IBM is moving quickly behind the scenes to hand over the reigns of its legendary PC business to the new Lenovo company.
The $1.25 billion sale is on pending a national security review, but IBM tapped two executives this week for Lenovo’s business partner sales and channels organization.
IBM executives expect the deal will close before the end of June.
The assignments are critical because IBM’s integration plan includes establishing a worldwide distribution initiative into North America and Europe — where Lenovo is not a household name.
Even more pressing for the new Lenovo is keeping current contracts away from Dell and HP
. Both have redoubled efforts to steal IBM’s market share since the Lenovo deal was announced. According to IDC figures for 2003, the combined unit market share of Lenovo and IBM’s PC businesses worldwide is approximately 8 percent.
To help calm partners’ nerves and solidify the channel outside of China, IBM named Mark Enzweiler vice president for IBM’s worldwide business partner sales, a role he’ll continue with when the PC division transfers to the new Lenovo. Likewise, Stephen Mungall was named to continue his role at Lenovo as vice president in charge of U.S. distribution and reseller sales.
Previously general manager of IBM’s global chemicals and petroleum contracts, Enzweiler has a 20-year record with the company, including executive experience in personal systems in Europe-Middle East-Africa and the Americas.
Mungall has been with IBM 17 years, serving in several posts, including manager of federal channel sales. Mungall will report to IBM vice president Scott Smith. Enzweiler will report to IBM vice president Ravi Marwaha.
Both groups will report to Lenovo’s new CEO, Steve Ward, who has been assembling the team. Top spots filled so far are: Chairman Yuanqing Yang; COO Fran O’Sullivan; Chief Marketing Officer Deepak Avani; and Vice President of Product Marketing Bob Galush.
The sale is on hold until the Committee on Foreign Investment in the United States (CFIUS) reviews the details. The 11-member panel is sifting through the proposal to make sure national security is not compromised.
Published reports last week noted Lenovo would gain access to IBM’s contracts, including its vendor status with the U.S. General Services Administration for government computers. That prompted members of the Department of Homeland Security and the Justice Department to ask if a sale to China’s leading PC maker could result in Chinese spies potentially working at IBM’s U.S. manufacturing plant in Raleigh, North Carolina.
The investigation is expected to conclude March 14. If CFIUS objects, President Bush would need to clear the deal after a formal investigation..
In the meantime, analysts at IT consultancy Robert Francis Group (RFG), have been advising clients to “trust, but verify” IBM’s promises and to have a backup supplier in mind in case the new Lenovo fails to deliver.
“IT executives at enterprises reliant upon, or considering, investment in IBM-branded desktops should review all current and potential contracts and seek more information or protections wherever necessary,” RFG analyst Michael Dortch said.
This is especially true as the IBM-Lenovo deal reaches its fifth anniversary, Dortch said, since IBM may not retain control over quality assurance and other issues.
