Lenovo Group Limited is a Chinese multinational technology company with headquarters
in Beijing Beijing,, China China,, and Morrisville, North Carolina, Carolina, United States. States.[1] It sells personal computers, tablet computers,, smartphones computers smartphones,, workstations workstations,, servers servers,, electronic storage devices, IT management software and smart televisions. televisions. In the second quarter of 2013 Lenovo was the world's largest personal computer vendor by vendor by unit sales. sales.[3] It markets theThinkPad theThinkPad line of notebook computers and [4] the ThinkCentre line of desktops. desktops. Lenovo has operations in more than 60 countries and sells its products in around 160 countries. Lenovo was founded in Beijing in 1984 and incorporated in Hong Kong in 1988 under its previous name, Legend. Lenovo is listed on the Hong Kong Stock Exchange and is a constituent of the theHang Seng China-Affiliated Corporations Index, Index, often referred to as "Red Chips". Contents [hide hide]]
1 Name
2 History
o
2.1 Founding and early history
o
2.2 IPO and secondary offerings
o
2.3 Mergers and acquisitions
3 Products and services o
3.1 Smartphones and tablets
o
3.2 Smart televisions
o
3.3 Personal and business computing
4 Operations
5 Corporate affairs
o
5.1 Financials and market share
o
5.2 Ownership
o
5.3 Corporate culture
o
5.4 Leadership
6 Marketing and sponsorships o
6.1 Emerging markets
o
6.2 United States
o
6.3 Ashton Kutcher
o
6.4 Kobe Bryant
o
6.5 Olympics
o
6.6 YouTube Space Lab
o
6.7 NFL
7 See also
8 Further reading
9 References
10 External links
Name[edit] "Lenovo" is a portmanteau of "Le-" (from Legend) and "novo", Latin ablative for "new". The Chinese name (simplified Chinese: 联想; traditional Chinese: 聯 想; pinyin: liánxiǎng ) means "association" (as in "word association") or "connected thinking" but can also imply creativity.[5] For the first 20 years of its existence, the company's English name was "Legend" (in Chinese 联 想 Lianxiang ). In 2002, Yang Yuanqing decided to abandon use of the Legend brand name in order to expand outside of China, as the "Legend" name was already in use by many other businesses worldwide, making it impossible to register in most jurisdictions. In April 2003, the company publicly announced its new name, "Lenovo", with a large media campaign involving huge outdoor billboards and primetime television ads. Lenovo spent 18 million RMB on an eight-week television advertising campaign. The billboards featured the Lenovo logo against blue sky with copy that read, "Transcendence depends on how you think." By the end of 2003, Lenovo had spent a total of 200 million RMB on rebranding.[6]
History[edit] Founding and early history [edit] Liu founded Lenovo in 1984 with a group of ten engineers in Beijing with 200,000 yuan. Lenovo officially states that it was founded on 1 November 1984. Lenovo's incorporation was approved by the Chinese government on the same day. Jia Xufu, one of the founders of Lenovo, indicates the first meeting in preparation for starting the company was held on 17 October of the same year. Eleven people, the entirety of the initial staff, attended. Each of the founders were middle-aged members of the Institute of Computing Technology, Chinese Academy of Sciences. The 200,000 yuan used as start-up capital was approved by Zeng Maochao. The name for the company agreed upon at this meeting was the Chinese Academy of Sciences Computer Technology Research Institute New Technology Development Company.[6] Their first significant effort, an attempt to import televisions, failed. The g roup rebuilt itself within a year by conducting quality checks on computers for new buyers. Lenovo soon started developing a circuit board that would allow IBM-compatible personal computers to process Chinese characters. This product was Lenovo's first major success. Lenovo also tried and failed to market a digital watch. Liu said, "Our management team often differed on which commercial road to travel. This led to big discussions, especially between the engineering chief and myself. He felt that if the quality of the product was good, then it would sell itself. But I knew this was not true, that marketing and other factors were part of the eventual success of a product." Lenovo's early difficulties were compounded by the fact that its staff had little business experience. "We were mainly scientists and didn't understand the market", Liu said. "We just learned by trial-and-error, which was very
interesting—but also very dangerous", said Liu. In 1990, Lenovo started to manufacture and market computers using its own brand name.[7] In May 1988, Lenovo placed its first advertisement seeking employees. The ad was placed on the front page of the China Youth News'.' Such ads were quite rare in China at this time. Out of 500 respondents, 280 were selected to take a written employment exam. 120 of these candidates were interviewed in person. Although interviewers initially only had authority to hire 16 people, 58 were given offers. These new hires included 18 people with graduate degrees, 37 with undergraduate degrees, and three students with no university-level education. Their average age was 26. Yang Yuanqing was among this group.[6] Liu Chuanzhi, received government permission to open a subsidiary in Hong Kong and was allowed to move there along with five other employees. Liu's father, already in Hong Kong, furthered his son's ambitions through mentoring and facilitating loans. Liu moved to Hong Kong in 1988. In order to save money during this period, Liu and his co-workers walked instead of taking public transportation. In order to keep up appearances they rented hotel rooms for meetings.[6]
IPO and secondary offerings [edit] Lenovo became publicly traded after a 1994 Hong Kong listing that raised nearly US$30 million. Prior to its IPO, many analysts were optimistic about Lenovo. The company was praised for its good management, strong brand recognition, and growth potential. Analysts also worried about Lenovo's profitability. Lenovo's IPO was massively over-subscribed. On its first day of trading, the company's stock price hit a high of HK$2.07 and closed at HK$2.00. Proceeds from the offering were used to finance sales offices in Europe, North America, and Australia; expand and improve production and research and development; and increase working capital. When Lenovo was first listed, its managers thought th e only purpose of going public was to raise capital. They had little understanding of the rules and responsibilities that went along with running a public company. Before Lenovo conducted its first secondary offering in 1997, Liu proudly announced the company's intent to mainland newspapers only to have its stock halted for two days by regulators to punish his statement. This occurred several times until Liu learned that he had to choose his words carefully in public. The first time Liu traveled to Europe on a "roadshow" to discuss his company's stock, he was shocked by the skeptical questions he was subjected to and felt offended. Liu later came to understand that he was accountable to shareholders. He said, "Before I only had one boss, but CAS never asked me anything. I relied on my own initiative to do things. We began to think about issues of credibility. Legend began to learn how to become a truly international company."[6] In order to get capital to fund its continued growth, Lenovo issued another secondary offering of 50 million shares on the Hong Kong market in March 2000 and raised about US$212 million.[6] Mary Ma, Lenovo's chief financial officer from 1990 to 2007, was in charge of investor relations. Under her leadership, Lenovo successfully integrated Western-style accountability into its corporate culture. Lenovo's emphasis on transparency earned it a reputation for the best corporate governance among mainland Chinese firms. All major issues regarding its board, management,
major share transfers, and mergers and acquisitions were fairly and accurately reported. While Hong Kong listed firms were only required to issue financial reports twice per year, Lenovo followed the international norm of issuing quarterly reports. Lenovo created an audit committee and a compensation committee with non-management directors. The company started roadshows twice per year to meet institutional investors. Ma organized the first-ever investor relations conference held in Mainland China. The conference was held in Beijing in 2002 and televised on CCTV. Liu and Ma co-hosted the conference and both gave speeches on corporate governance.[6]
Mergers and acquisitions [edit] IBM personal computer business [edit]
The ThinkPad logo as shown on the ThinkPad x100e notebook computer.
Lenovo acquired IBM's personal computer business in 2005.[8] Lenovo's acquisition of IBM's personal computer division accelerated access to foreign markets while impr oving both its branding and technology.[9] Lenovo paid US$1.25 billion for IBM's computer business and assumed an additional US$500 million of IBM's debt. This acquisition made Lenovo the third-largest computer maker worldwide by volume.[10] In regards to the purchase of IBM's personal computer division, Liu Chuanzhi said, "We benefited in three ways from the IBM acquisition. We got the ThinkPad brand, IBM's more advanced PC manufacturing technology and the company's international resources, such as its global sales channels and operation teams. These three elements have shored up our sales revenue in the past several years."[10] IBM acquired an 18.9% shareholding in Lenovo in 2005 as part of Lenovo's purchase of IBM's personal computing division.[11] Since then, IBM has steadily reduced its holdings of Lenovo stock. In July 2008, IBM's interest in Lenovo fell below the 5% threshold that mandates public disclosure.[12] Although Lenovo acquired the right to use the IBM brand name for five years after its acquisition of IBM's personal computer business, Lenovo used it for only three years. On 7 December 2007, an event called "Lenovo Pride Day" was held. After words of encouragement from management, employees ceremoniously peeled the IBM logos off their ThinkPads and replaced them with Lenovo stickers.[citation needed ]
Mobile devices[edit]
Lenovo sold its smartphone and tablet division in 2008 for US$100 million in order to focus on personal computers and then paid US$200 million to buy it back in November 2009.[13] As of 2009, the mobile division ranked third in terms of unit share in China's mobile handset market.[14] Lenovo invested CN¥100 million in a fund dedicated to providing seed funding for mobile application development for its LeGarden online app store. As of 2010, LeGarden had more than 1,000 programs available for the LePhone. At the same time, LeGarden counted 2,774 individual developers and 542 developer companies as members.[15] Lenovo entered the smartphone market in 2012 and quickly became the largest vendor of smartphones in Mainland China.[16] Entry into the smartphone market was paired with a change of strategy from "the one-size-fits-all" to a diverse portfolio of devices.[17] These changes were driven by the popularity of Apple's iPhone and Lenovo's desire to increase its market share in mainland China. Lenovo passed Apple to become the No. 2 provider of smartphones to the Chinese market in 2012.[17] However, due to there being about 100 smartphone brands sold in China, this second only equated to a 10.4% market share.[17] In May 2012, Lenovo announced an investment of US$793 million in the construction of a mobile phone manufacturing and R&D facility in Wuhan, China.[18]
Joint venture with NEC [edit] On January 27, 2011, Lenovo formed a joint venture to produce personal computers with Japanese electronics firm NEC. The companies said in a statement they will establish a new company called Lenovo NEC Holdings B.V., which will be registered in the Netherlands. NEC will receive US$175 million from Lenovo through the issuance of Lenovo's shares. Lenovo will own a 51% stake in the joint venture, while NEC will hold a 49% stake. Lenovo has a five-year option to expand its stake in the joint venture.[19] This joint venture is intended to boost Lenovo's worldwide sales by expanding its presence in Japan, a key market for personal computers. NEC has spun off its personal computer business into the joint venture. As of 2010, NEC controlled about 20% of Japan's market for personal computers while Lenovo had a 5% share. Lenovo and NEC have also agreed to explore cooperating in other areas such as servers and tablet computers.[20] Roderick Lappin, chairman of the Lenovo-NEC joint venture, told the press that the two companies will expand their co-operation to include the joint development of tablet computers.[21]
Medion[edit] In June 2011, Lenovo announced that it planned to acquire control of Medion, a German electronics manufacturing company. Lenovo said the acquisition would d ouble its share of the German computer market, making it the third-largest vendor by sales (after Acer and HewlettPackard). The deal, which closed in the third quarter of the same year, was the first in which a Chinese company acquired a well-known German company.[22] This acquisition will give Lenovo 14% of the German computer market. Gerd Brachmann, chairman of Medion, agreed to sell two-thirds of his 60 percent stake in the company. He will be paid in cash
for 80 percent of the shares and will receive 20 percent in Lenovo stock. That would give him about one percent of Lenovo.[22]
CCE[edit] In September 2012, Lenovo agreed to acquire the Brazil-based electronics company Digibras, which sells products under the brand-name CCE, for a base price of 300 million reals (US$148 million) in a combination of stock and cash and an additional 400 million reals dependent upon performance benchmarks.[23][24] Prior to its acquisition of CCE, Lenovo already established a $30 million factory in Brazil, but Lenovo's management had felt that they needed a local partner to maximise regional growth. Lenovo cited their desire to take advantage of increased sales due to the 2014 World Cup that will be hosted by Brazil and the 2016 Summer Olympics and CCE's reputation for quality.[25] Following the acquisition, Lenovo announced that its subsequent acquisitions would be concentrated in the areas of software and IT services.[26]
Stoneware[edit] In September 2012, Lenovo agreed to acquire the United States-based software company Stoneware, in its first software acquisition. The transaction is e xpected to close by the end of 2012; no financial details have been disclosed.[27][28] Lenovo said that the company was acquired in order to gain access to new technology and that Stoneware is not expected to significantly affect earnings. More specifically, Stoneware was acquired to further Lenovo's efforts to improve and expand its cloud-computing services. For the two years p rior to its acquisition, Stoneware partnered with Lenovo to sell its software. During this period Stoneware's sales doubled. Stoneware was founded in 2000. As of September 2012, Stoneware is based in Carmel, Indiana and has 67 employees.[29][30]
LenovoEMC [edit]
The signing ceremony for the LenovoEMC joint venture
Main article: LenovoEMC
Lenovo and EMC formed LenovoEMC as a joint venture to offer network attached storage (NAS) solutions. LenovoEMC's products were formerly offered under the Iomega brand name. After the formation of LenovoEMC, Iomega ceased to exist as bu siness unit. LenovoEMC's products are designed for small and medium sized that do not have the budgets for enterprise-class data storage. LenovoEMC is part of a broader partnership between the two companies announced in August 2012.[31] This partnership also includes an effort to develop x86-based servers and allowing Lenovo to act as an OEM for some EMC hardware. Lenovo is expected to benefit from the
relatively high profit margins of the NAS market. LenovoEMC is part of Lenovo's Enterprise Products Group.[32][33]
Products and services[edit] Smartphones and tablets [edit] Main article: Lenovo smartphones
The ThinkPad Tablet 2 from front and back.
Lenovo launched the LePhone in China in order to compete against other smart phones. These same phones are marketed as IdeaPhones outside of China. In early 2013, Lenovo's CEO announced that the company would start selling mobile phones in the US by the end of the year. As of January 2013, Lenovo only manufactures phones that use the Android operating system from Google. Numerous press reports indicated that Lenovo plans to release a phone based on Microsoft's Windows 8. According to JD Howard, a vice president at Lenovo's mobile division, the company will release a Windows-based phone if there is market demand. A Windows-based phone from Lenovo would be a potentially formidable competitor against Nokia's Lumia line of smartphones.[34] Lenovo has implemented an aggressive strategy to replace Samsung Electronics as Mainland China market's top smartphone vendor. It has spent $793.5 million in Wuhan in order to build a plant that can produce 30 to 40 million phones per year. Data from Analysys International shows that Lenovo experienced considerable growth in smartphone sales in China during 2012. Specifically, it saw its market share increase to 14.2% dur ing 2012's third quarter, representing an increase when compared to 4.8% in the same quarter of 2011. IDC analysts said that Lenovo's success is due to its "aggressive ramping-up and improvements in channel partnerships." Analysys International analyst Wang Ying wrote, "Lenovo possesses an obvious advantage over rivals in terms of sales channels." The company's CEO, Yang Yuanq ing, said, "Lenovo does not want to be the second player ... we want to be the best. Lenovo has the confidence to outperform Samsung and Apple, at least in the Chinese market." [35] According to IHS iSuppli, Lenovo was a top-three smartphone maker in China with a 16.5% market share in the first quarter of 2012. According to a May report released by IDC Lenovo ranks fourth in the global tablet market by volume.[36] As of November 2012, Lenovo was the second largest seller of mobile phones in China when measured by volume.[16]
Smart televisions [edit]
A Lenovo A30 TV set top box
Main article: Lenovo LeTV
In November 2011, Lenovo said it would soon unveil a smart television product called LeTV, expected for release in the first quarter of 2012. "The PC, communications and TV industries are currently undergoing a “smart” transformation. In the future, users will have many smart devices and will desire an integrated experience of hardware, software and cloud services." Liu Jun, president of Lenovo's mobile-Internet and digital-home-business division.[37]
Personal and business computing [edit] While many argue that computing is entering a "post-PC era", Lenovo's CEO, Yang Yuanqing, believes that the personal computer is still relevant and that computing is really entering what he calls the "PC plus era". In order to avoid commodity pricing and compete against mobile devices, Yang has pushed Lenovo to pursue innovative new PC designs such as its popular IdeaPad Yoga products, ThinkPad Helix, and ThinkPad Twist. Lenovo has achieved significant success with this high-value strategy and it now controls more than 40% of the market for Windows computers priced above $900 in the United States.[38]
ThinkPad[edit] Main article: ThinkPad
A Lenovo ThinkPad X1 Ultrabook
ThinkPad is a line of business-oriented laptop computers known for their boxy black design, modeled after a traditional Japanese lunchbox.[39]ThinkPads were originally an IBM product; they
have been manufactured and sold by Lenovo since early 2005, following its acquisition of IBM's personal computer division. The ThinkPad has been used in space and is the only laptop certified for use on the International Space Station.[40] Shipments of Think-branded computers have doubled since Lenovo's takeover of the brand, with operating margins thought to be above 5%.[41] Lenovo has aggressively expanded the ThinkPad brand away from traditional laptop computers in favor of tablets and hybrid devices such as ThinkPad Helixand the ThinkPad Twist.
ThinkCentre[edit] Main article: ThinkCentre
ThinkCentre is a line of business-oriented Desktop computers which was introduced in 2003 by IBM and since has been produced and sold by Lenovo since 2005.[42] ThinkCentre computers typically include mid-range to high-end processors, options for discrete graphics cards, and multimonitor support.[43][43]
ThinkServer [edit] Main article: ThinkServer
The ThinkServer product line began with the TS100 from Lenovo.[44] The server was developed under agreement with IBM, by which Lenovo would produce single-socket and dual-socket servers based on IBM’s xSeries technology.[44] An additional feature of the server design was a support package aimed at small businesses.[44] The focus of this support package was to provide small businesses with software tools to ease the process of server management and reduce dependence on IT support.[45]
ThinkStation[edit] Main article: ThinkStation
The ThinkStation products from Lenovo are workstations designed for high-end computing. In 2008, Lenovo expanded the focus of its “THINK” brand to include workstations, with the ThinkStation S10 being the first model released.
ThinkVision displays [edit] High-end computer displays are marketed under the ThinkVision name. ThinkVision displays share a common design language with other THINK devices such as the ThinkPad line of notebook computers and ThinkCentre desktops.
IdeaPad[edit] Main article: IdeaPad
A model with a Lenovo IdeaPad at a launch party in Japan.
The IdeaPad line of consumer-oriented laptop computers was introduced in January 2008. The IdeaPad is the result of Lenovo's own research and development; Unlike the ThinkPad line of notebooks, its design and branding were not inherited from IBM. The IdeaPad line's design language differs markedly from the ThinkPad and has a more consumer-focused look and feel.[46][47] In October 2012 the firm launched the IdeaPad Yoga 13, a laptop running Microsoft Corp's Windows 8 that can be converted to a tablet PC by flipping the screen all the way backwards.[48] Lenovo has subsequently released the IdeaPad Yoga 11 running Windows RT and announced the IdeaPad Yoga 11S running Windows 8. Lenovo's Yoga products reflect the company's commitment to the "PC plus era" where innovative products allow Lenovo to resist commodity pricing of PCs.
IdeaCentre[edit] Main article: IdeaCentre
A Lenovo IdeaCentre all-in-one PC
All IdeaCentres are all-in-ones machines, combining processor and monitor into a single unit.[49] The desktops were described by HotHardware as being "uniquely designed".[49] The first IdeaCentre desktop, the IdeaCentre K210, was announced by Lenovo on June 30, 2008.[50] While IdeaCentre was designed to be purely desktop models, influences of the IdeaPad line were observed.[50] One such feature was Veriface facial recognition technology.[50] At CES 2011, Lenovo announced the launch of four IdeaCentre desktops: the A320, B520, B320, and C205.[49] In the autumn of 2012, the firm introduced the more powerful IdeaCentre A720, with a
27-inch touchstreen display and running Windows 8.[51] With a TV tuner and HDMI in, the A720 can also serve as a multimedia hub or home theater PC.[52] In 2013 Lenovo added a table computer to the IdeaCentre line. The Lenovo IdeaCentre Horizon Table PC, introduced at the 2013 International CES is a 27-inch tablet computer designed for simultaneous use by multiple people. Thanks to its use of Windows 8 the Horizon can also serve as desktop computer when set upright.[53]
