Lenovo Group Limited

Type	Public
Traded as	SEHK: 0992
Industry	Computer hardware Computer system Electronics
Founded	1984 (Beijing)
Founder(s)	Liu Chuanzhi
Headquarters	Beijing, China Singapore Morrisville, NC, United States
Area served	Worldwide
Key people	Yang Yuanqing (Chairman and CEO)
Products	Desktops, servers, notebooks, tablet computers, netbooks, peripherals, printers, televisions, scanners, storage
Revenue	US$ 21.594 billion (2011)[1]
Operating income	US$ 382 million (2011)[1]
Net income	US$ 273 million (2011)[2]
Total assets	US$ 10.705 billion (2011)[1]
Total equity	US$ 1.834 billion (2011)[1]
Employees	26,341 (2011)
Website	www.lenovo.com

Lenovo Group Limited (SEHK: 0992) is a Chinese multinational information technology and electronics company co-headquartered in Beijing, Singapore and Morrisville, North Carolina, United States. Its products include personal computers, workstations, servers, electronic storage, IT management software, and other related products and services. Lenovo was founded in Beijing in 1984 and incorporated in Hong Kong in 1988 under its previous name, Legend.^[3]

Lenovo is the world's second-largest PC vendor by 2011 market share (after Hewlett-Packard) and markets the ThinkPad line of notebook computers and the ThinkCentre line of desktops.^[4] These brands became part of Lenovo's offerings after its 2005 acquisition of IBM's personal computer business. Lenovo also sells the IdeaPad line of notebook computers. Lenovo markets its products directly to consumers, small to medium size businesses, and large enterprises, as well as through online sales, company-owned stores, chain retailers, and major technology distributors and vendors.

Lenovo is listed on the Hong Kong Stock Exchange.

Name[link]

In 2004, Lenovo Group changed its English name to Lenovo Group Limited. "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" or "connected thinking" but can also imply creativity. The name was changed from Legend because it conflicted with other trademarks registered in the West.^[5]

History[link]

In the 1980s, with market reforms in progress, the Chinese government commissioned Liu Chuanzhi to distribute foreign-made computers. Soon after, Liu founded Lenovo (whose English name was originally Legend, in Chinese 联想 Lianxiang), in 1984 with a group of ten other engineers in Beijing with 200,000 yuan. Their first significant transaction, an attempt to import televisions, failed. The group rebuilt itself within a year by conducting quality checks on computers for new buyers. Lenovo soon invested money in developing a circuit board that would allow IBM PCs to process Chinese characters. This product was Lenovo's first major success. In 1990 Lenovo started to assemble PCs under its original brand name, Legend.^[6]

Liu claims Hewlett-Packard as a key source of inspiration. In an interview with The Economist he said, "Our earliest and best teacher was Hewlett-Packard." For more than ten years Lenovo served as Hewlett-Packard's distributor in China.^[7] Speaking in reference to Lenovo's later acquisition of IBM's personal computer unit Liu said, "I remember the first time I took part in a meeting of IBM agents. I was wearing an old business suit of my father's and I sat in the back row. Even in my dreams, I never imagined that one day we could buy the IBM PC business. It was unthinkable. Impossible."^[6]

Business ethics were a key challenge for Liu in establishing and expanding Lenovo. Liu says that at first he behaved "like a kind of dictator" and spent lots of time yelling. He sent five corrupt executives to jail. Being late for a meeting could be punished by having to stand in silence before the group, a punishment that Liu accepted three times himself. Lenovo's culture gradually changed and Liu was able to relax his authoritarian style. Lenovo became an employer of choice for Chinese engineers and managers with overseas education. ^[7]

Lenovo was listed in the Hong Kong stock market in 1994, raising nearly $30 million. Lenovo was traded in overseas financial markets for the first time on 1 April 2001.

In August 2002, Lenovo launched a supercomputer capable of making a quadrillion calculations per second. This was the first computer to exceed quadrillion calculations per second in tests.^{[more information needed]}

IBM personal computer business[link]

Lenovo made its acquisition of IBM's personal computer business amid a backlash in Congress against Chinese companies trying to purchase American businesses. Chinese oil company CNOOC abandoned its attempt to buy Unocal and appliance maker Haier Group ended its efforts to acquire Maytag. Lenovo has moved its global headquarters to Purchase, New York and kept most of its former IBM development staff in North Carolina.

Lenovo Mobile[link]

Lenovo sold its mobile phone division in 2008 in order to focus on its personal computer business and then paid $200 million to buy it back in November 2009. Lenovo Mobile focuses on mobile internet devices such as smart phones and tablet computers^[8] Lenovo Mobile now ranks third in terms of unit share in China’s mobile handset market.^[9]

Lenovo invested 100 million yuan 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.^[10] 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.^[11]

Joint venture with NEC[link]

On January 27, 2011, Lenovo formed a PC joint venture with Japanese IT company NEC. As part of the deal, 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, through a unit, 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.^[12]

This joint venture with NEC 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 area such as servers and tablet computers.^[13]

Acquisition of Medion[link]

In June 2011 Lenovo announced that it planned to acquire control of Medion, a German electronics manufacturing company. Lenovo said the acquisition would double its share of the German computer market, making it the third-largest vendor by sales (after Acer and Hewlett-Packard). 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. This acquisition will give Lenovo 14 percent 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.^[14]

Products and services[link]

ThinkPad[link]

The current Thinkpad logo

The ThinkPad line of laptop computers was originally sold by IBM. ThinkPads are known for their boxy black design, modeled after a traditional Japanese lunchbox.^[15] Since early 2005, ThinkPads have been manufactured and sold by Lenovo, which purchased the IBM personal computer division that year. ThinkPads are popular with businesses, schools, and individual users. The ThinkPad has been used in space and is the only laptop certified for use on the International Space Station.^[16]

IdeaPad[link]

A 2008 Lenovo Ideapad S10

The IdeaPad line of consumer-oriented laptop computers was introduced in January 2008. The IdeaPad is entirely 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 design marked a deviation from the business-oriented ThinkPad laptops, towards a more consumer-focused look and feel.^[17] Among these changes were the inclusion of a glossy screen and the omission of the traditional ThinkPad TrackPoint.^[18] Notebook Review said the keyboard had a ‘"distinctive ThinkPad feel" and "the touchpad and touchpad buttons were smooth and responsive."^[19]

ThinkCentre[link]

The ThinkCentre line of desktops was introduced in 2003 by IBM and this product line has been sold by Lenovo since 2005.^[20]

IdeaCentre[link]

The first IdeaCentre desktop, the IdeaCentre K210, was announced by Lenovo on June 30, 2008.^[21] While IdeaCentre was designed to be purely desktop models, influences of the IdeaPad line were observed.^[21] One such feature was Veriface facial recognition technology.^[21]

At CES 2011, Lenovo announced the launch of four IdeaCentre desktops: the A320, B520, B320, and C205.^[22] All desktops were designed as All-in-ones, combining processor and monitor into a single unit.^[22] The desktops were described by HotHardware as being ‘uniquely designed’, with users needing to ‘gaze on each one to see which design would look best in your place’.^[22]

Mobile devices[link]

A Lenovo X61 Tablet

The LePad is a tablet computer. The LePad is part of an effort by Lenovo in the market for mobile internet devices. Lenovo has established a Mobile Internet and Digital Home Business Group in order to compete in this space. "The LePad is the first major launch since the business group's founding, we are confident in it and will continue to enrich its product line with better per-forming products and a richer selection of styles," Lenovo said in a written statement.^[23]

Lenovo launched the LePhone in order to compete against other smart phones. The LePhone is offered at a low price point, and is customized for the Chinese market. The LePhone has benefited from strong support from Chinese mobile phone companies and content providers such as Baidu, Alibaba, and Tencent. The LePhone supports the GSM standard, China's indigenous TD-SCDMA 3G standard used by China Mobile, the WCDMA 3G standard used by China Unicom, and China Telecom's CDMA 2000 network.^[24][25][26] As of December 2011 the LePhone exclusively uses the Android operating system from Google, although Lenovo plans to release a version of the LePhone which uses Microsoft Windows in 2012.

According to IHS iSuppli, Lenovo was a top-three smartphone maker in China with a 16.5 percent 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.^[27]

Lenovo ideapad Tablet

LeTV[link]

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.^[28]

Cloud[link]

In November 2011, Lenovo said it would offer a new cloud computing service that will allow users to share content between multiple devices, in addition to managing their personal information and social networking.^[28]

Other products[link]

Other Lenovo products include:

• ThinkStation workstations
• ThinkServer servers
• Lenovo 3000 J Series desktops
• Lenovo 3000 C, N, and V Series laptops
• Computer displays
• ThinkVision projectors and monitors

Operations[link]

The Lenovo corporate campus in Beijing

Lenovo's principal facilities are in Beijing, Morrisville, North Carolina and Singapore, with research centers in those locations, as well as Shanghai, Shenzhen, Xiamen, and Chengdu in China, and Yamato in Kanagawa Prefecture, Japan.^[29]

Lenovo operates factories in Chengdu and Hefei in China, Japan, and as of December 2011 has plans to start production in Argentina. Lenovo focuses on vertical integration in order to avoid excessive reliance on original equipment manufacturers and keep costs down.^[30]

in 2012, Lenovo started construction on an industrial park in Wuhan that will serve as the base of operations for a major expansion of its mobile devices business. The facility is scheduled to open in October of 2013. The facility will house research and development, production, a global sales office for mobile devices. About 10,000 people will be employed at this location. ^[27]

Corporate affairs[link]

Financials and market share[link]

The Lenovo R&D centre in Shenzhen, China

Lenovo is the dominant supplier of computers in mainland China and became the world's second largest supplier of personal computers during the third quarter of 2011. Lenovo held around 13.5% of the worldwide computer market as of October 2011. The company's expansion was boosted in part by a joint venture with NEC in Japan and aggressive marketing to both professional sand consumers. Yang Yuanqing said that Lenovo would continue its expansion by focusing on technological convergence in the areas of smart phones, tablets, personal computers, and "smart TV." "We must deliver a great user experience across all platforms to achieve our goal and become the leading personal technology company in the world," he said.

In the second quarter of 2011, Lenovo was the world's third largest vendor of personal computers.^[31] For the year ending with third quarter 2010, its market share increased from 8.6 percent to 10.4 percent.^[32] The company is the largest seller of PCs in China, with a 28.6% share of the China market, according to research firm IDC in July, 2009. It reported annual sales of $14.9 billion for the fiscal year ending 2008/2009 (ending March 31, 2009).

During the first quarter of 2011, Lenovo held 31.7% of the Chinese personal computer market when measured by units sold. Lenovo reported a 98.3 percent rise in profit to $108.8 million during the first quarter of 2011, up from $54.86 million during the same quarter of the previous year. Lenovo shipped 10.28 million personal computers in the first quarter of 2011. Lenovo reported a 54-percent rise in profit for the third quarter of 2011, beating analyst predictions, in spite of slow sales growth and a shortage of hard drives.^[33]

Ownership[link]

As of October 1, 2011, 58% of Lenovo stock was held by the general public, 34% by Legend Holdings Limited, and 8% by other entities. The Chinese Academy of Sciences owns 36% of Legend Holdings.^[34]

On September 4, 2009, Oceanwide Holdings Group, a private investment firm based in Beijing, bought 29% of Legend Holdings, the parent company of Lenovo, for 2.76 billion yuan.^[35]

IBM acquired a 18.9% share of Lenovo in 2005 as part of Lenovo's purchase of IBM's personal computing division.^[36] Since then IBM has steadily reduced its holdings of Lenovo stock. In July 2008 the IBM's interest in Lenovo fell below the 5% threshold that mandates public disclosure.^[37]

In November 2010, it was reported that private equity firms TPG Capital and General Atlantic were seeking to exit Lenovo with a HK$1.56 billion share placement.^[38]

Responding to claims that Lenovo is a state owned enterprise CEO Yang Yuanqing said: "Our company is a 100% market oriented company. Some people have said we are a state owned enterprise. It's 100% not true. In 1984 the Chinese Academy of Sciences only invested $25,000 in our company. The purpose of the Chinese Academy of Sciences to invest in this company was that they wanted to commercialize their research results. The Chinese Academy of Sciences is a pure research entity in China, owned by the government. From this point, you could say we're different from state-owned enterprises. Secondly, after this investment, this company is run totally by the founders and management team. The government has never been involved in our daily operation, in important decisions, strategic direction, nomination of the CEO and top executives and financial management. Everything is done by our management team."^[39]

Yang dramatically increased his ownership stake in by acquiring 797 million shares in 2011. As of June 2011, Yang owns an 8 percent stake in Lenovo. He previously owned only 70 million shares. In a statement, Yang said, "While the transaction is a personal financial matter, I want to be very clear that my decision to make this investment is based on my strong belief in the company's very bright future. Our culture is built on commitment and ownership - we do what we say, and we own what we do. My decision to increase my holdings represents my steadfast belief in these principles."^[40]

Leadership[link]

Liu Chuanzhi[link]

Liu Chuanzhi is the founder of Lenovo. Liu founded Lenovo (whose English name was originally Legend, in Chinese 联想 Lianxiang), in 1984 with a group of ten other engineers in Beijing with 200,000 yuan. The listed holding company was incorporated in 1988 in Hong Kong.

Yang Yuanqing[link]

Yang Yuanqing - Annual Meeting of the New Champions Tianjin 2008)

Yang Yuanqing is the chief executive officer of Lenovo. Yang was chairman of Lenovo's board from 2004 to 2008. Before the acquisition of IBM's PC division in 2004, he was president and CEO. One of his major achievements was leading Lenovo to become the best-selling personal computer brand in China since 1997. In 2001, Business Week named him one of Asia's rising stars in business. In February 2009, CEO Bill Amelio was replaced by Yang.^[41]

Gianfranco Lanci[link]

In April of 2012, Lenovo named former Acer CEO Gianfranco Lanci head of its European unit. Lenovo said Lanci was hited help achieve its goal of becoming a top-three personal computer maker in Europe within the year. ^[42]

Marketing[link]

The 2008 Summer Olympics Torch, which was designed by Lenovo

Olympic sponsorship[link]

Lenovo was an official computer sponsor of the 2006 Winter Olympics in Turin, Italy, and the 2008 Summer Olympics in Beijing.

When asked about Lenovo's brand Yang Yuanqing said, "Outside of China we still have a long way to go, and that's why we've paid a lot of attention to brand building, particularly in emerging markets. It's easier to do it in those countries compared with mature markets. The Beijing Olympics were very good for brand awareness in countries like the US and Argentina, but not good enough.

Space contest[link]

As of December 2011, Lenovo is conducting a contest in conjunction with YouTube, NASA, the European Space Agency, and JAXA that will allow students between the ages of 14 and 18 the chance to devise experiments to be performed by astronauts on the International Space Station. Winners will receive a trip of their choice to either Japan or Russia in addition to having their experiments performed in space.

See also[link]

	People's Republic of China portal
	North Carolina portal
	Companies portal
	Computer science portal

• Lists of Chinese companies
• List of the world's largest companies
• List of computer system manufacturers
• List of company name etymologies

References[link]

• Ling, Zhijun (2005). The Lenovo affair: the growth of China's computer giant and its takeover of IBM-PC. trans. Martha Avery. Singapore: John Wiley & Sons [Asia]. ISBN 978-0-470-82193-0. http://books.google.com/?id=Mg7TdU9E3d0C. Retrieved 2009-09-16. 

External links[link]

Wikimedia Commons has media related to: Lenovo

• Official website of Lenovo
• Yahoo! - Lenovo Group Limited Company Yahoo Profile

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