Appointment of new CEO highlights Lenovo's separation from IBM

Chicago (IL) - Just about one year ago, IBM announced to sell its PC business to China-based Lenovo. Throughout the past year, Lenovo has been transitioning and stabilizing its new PC business among the largest PC vendors worldwide. A shift in its executive leadership sets the stage for cutting remaining ties with IBM and preparing the company for expansion.

Browsing on Lenovo’s website quickly remains how much the PC-business of the Chinese company still depends on IBM. Only the top level pages are organized under the lenovo.com domain. Product descriptions are still listed and managed on IBM’s servers. Throughout the site, IBM’s corporate design guidelines are apparent in every single corner.

Transition takes time, especially, if it involves the world’s third largest PC business. But a few days after Lenovo’s announcement to appoint a new CEO, it is clear that Lenovo has made progress and is ready to go its own way and separate from IBM. So far, Stephen Ward, the former general manager of IBM’s Personal Systems Group, lead the company as temporary CEO. Now, Lenovo brought in William Amelio, who will be responsible for growing Lenovo’s PC business into a more dominant role.

The 47-year old Amelio joins Lenovo from Dell, where he was senior vice president for the firm’s operations in the Asia-Pacific region. Prior to joining Dell in 2001, Amelio was executive vice president and chief operating officer for NCR’s retail and financial group. Before that, Amelio was president and CEO at Honeywell. His career also includes 18 years at IBM.

During 2005, Lenovo surprised analysts by keeping IBM’s PC shipments stable. In the third quarter, the company shipped and expected 757,000 desktop and notebook computers just in the US. Richard Shim from IDC told TG Daily that the quarter was "all about establishing a shipping infrastructure." And the company did much better than it was generally expected : "We thought it would take Lenovo longer to get their shipping in order. It’s a promising result. Now they have to prove that they can grow," Shim said at the time when the figures were released.

On a global basis, Lenovo already is the third largest PC manufacture behind Dell and Hewlett-Packard (HP). According to iSuppli, the company shipped 4.1 million PCs in the third quarter of this year, which represents a growth of 12.7% over the second quarter - and is in line with the combined shipments of Lenovo and IBM in the third quarter of 2004. Lenovo’s market share currently is estimated at 7.4% while HP is listed with 15.5% and Dell with 17.3%.

Acer’s chairman JT Wang told Digitimes that Amelio’s appointment "is a way for the company to step out of IBM’s shadow." Wang believes that "the goal of being a worldwide player, rather than being limited to China, will be challenging Lenovo in the coming future." Chinese consulting firm Analysys International agreed with Wang’s description and adds that it believes that "Lenovo has finished its initial consolidation for phase one" and that Amelio’s operation experience may help the company consolidate the PC business for mature and emerging markets.

Analysys believes that Stephen Ward "mostly shouldered a transitional role to stabilize former IBM PC employees and clients," in which he was very successful, even if Lenovo lost almost one third of its employees, after the sale of IBM’s PC unit was announced in December 2004. Amelio’s task will be to "seek a more aggressive and profitable expansion."

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