Lenovo To Split Into Business And High-End Divisions

Chinese company hopes to take on Apple and Samsung with premium ThinkPad brand

On Sunday, Chinese electronics manufacturer Lenovo announced the formation of two new internal groups – the Lenovo Business Group (LBG) and the Think Business Group (TBG).

The former will continue to manufacture mainstream devices, while the latter will take over the ThinkPad PC brand and enterprise products.

CEO Yang Yuanqing hopes the restructuring will bring “sharper” branding and increase efficiency, due to faster decision-making. The changes are expected to take effect by 1 April 2013.

According to Gartner, Lenovo was the world’s largest PC vendor in the third quarter of 2012. Research firm IDC rated it the second largest after HP, though the difference was just a fraction of a percent.

The big leagues

In the West, Lenovo is best known for the ThinkPad brand, which it acquired after taking over IBM’s PC business in 2005. Since then, the Chinese company has been growing at an incredible rate, but it has struggled with creating a recognisable identity.

To solve this problem, the company’s CEO Yang Yuanqing decided to split the company into two distinctive entities. According to an internal memo, this will help Lenovo break into the high-end market with its ThinkPad laptops and workstations, where it plans to compete with none other than Apple.

LBG will be headed by senior vice president of mobile, Internet and digital home Liu Jun, and focus on mainstream PCs, laptops, smartphones and tablets.

Meanwhile, TBG will be led by senior vice president of the product group, Peter Hortensius, to focus on the enterprise market – servers, storage and workstations – and building ThinkPad into a premium brand.

The company doesn’t expect the structural changes to result in any layoffs.

“The new structure is designed to capitalize on Lenovo’s outstanding momentum in the market. The company has been the fastest growing major PC manufacturer for 14 straight quarters and last quarter became the world’s leading PC company for the first time according to analyst reports,” said a statement from Lenovo. “In addition, Lenovo is the number two smartphone company in China and is rapidly expanding this business to other markets.”

In an unrelated interview in Beijing on Sunday, CEO Yang Yuanqing outlined the plans for the company to become the number one smartphone vendor in China. “Lenovo has the confidence to outperform Samsung and Apple, at least in the Chinese market,” he told China Daily. It should be noted the company introduced an overwhelming 46 smartphone models to the Chinese market in 2012 alone.

While the restructuring is going ahead, the company hasn’t stopped announcing new products. On Monday, Lenovo launched its first ever “table” PC – the IdeaCentre Horizon.

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