YM778.TV Chapter 1181 - Who is in charge?
Yes, IBM was definitely the best 10 years ago. But after they shifted their focus to software, they had lost their status as the industry leader and is even lagging behind HP and Lenovo now. If it wasn’t for the long-term contracts with major corporations in the US, IBM might be kicked out of the top five PC companies.
In Feng Yu’s previous life, Lenovo had acquired IBM’s PC business, and IBM’s PC sales had dropped drastically. The US government switched to other vendors as they are afraid of Lenovo creating a ‘backdoor’ in their PCs! This is also the reason why the Chinese Government insisted on developing their own PCs.
“I don’t know how you define the best. Other than the IBM brand, IBM PCs’ specs, designs, and sales are not the best. You all have to admit that even HP and Dell are better than you all in the North American market. You all are also lagging behind other companies in Europe. Asia, a market with great potential, is now controlled by us, Lenovo.”
“Some of IBM’s technologies are still the most advanced in the world, but a PC does not depend on one or two advanced technologies. If someone is to buy a PC, they will consider all aspects of the PC. IBM had positioned itself as a high-end PC, but I don’t see which part of the specs is considered high-end. Increasing the price of the PC based on the brand is a stupid move.”
Liu Chuanzhi told Gerstner directly. He had pointed out that IBM is making use of brand loyalty to sell their PC. Although IBM is an established brand, as its product’s quality declines, the sales will also drop.
These are the truth. Many people complained that IBM’s products lacked innovation and expensive in the past two years. The real high-end PC should have better specs than other PCs. But IBM Laptops’ specs are worse than other laptops!
“But in North America, Lenovo cannot be compared to IBM. That’s why I feel that IBM should be in charge of North America. Lenovo can oversee sales in China and other parts of Asia. This way, we can share our resources better.”
Feng Yu interrupts. “Do you think that without IBM’s help, Lenovo cannot survive in the North American market? Many large corporations in North America, like eBay and Amazon, are using Lenovo PCs. Of course, companies with high potential like Nvidia, Kingston, and Google are also using Lenovo PCs. If we market our products well, just the pricing advantage, we can snatch a big portion of the market share.”
“In Europe, we have strong partners like Philips and Thomson. They are world-class consumer electronics brands, and Lenovo sales in Europe is climbing steadily. We are also the market leaders in the East European market.”
“Feng, I think you had belittled our brand effect. This is North America and not Asia or Europe. We, IBM, have lots of loyal customers.” Gerstner replied. “Also, we have lots of retail shops, and these are what you all lack.”
Feng Yu smiled and asked Gerstner. “What do you think will happen if I endorse and advertise for Lenovo?”
Feng Yu is not serious about this as he is not interested in being a spokesperson personally.
Gerstner is dumbfounded. Feng Yu is going to endorse for Lenovo PC?! But he doesn’t like to be in the limelight.
If Feng Yu endorsed and advertised for Lenovo, the consumers might really switch to Lenovo. They are businessmen, but in the eyes of ordinary folks, they are more outstanding than celebrities. They know how much sales can a top-rated celebrity increase through endorsement. IBM had hired some celebrities to endorse their products before.
Liu Chuanzhi added. “I think if we were to cooperate, Lenovo should be overseeing the sales, and I guarantee that IBM’s profits will rise. I will market IBM’s PC like Lenovo without bias.”
Gerstner and Palmisano exchanged looks. They realized that they are the underdogs in this negotiation. Since when has IBM been the underdog in business negotiations?!
Liu Chuanzhi is telling them to hand over IBM PCs’ sales to Lenovo, including sales in the North American market. This also includes all of IBM’s distribution channels.
All these might not be considered priceless, but it is highly valuable.
More importantly, IBM’s PC sales have to depend on Lenovo. Although IBM had shifted their focus to software development, their PCs are still making money. This is equivalent to giving up their PC business to Lenovo.
Liu Chuanzhi’s promise of treating IBM the same as Lenovo is impossible. If the same marketing effort is put in for both brands, Lenovo will have a pricing advantage, and IBM’s PC will not increase.
Gerstner suddenly has a feeling that Lenovo is trying to acquire IBM’s PC business!
Gerstner immediately throws out this thought from his mind, as this is impossible. Which company dares to acquire IBM’s PC business? IBM is the founder of PC!
Handing over the PC sales rights to Lenovo Group is equivalent to handing over half of IBM PC’s lifeline.
No other companies are better than Lenovo in PC designs and developments. Lenovo had demonstrated their competitiveness in their desktops or laptops. Their pricing, designs, specs, and branding had standout among their competitors!
Gerstner looked at Liu Chuanzhi in his eyes, and he can see the desire to acquire IBM’s PC business.
Suppose IBM sells its PC business to Lenovo Group... no. In that case, it should be merged with Lenovo Group, IBM will get Lenovo Group’s shares in return. At the same time, they can focus on software and server development and new technologies development. This might also be a good thing for them.
Microsoft can get to where they are now is because of IBM’s support in the past. Many people said that if IBM had acquired Microsoft, they would retain their position as the industry leader. Now, Microsoft had exceeded IBM, and it might be easier for IBM to get back its leader position if they put all their focus on one area.
“Make your decision. You all should know how this cooperation will benefit IBM.” Feng Yu said.
“Feng, I think no other companies will make such an important decision hastily. Handing over an important product’s sales to another company is a big decision. We need to discuss it with the board of directors. But we will give you an answer soon.” Gerstner replied.
Feng Yu also did not expect IBM to agree in this meeting. But he can tell Gerstner and Palmisano are hesitating, and that’s enough.
Feng Yu will let Liu Chuanzhi handle the rest.
“I will wait for your good news.”