Lenovo metaphor Think Think back to high-end

At the beginning of the new year, Lenovo Group once again adjusted its corporate structure.

Yang Yuanqing, chairman and CEO of Lenovo Group, said in an internal email that the company will be divided into Lenovo and Think's two major business groups in the new fiscal year. Among them, Liu Jun served as President of the Lenovo Business Group, and Peter Hothen Hughes served as President of the Think Business Group. The adjustment will take effect on April 1.

Why reorganization?

It is reported that when Lenovo Group just acquired IBM, the company’s revenue was less than US$15 billion. In 2012, Lenovo Group’s revenue exceeded US$30 billion and the management span was greater than ever.

In response, Yang Yuanqing said with deep feeling: "The current organizational structure of Lenovo has become an obstacle. Consumer-oriented businesses need fast delivery of products and rapid marketing. The existing organizational structure has become fragmented and cannot be closely matched with the supply chain. The cross-departmental cross-sectoral cooperation of personnel has led to difficulties in coordination and slow decision-making."

In addition, the gradual diversification of business is also the reason for Lenovo's restructuring. At the time of Lenovo’s acquisition of IBM, it was “focusing on the PC” and the overseas business was only the commercial business involved in the original Thinkpad business. Eight years later, new businesses include overseas consumer PCs, global server services, and storage services.

At the same time, another important reason that prompted Lenovo to reorganize the structure is that the development ideas of high-end and mainstream products are completely different. On the one hand, the Think brand is gradually being marginalized; on the other hand, Lenovo did not change Lenovo's low-end image after borrowing the Think brand. Instead, Lenovo dragged down Think's market position.

"Mainstream products need to consider the cost, price, and wait until the high-end model of the product to achieve the ultimate re-pricing is difficult to achieve in the mainstream product market." Yang Yuanqing said.

"Think is a customer type, Lenovo is a relationship type; one is a high-end, one is a low-end." Lenovo Group spokesman Milanka Muecke said that this adjustment is not a simple spin-off product group, but the restructuring of the front-end and back-end architecture .

Some media commented that before the reorganization, Lenovo’s structure could be described as “a set of teams and a set of troops”, and the new structure could be described as “two teams and two sets of personnel” to perform their duties and reduce cross-sectoral cross-sectoral cooperation.

Brand breakthrough

The new restructuring, the most important is based on brand division, seeking a breakthrough in the brand.

"Lenovo has tried to promote the Lenovo brand in the mature market, but found Lenovo brand has only significant results in the mainstream and low-end areas. In the high-end products market, Think is the only brand that can compete with Apple." In the internal mail Yang Yuanqing said frankly.

Chen Zhigang, an IT expert, believes that in the years following the acquisition of IBM’s PC business, Lenovo had diversified the influence of the Think brand several times and launched several inexpensive Think models. Although Lenovo eventually became the largest share of the global PC market, there is still a gap between profit margin and competitors.

According to the current Lenovo product strategy, Think business will focus on commercial, relational trading and high-end market in the future, while Lenovo business will focus on consumption and mainstream market.

In this regard, market analysts believe that this may limit the development of Lenovo. Yang Yuanqing denies that “This is not only a limitation but also a liberation of Lenovo brand. At present, Think has a good share in the enterprise-class high-end business, but its entry-level share is very low, and Lenovo’s business has a high share in the mainstream market. However, the share of high-end business is very low. After the reorganization, both brands have the opportunity to develop different markets."

Guo Haitao, a well-known analyst in the PC industry, also told reporters, “As the PC market is so mature today, Lenovo's restructuring and reform aims to maintain the vitality of the company. It separates the Think high-end market from Lenovo, which emphasizes the consumer market, and operates independently on the products. Cost control and brand management are good."

Although the era of mobile Internet has quietly come, but Yang Yuanqing believes that PC will not die, and can even create a market, "from PC to PC +, this is an inevitable trend."