Lenovo Buys IBM's PC Business

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China's Lenovo Group shook up the PC industry in early December when it agreed to buy IBM's PC business for $1.25 billion. The deal, which will be completed in the second quarter of 2005, will transform China's biggest PC vendor into a worldwide powerhouse, nipping closely at the heels of Dell and Hewlett-Packard.

Lenovo's beefed up PC business will take in some $12 billion in annual revenue and shippe 11.9 million units once IBM's $9.6 billion yearly PC business is factored in.

For the channel, Lenovo's ground-breaking acquisition has raised a host of concerns. Many are wondering whether Lenovo will continue IBM's tradition of innovation, or whether it might move downmarket in keeping with its low-end heritage. The IBM executives who will move over to Lenovo to run its PC business -- led by Stephen Ward, who's currently senior vice president and general manager of IBM's Personal Systems Group -- pledge that won't happen. Ward points out that Lenovo will have access to IBM's sales force and PartnerWorld program, and be able to draw on the resources of IBM Global Finance and IBM Credit.

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