Lenovo Chairman Vows Swift Market Growth, Channel Focus

Chairman Yuanqing Yang said the Chinese PC maker, which has based its U.S. operations in New York since acquiring IBM&s PC business, plans to grow its brand, its revenue and its relationships with business partners as it climbs its way to the top of the computer market.

"I expect the new Lenovo will become the most competitive PC company and the most famous PC brand in the world," Yuanqing said at a New York City news conference. "This means our market share will be significantly higher than [it is] now. We will be very healthy and profitable."

Since closing the IBM PC acquisition in April, Lenovo has maintained a low-key status. However, that stands to change. The company plans to gain attention by sponsoring the 2006 Winter Olympics in Torino, Italy, and embracing consumer markets in emerging nations to replicate the success that Lenovo had developed in previous years in China.

But Yuanqing was most animated about Lenovo&s strategy to migrate more of its non-China sales from "transaction”-based customers--those in the consumer, small- and midsize-business and education markets--to "relationship" customers from large enterprises and government agencies. In China, about 70 percent of Lenovo's business is with transaction customers, but that client segment represents a much smaller percentage in other markets. Over time, Yuanqing said, the company would like to make that a 50-50 split worldwide.

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"We wish we could have double the industry growth rate," Yuanqing said. "I just expect we will focus on growth first. That will give us more advantage competitively. We also have to reduce our expense-to-revenue. But certainly, we will be able to leverage Lenovo China's more efficient operations to lower expense-to-revenue."

And the channel will remain a crux of Lenovo&s sales scheme, according to Yuanqing. "We will still sell through partners," he said.

Although the legacy IBM business included some large customers who preferred a direct relationship with the vendor, that approach will be a small and shrinking part of Lenovo's strategy, said Deepak Advani, Lenovo's senior vice president and chief marketing officer.

"Given the fact that we are putting a lot of emphasis on transaction business, given there is a very high growth [in that space], our dependence on the business partner channel will increase over time,” Advani said.

Among the products that Lenovo will push going forward is a new ThinkPad Z-Series Widescreen notebook line, which sports a crash-resistant inner frame and an optional titanium cover. The ThinkPad Z60T and ThinkPad Z60M, slated to ship later this month, will come in 14-inch and 15-inch wide-screen models and be the first broadline notebooks to have integrated EVDO broadband wireless connectivity, the company said. Pricing and other details will be disclosed when Lenovo officially announces the new systems, a company spokeswoman said.

Lenovo executives also took great pains to describe the merger with IBM's PC organization as smooth.

"One of the key concerns we had would be the retention rate [of former IBM employees]," Advani said. "The retention rate is actually higher than we had when we were part of IBM. They are excited, and they are very energetic."

Between 9,000 and 10,000 IBM employees went to work for Lenovo when the merger took place, and there has been less than 5 percent attrition so far, he said.