Lenovo to create ThinkPad-focused business unit to compete at the high end

IDG News Service - Lenovo is reorganizing its operations into two business groups, in an apparent move to leverage the company's ThinkPad brand to better compete in the market.

The reorganization, which will be completed on April 1, seeks to "sharpen" the company's branding and further streamline operations, said Lenovo in a statement Monday. As part of the restructuring, it will create two new divisions, Lenovo Business Group and Think Business Group.

The Lenovo Business Group will focus on mainstream products including consumer and commercial PCs and tablets, along with smartphones. The Think Business Group, on the other hand, will develop premium products for commercial and consumer segments, and also focus on the server and storage business.

Lenovo operates with a global product division that covers its PC and server business. In 2011, the company established a Mobile Internet and Digital Home business unit focused on tablets and smartphones.

The announcement of the reorganization comes after an internal email message from Lenovo CEO Yang Yuanqing revealing the move was leaked to the Chinese media over the weekend.

In the message, Yang said the company discovered the Lenovo brand performed well in mainstream and low-end market segments, but that its "Think" brand excelled in higher-end markets, where it could compete with Apple.

"We need to clarify and simplify our brand strategy, to let the market clearly understand the brand positioning of Lenovo and Think," he said.

Lenovo spokeswoman Angela Lee said the company would only confirm the reorganization, and had no further comment.

The Chinese company's Think brand comes from its 2005 acquisition of the ThinkPad PC business from U.S. firm IBM. Since then, Lenovo has risen to become the top PC maker alongside Hewlett-Packard, and analysts point to its ThinkPad products as a major factor behind its success.

The reorganization could be similar in approach to that of car maker Toyota, which successfully developed its luxury brand Lexus to tackle the premium market, said Bryan Ma, an analyst with research firm IDC. Lenovo, which was founded in China, has struggled to develop its brand in more mature markets such as the U.S. The ThinkPad brand, however, benefits from an established following.

The reorganization, however, also could be a "step back" for the company, which has tried for years to successfully merge Lenovo with the ThinkPad business, Ma said.

"It potentially signals that they've somewhat given up on trying to integrate the IBM PC business with the Lenovo brand name," he said. "They've put Lenovo China in one group, and the old IBM business back in its own group."

Peter Hortensius, the head of Lenovo's Product Group, will lead the Think Business Group. Liu Jun, head of its Mobile Internet and Digital Home business, will take the reins of the Lenovo Business Group.