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Lenovo restructuring to focus on enterprise products, software after IBM deal

Lenovo last week announced a deal to buy IBM's x86 server business

By Michael Kan, IDG News Service
January 28, 2014 10:20 PM ET

IDG News Service - Lenovo is once again restructuring its operations, this time to create two new business groups devoted to its enterprise products and to developing a software ecosystem.

A few days after announcing its plan to buy IBM's x86 server business, the Chinese company is dividing its operations into four business groups, with the other two centered around its PCs and mobile products, Lenovo said on Tuesday.

The restructuring aims to create "new businesses and new pillars" for a company that makes most of its revenue from PCs. The new enterprise group is intended to become a profit engine for the company, Lenovo added. In addition, the company's new "Ecosystem and Cloud Services" group will develop strategies to monetize company services.

The changes go into effect on April 1.

Lenovo has risen to become the world's largest PC maker, riding high from sales in its home market. But as PC demand continues to decline, the company has been developing mobile products, becoming a major smartphone vendor in China, and is bolstering its enterprise business.

Last Thursday, the company announced it would spend US$2.3 billion to buy IBM's x86 server business. If completed, the deal will boost Lenovo's credibility in the enterprise market, according to analysts.

Lenovo is trying to diversify its business so that it won't be "pigeonholed" into only selling PCs, said Bryan Ma, an analyst with research firm IDC. Its competitors, Dell and HP, have already been on this path for years now, by focusing on the higher-margin enterprise business, he added.

"PCs are no longer at the center of the world," Ma said.

Lenovo previously went through another restructuring just a year ago that split all its operations into two business groups. One was focused on mainstream products, the other on building premium products with its ThinkPad brand.

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