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16 | Lenovo India: Smooth Transition
Most doubts faded after Lenovo's textbook transition of channels and customers
Thursday, August 17, 2006

Lenovo shot to fame when it acquired IBM's PC division last year. The $1.25 bn purchase has made Lenovo the world's third-largest PC maker, next to Dell and HP. There were apprehensions about the merger. Worries about the synergy between the two: Lenovo, the price warrior from China, and IBM, Big Blue from the USA, a western-centric company in terms of culture.

Lenovo accepted the challenge, and its year round focus was on building a strong brand. In India, the company adopted customized branding exercises such as roping in celebrities like Saif and Soha Ali Khan as brand ambassadors. And it was not just about brand building. Keeping up the IBM tradition, Lenovo was voted 'No 1' in the DQ-IDC Customer Satisfaction Audit for the year 2005, in both the notebook and desktop categories. It also won six of DQ Channels' Choice Awards, a clear thumbs up in terms of popularity in channels. Fiscal 2005-06 shows that despite uncertainties, Lenovo did quite well in India. Desktops sales grew 44% in number terms, and increased market share from 6 to 7.2%. While it lost notebook market share significantly, it still managed to ship 116,000 notebooks, representing an 87% unit growth.

Highlights

  • Rapid channel buildup. Channel/customer satisfaction awards

  • Some dip in notebook share, but ThinkPads still grow 87%

   

l Start-up Year: May 2005; l Products & Services: Systems; l Outlets: 194; l Address: Subramanya Arcade, Block C, No 12, Bannerghata Main Road, Bangalore 560029; l Tel: 22063000;l Website: www.lenovo.com/in/en

Strengths

  • Pure-play PC company, with strong enterprise sales/service partner in IBM GS

  • Wide portfolio: 'Think' for enterprise, 'Lenovo' consumer/SMB

  • IBM largely aligned to Intel, Lenovo more with AMD

 

Weaknesses

  • IBM, not Lenovo, rules enterprise: inadequate leverage of IBM brand in messaging eg for ThinkPads

  • Stiff competition; premium pricing

 

 

Neeraj Sharma, MD (South Asia)

Ajay Mittal, brand and marketing
Anil Philip,
consumer/SMB
Vivek Malhotra,
enterprise & mid-market
Thiru Subramanian,
CFO
Anoop Nambiar,
strategy & transformation

In March this year, Lenovo launched its own branded PCs aimed at the SMB segment. It also ramped up its distribution model in India and signed with regional distributors to gain more ground in up-country markets. As part of its channel management, Lenovo launched new initiatives such as Think Warrior, which offers reward points to the sales teams of the channels partners. Going forward, bringing out affordable PCs and making a dent into the upcountry areas tops Lenovo's agenda in India.

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