Posted by: Dan Beucke on February 17, 2011
By Bruce Einhorn
I’ve always been skeptical about Lenovo, the Chinese computer company. In 2005 it bought the PC division of IBM, a purchase that immediately made Lenovo a worldwide rival to Hewlett-Packard and Dell. But then Lenovo struggled. As the company tried to figure out how best to integrate two very different business cultures, Lenovo went through a couple of management changes, all the while losing market share in the U.S. Five years after the IBM deal was supposed to make it a global player, Lenovo still relies on China for half of its sales. And, to make matters worse, Lenovo allowed Taiwanese rivals Acer and Asustek to gain the head start in a hot new category, netbooks. Lenovo eventually got to netbooks but since the company was just an also-ran, the mini-laps didn’t have the same impact on sales as the Taiwanese enjoyed.
Netbooks are yesterday’s story, though, and now the Next Big Thing is the tablet. Lenovo seems to be doing better this time. It wasn’t as fast as Apple, of course, but Lenovo does have its LePad, which it plans to start selling by the end of March. The company is also moving quickly into smartphones. And it’s trying once again to expand into developed markets: Last month Lenovo announced a joint-venture with NEC (with Lenovo owning 51 percent) to make inroads into the Japanese market.
Will the new strategy work? It won’t be easy, but at least for now there’s some good news. Today Lenovo announced that profit for the quarter ended in December rose 25 percent to $99.7 million; analysts were expecting just $86 million, according to Bloomberg data.