IBM, Lenovo ponder world desktop PC JV
Economies of scale
IBM and Chinese PC maker Lenovo are discussing ways the two might co-operate to boost their share of the desktop market in China and around the world, reports in the Far Eastern press suggest.
According to separate reports in the Chinese-language Commercial Times and Economic Daily News, the two PC makers are in talks centring on the foundation of a dual-brand joint-venture.
Details of the plan remain scarce, but CT suggests the following scenario: Lenovo buys the share China's Great Wall Computer holds in International Information Products Company, an existing JV with IBM. After the acquisition, IIPC becomes 'Lenovo-IBM', 'IBM-Lenovo' or some such.
According to IDC, IBM and Lenovo command 4.4 per cent and 3.4 per cent, respectively, of the never more commoditised world desktop PC market, well behind Dell and HP. Bringing their businesses together would still leave them with roughly half of HP's market share - 14.9 per cent - but would lift the JV above the heads of other rivals.
In China, Lenovo has led the field for some time, beating down all the well-known Western PC vendor names. But over the last few years the rapidly growing Chinese PC market has encouraged plenty of home-grown competition, resulting in very fierce price wars. In August, Dell - which knows the low-end PC business better than anyone - was forced to cut its losses and escape that segment of the Chinese market to focus on high-end kit such as servers.
A deal with IBM might bring Lenovo the kudos it may believe it needs to pitch for that higher-level business. ®