Word: amelio
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...Amelio wants to replicate Lenovo's China business model around the world. Execs have jetted to cities from Paris to Bangalore to teach local managers how things are done in China. The goal: penetrate markets by building close ties to both major resellers and mom-and-pop computer centers to target fast-growing small businesses. Then, back up the sales effort with highly efficient and flexible product-supply systems developed in China. "We have a model that works," says Amelio. "We have to get it rolling everywhere...
...Amelio is also employing a tactic used by other Asian upstarts, like Korean carmaker Hyundai Motor--value for money. Lenovo is packing its products with goodies and charging less than other PC brands, especially in a new series of computers called Lenovo 3000. Launched in February, the 3000s are an amalgam of Lenovo and IBM design and technology. The desktops are based on a Chinese product that features a one-button fix-it process to restore virus-damaged systems. They also feature ThinkPad-quality keyboards--all at a very reasonable $349. In comparison with other major brands, Lenovo notebooks ranked...
...usually arrives within 10 days. Order from Lenovo and it could come as quickly. Or you could go on vacation for a couple of weeks, and it may or may not be there when you return. "Outside of China, our supply chain is not world class," Amelio admits. To help fix the problem, he poached Dell's Gerry Smith to run supply-chain management--a Dell specialty...
Another problem: Lenovo doesn't have the financial muscle it needs to wage war with HP and Dell. In its past quarter, Lenovo earned only a $5 million net on revenues of $3.5 billion (after restructuring charges). Amelio has already cut 5% of the workforce and plans to slice $350 million from Lenovo's costs by early 2008, in part by consolidating operations, such as centralizing the global desktop team in China. The cost cuts "may be what I need to stay aggressive on pricing and not destroy my margins," he says...
Still, there may be opportunity. Dell is wounded, reeling from plummeting profits and a major laptop recall. Amelio's aggressive plan might be what Lenovo needs to become a global PC heavyweight. "Amelio is doing exactly what needs to be done," says Joseph Ho, an analyst at Daiwa Institute of Research in Hong Kong. And if Lenovo gets some breathing room, maybe He, the chief technology officer, can focus on learning how to tell a Tar Heel from a Blue Devil...