Lenovo is reorganizing its operations into two groups – Lenovo Business Group and Think Business Group – as part of a “necessary transformation” a spokesperson says is needed to fuel continued growth.
No layoffs are expected as part of the moves, the spokesperson told WRAL News.
“As you know, we’re adapting and changing from a position of strength to sustain our recent success,” Milanka Muecke, director of media relations for North America, said. “Lenovo has outgrown our major competitors for over three consecutive years and is now very close to becoming the global PC industry leader.
“This leadership position requires a different organizational model and we are moving proactively to make the necessary transformation,” she added. “We are confident that Lenovo will continue executing flawlessly for our customers under the new structure.”
Lenovo is battling HP to become the world’s No. 1 PC seller. Statistics from different research firms differ on which company is leading.
The company operates its global executive headquarters in Morrisville, but most operations are located in China.
Chairman and CEO Yang Yuanqing told employees in an email late Saturday about the changes.
Lenovo provided a statement late Sunday spelling out the reasoning behind the changes:
“Lenovo has begun implementing an internal company reorganization intended to sharpen its branding, enhance its ability to innovate in both premium and mainstream product segments, and further increase the speed of decision-making and execution. This reorganization creates two new end-to-end business groups:
- “Lenovo Business Group (LBG), led by Liu Jun, senior vice president, will focus on the mainstream consumer/commercial desktop, notebook PC and tablet businesses. Previously, Liu Jun led the company’s Mobile Internet and Digital Home (MIDH) business. The MIDH product portfolio, including smartphones, will be incorporated into the new LBG.
- “Think Business Group (TBG), led by Peter Hortensius, senior vice president, will focus on premium products in both the commercial and consumer segments, as well as enterprise solutions (such as servers and storage) and workstations. Hortensius previously led the company’s global Product Group, which was primarily focused on PCs.
“Lenovo’s current operations, including its Global Supply Chain, Global Services unit and corporate functions, will be integrated and aligned with these new business groups. The company expects to complete this reorganization and begin operating under the new structure by April 1, 2013. It does not anticipate any workforce reductions directly related to this announcement.
“The new structure is designed to capitalize on Lenovo’s outstanding momentum in the market. The company has been the fastest growing major PC company for 14 straight quarters and last quarter became the world’s leading PC company for the first time according to analyst reports. Lenovo is number one in commercial notebooks and consumer PCs. It is also the number one PC company in global emerging markets, as well as five of the seven largest PC markets in the word. In addition, Lenovo is the number two smartphone company in China and is rapidly expanding this business to other markets. The company expects the new organization to support its continued push into the “PC+” space that includes PCs, smartphones, tablets, smart TV, cloud computing and other new devices and services.”
Since acquiring IBM’s personal PC division, which was largely based in Raleigh, in 2005, the largely China based company has steadily climbed to the top of the global PC market where some data shows it has surpassed HP as the top company.
However, Yang, who recently moved back to China from a home he had established near Lenovo’s executive management headquarters in Morrisville, said Lenovo must divide into two groups in order to improve its brand recognition in higher-end markets. In the email, which was first disclosed by China media late Saturday, Yang said breaking the Think brand, which it inherited from IBM, away from Lenovo will help Lenovo compete better against Apple.
The Lenovo unit will focus on consumers and small business as well as mobile devices and phones, Yang said.
Lenovo recently rose to No. 3 worldwide as the seller of “smart-connected devices,” and Yang has made mobile Internet connectivity as well as smart TVs a major priority in his goal of making Lenovo less reliant on PCs for sales. The company now offers a wide range of desktop and laptop PCs, recently launched a joint venture with EMC targeting servers, is rolling out smartphones in more markets outside of China, and builds smart TVs.
The two newly formed units will operate under the Lenovo Group umbrella.
“The restructuring inevitably have to take up all the time and effort,” Yang said in the email that was published by Sina news. The email was translated through Google.
Yang stressed the decision is part of his “defend and attack” global strategy of defending markets where Lenovo is dominant, such as China, and growing in emerging markets as well as more established economies such as in the U.S., Europe and Japan. Over the past two years, Lenovo has pursued acquisitions and partnerships to maintain its rapid growth.
“[W]e must unswervingly implement the the fists – strategic defend + offensive – to maintain the victories, and continue to make new breakthroughs,” Yang wrote.
“We must not waver, is critical to the success of our results for the quarter and the fiscal year.
“At the same time, we need to plan for the future. Let us take full advantage of the efficiency and innovation of the new organization, to continue to win the victory, achievement of long-term goals, and ultimately built to last!”
Lenovo faces intense competition from Apple in China for tablets, PCs, laptops and phones. While Lenovo’s relatively new LePhone smartphones are gaining market share, Samsung is the top seller as it is worldwide and Apple’s iPhones are big sellers. The latest iPhone models are now being introduced in China. Lenovo executives have said they will sell smartphones in the U.S. at some point in the future. It is slowly expanding sales beyond China.
Over the past year, Lenovo has made other organizational changes, including the forming of an executive committee to advise Yang and the geographic breakdown of markets as well as who will manage them.
Gerry Smith, one of Yang’s top advisors, recently was named president of North American operations and is based in Morrisville. He also is a member of the executive committee. He led the global supply chain group before taking the new post.
[LENOVO ARCHIVE: Check out seven years of Lenovo stories as reported in WRAL Tech Wire.]