Background & Marketing Strategy

Topics: Personal computer, Lenovo, ThinkPad Pages: 8 (2004 words) Published: October 10, 2009

Lenovo Group Limited is today the largest information technology enterprise in China and the third largest computer company in the world which is has an 8.6 per cent share of the PC market, after Hewlett-Packard at 15 per cent and Dell of the US at 16.8 per cent. During its first 20 years, Lenovo evolved from a small distributor of imported computers into China’s leading computer firm and in 2005, it purchased IBM’s division. Lenovo has been the market leader for seven consecutive years, commanding a 27 per cent share of the domestic PC market. It is also the market leader in the Asia Pacific region (excluding Japan), with a market share of 12.6 per cent.

Lenovo produces desktops, laptops, servers, handheld computers, imaging equipment, and mobile phone handsets. Lenovo also provides information technology integration and support services, and its QDI unit offers contract manufacturing. Lenovo also offers Internet access through its portal. Its executive headquarters are located in Beijing, People’s Republic of China and in Morrisville, North Carolina, USA. It is incorporated in Hong Kong.

The Lenovo Company was founded in 1984 by a group of eleven engineers, headed by Liu Chuanzhi, in Beijing. Originally known as Legend Group Limited and New Technology Developer Incorporated (NTD). With an initial capital outlay of only US$ 30,000 they launched the NTD Inc. funded by the Chinese Academy of Sciences. NTD set up shop in a small concrete bungalow in Beijing with a mandate to commercialize the Academy’s research and use the proceeds to further computer science research. NTD generated early revenues by distributing imported computers such as IBM PCs to government agencies and large state-owned companies. The company initially began as a reseller, distributor and later CM for foreign brands, including IBM, entering the Chinese market.

IBM Portable Personel Computer introduces its first portable computer in 1984, that it weighing 30 pounds. Then, IBM PCD introduces its first laptop computer in 1986, known by IBM PCD 5155 Model 68 that consists of a lightweight case with a carrying handle containing a built-in. In 1987, IBM PCD announces the Personel System 2 Personel Computer (PS 2). The PS 2 was IBM’s second generation of personel computers and was created in an attempt to recapture control of the PC market by introducing an advanced proprietary architecture.

The company first original product was the Legend Chinese-character card in 1987, which translated English-language operating systems into Chinese. This also included a popular “association” feature that allowed users to form common Chinese phrases by typing in just a few Chinese characters. Unlike competing software product, the Legend card was a piece of hardware that attached to PC motherboards, thereby saving valuable hard drive space.

NTD bundled the Legend card with the imported PCs it distributed, achieving substantial first year sales of the card, which accounted for 38 per cent of company revenue and 46 per cent of profit. By the time Legend card popularity gave a boost to the PC distribution business and the firm won several new contracts, including one to distribute HP PCs in Chinaccc. In 1988, Legend card receives the highest National Science-Technology Progress Award in People’s Republic of China. In 1989, NTD was renamed Legend Computer Company.

In the early1990s, Lenovo started to manufacture and launched its own brand PCs into the market and selling 2,000 units that first year and 17,000 units by 1992. Legend then pioneered the home computer concept in China, introducing a line of home PCs and a retail network in 1993. The Legend PC business division was formally established through a 1994 reorganization that coincided with the company’s listing on the Hong Kong Stock Exchange.

At age 29, Yang Yuanqing, graduated from Shanghai Jiao Tong University was appointed general manager of the new PC division....
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