Lenovo Outlines IBM ThinkPad Strategy

China’s Lenovo Group is beginning to shed light on its short-term growth
plans after agreeing to buy
IBM’s PC business.

Executives speaking at this week’s Consumer Electronics Show in Las
Vegas said they are adopting an “aggressive yet prudent growth strategy”
during the five-year transition. IBM will still maintain a stake in its
consumer business. The $1.75 billion deal for IBM includes an 18.9
percent stake in Lenovo, the leading PC maker in China.

Bob Galush, vice president of product marketing in IBM’s PC
division, told internetnews.com the plan is to establish a worldwide
distribution initiative outside of China and into North America and
Europe — places where Lenovo is not a household name.

“We have the enviable position of immediately having a market share
that will be in the mid-30s,” Galush said.

The IT market in China is the fastest growing among the world’s top
economies. Within this market, IBM estimates services and software are
contributing to an estimated compound growth rate through 2006 of about
20 percent.

As part of its short-term strategy, Galush said Lenovo is also
committed to the continued development of ThinkVantage Technologies,
which reside in IBM’s ThinkPad notebooks and ThinkCentre desktop
models.

“What I have been telling customers is that they will see no change,”
Galush said. “The client team continues to cover the PCs. The PC
specialists or the specialists on the PC products will be the same ones
customers are used to having a relationship with.”

Galush said the companies will have to wait for a few more
weeks before they can formally start the arduous process. Chinese and
U.S. government regulators are reviewing the terms of the deal, which is
not expected to finalize until the second quarter of 2005.

“We have to go and look at all of their products and then start
looking around the globe to see where there are opportunities to sell
them,” Galush said.

Despite the delay, Lenovo wasted no time in contacting its channel
partners and corporate customers. Right after the deal was announced,
Galush said a group made up of new Lenovo CEO Stephen Ward and a host of
other top-level executives made the rounds with partners and corporate
customers ensuring a smooth transition and making sure that the
integration is effective.

Galush said customers fell into three categories: people who want
Lenovo to broaden the product line; people who don’t want Lenovo to change a
thing; and people who are avoiding the whole situation.

“Most fall into the first two categories, which is good considering
our key competitors have been installing some [fear, uncertainty and
doubt],” Galush said.

Beyond the better-known airbag and biometric additions to the
ThinkPad lineup, Lenovo is developing a technology called Antidote.
Expected to be included in next-generation PCs released after October,
the technology lets a user or administrator clean out all the systems of
a network and block them from re-infection.

Galush said Lenovo is also carrying over IBM’s Access Connections,
which is a connectivity package to store profiles. In addition to its Rapid Restore Ultra disaster
recovery software, IBM is developing its Embedded Security Subsystem for new Lenovo notebooks.

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