandoned/not wanted by anyone. Time will tell... (I could hardly imagine Lenovo to maintain the ThinkPad brand only within China, either way I try to look upon it my expectation leads to devaluation or resell).

Marin

[hart22]

As a data point of my own, I'll say that I have noticed changes to the models Lenovo is aggressively marketing in China, which would be their domestic market. I visit Beijing fairly regularly, and Lenovo always has prominent displays, especially in the high-tech regions of the city such as Zhong Guan Cun.

In years past the most visible Lenovo billboards, such as the huge main billboard at the main intersection in that area, has always been for a top-of-the-line T series. First it was the T60 a few years ago, then the T61. This has always been the case since Lenovo acquired the IBM PC division. But this past December when I visited the emphasis had completely shifted to their line of IdeaPads, and in fact that main billboard, probably the most prominent and most viewed for several city blocks, was for an IdeaPad Y or S series.

All around Beijing the ThinkPad advertisements just didn't have nearly the penetration of years past, and in fact the only ones I did notice were at the Olympic Village, where understandably they should be since ThinkPads were marketed as machines that helped to run the logistics of that event.

Does this mean Lenovo is de-emphasizing premium ThinkPads over mass-market models such as their IdeaPads and netbooks? Given the current economic outlook it may be possible, although I certainly hope not. Time will tell...

[ajkula66]

It would make perfect sense for Lenovo to push IdeaPads harder on its home (Chinese) market...ThinkPad name means a lot more in the Western world than it does over there...

I'm optimistic for one reason only, and that is W700. Someone, somewhere in Lenovo has figured out what many users have known for years: that there is a market for high-end, expensive laptops and that for many business users, price is only a very small part in the total equation leading to purchase. Panasonic ToughBooks (which have improved tremendously over the last decade) are a living proof of that...if you know how to sell a somewhat esoteric concept, you'll do excellent in the high-end market, where profit margins are much higher...and ThinkPads have always been an esoteric concept per se, at least in my opinion...

[BillMorrow]

I am curious as to were a Chinese company outsources their work?

Scott

good one spuddog..
here's a bird for ya, a good bird..

uhmm, maybe taiwan..?

[BillMorrow]

......if you know how to sell a somewhat esoteric concept, you'll do excellent in the high-end market, where profit margins are much higher...and ThinkPads have always been an esoteric concept per se, at least in my opinion...

i was once told by a retired IBM'er, referring to the transnote, that IBM could not market (or chose not to) thinkpads well..
whether true or not it was obvious that they gave up on the consumer business long ago and they also gave up on PC's when they determined the PC market was commoditized (is that a word?)..

thus lenovo got the PC division..

thinkpads still have some "snob appeal" IMO..

[lophiomys]

I am curious as to were a Chinese company outsources their work?
Scott

To Panasonic.
They close Raleigh and let Panasonic produce Thinkpads in the Toughbook factories.
That might work out well together with the Japanese Design Lab after all.

[hart22]

I am curious as to were a Chinese company outsources their work?

Scott

Many areas in China which previously had the edge bar-none in worldwide labor costs are now losing that edge as the country benefits from rising prosperity as result of economic reforms. Don't forget that the number of Chinese lifted out of the global poverty line in the past decades numbers in the hundreds of millions. Many multinationals in the US and elsewhere have already begun securing lower cost alternates elsewhere, in areas such as Vietnam, Malaysia and even India, for some manufacturing purposes. Vietnam has been one of the real globalization success stories, at least until very recently. That's simply the way comparative advantage works. Many of China's areas are moving up the technology chain into higher value-added products and services.

Of course, China still maintains a food self-sufficiency model, which coupled with lack of true property rights and lack of land ownership in the countryside means that a significant number of people remain in the agricultural sector. Should any one of these policies change there will be another massive influx of people into the globalized labor force, again pushing down labor costs.

There many places that China outsources to, and there will be more in the future if the country continues the current pace of economic development. The real risk remains political, as well as in constraints on natural resources. Many in the US have little appreciation for the wealth that lies in our vast fresh water resources, not to mention arable land and other geographic advantages.