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The Great Laptop Forward

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In the West, there's almost no awareness of the brand—yet. See All Video & Multimedia

The Long Product March The Long Product March

A glimpse of some of Lenovo’s innovations that are available in China now—and may be coming soon to a Best Buy near you. See All Video & Multimedia
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What would that mean to the United States and the rest of the world? Like Sony in Japan, Lenovo could lead an entire nation toward global competitiveness, creating a new threat to other computer companies. In the short term, it means Western consumers are about to see a river of products and TV commercials from Lenovo.

The two still-very-nervous P.R. guys and I have been waiting in the conference room for 20 minutes when Amelio finally strides in. His cell phone instantly rings. He answers with the standard Chinese greeting ni hao but continues in English. (He does not speak much Chinese.) He’s back off the phone in about two minutes and gives me the look that says “You’ve got five minutes . . .” Since Beijing’s traffic didn’t appear to faze him, I ask if the burden of carrying China to a new level in the global economy stresses him out. Amelio doesn’t flinch.

“I don’t feel any pressure about that,” he says, looking slightly amused, his eyes confidently fixed on me. “One of the exciting reasons I took this job is that this hasn’t been done before.”

Some might argue that Lenovo is as Chinese as a P.F. Chang’s China Bistro.

A little history: Lenovo was founded as Legend, in 1984, by Liu Chuanzhi and soon began distributing Hewlett-Packard products in China. Legend evolved into a PC maker and, in 1994, went public on the Hong Kong Stock Exchange. The Chinese government’s Academy of Sciences at that time owned 50 percent of the company; it still owns approximately 27 percent. “Legend was like China’s version of the H.P. garage in Palo Alto,” says Red Hat’s Hu.

In 2001, Liu named his protégé, Yang Yuanqing, as C.E.O. By then, Legend was China’s biggest technology company, a position it retains today. China’s Ministry of Information Industry ranks Lenovo as No. 1, followed by Haier Group (whose revenue is 22 percent less than Lenovo’s) and Huawai Technologies (which is half Lenovo’s size).

In the wake of China’s dotcom crash in 2000, growth in the country’s PC market slowed, so Lenovo diversified into cell phones and MP3 players. “The end result was not very successful,” Yang told me in 2005. Lenovo couldn’t beat Nokia, Motorola, and Samsung, so Yang shifted strategy, expanding Legend’s PC business globally. The company changed its name to Lenovo because Legend couldn’t be trademarked in the West. Then, Yang said, “I.B.M. knocked on our door.”

Since 2000, I.B.M. had periodically been looking to sell its money-losing PC division to Lenovo. Lenovo at first wondered if I.B.M. was trying to dump a clunker of a business on the Chinese. But then Lenovo’s former chief financial officer Mary Ma took a hard look and decided that I.B.M.’s PC division came with two valuable prizes: ThinkPad, a powerful laptop brand in corporate markets, and a cadre of well-trained American managers who could teach the Chinese a thing or two about global business—such as how to manage a multinational corporation and market products around the world. In 2005, Lenovo paid I.B.M. $1.3 billion for its PC group, the biggest buyout of a U.S. operation ever by a Chinese company. After the merger, Yang appointed I.B.M. executive Stephen Ward to be C.E.O. Yang became chairman and moved to Raleigh, North Carolina, where Lenovo has its U.S. headquarters.

Ward—who spoke often about values and vision—was probably the right guy to handle the delicate melding of Chinese and American business cultures. “He was much more collegial, with a slightly higher-level approach to problems,” says Peter Hortensius, who has run the ThinkPad unit since coming to Lenovo from I.B.M. at the time of the merger. But analysts and Lenovo executives say the company faltered under Ward. It wasn’t growing much. Supply chains broke down. Costs were too high. The product line lost focus.

In December 2005, Yang pushed Ward out and brought in Amelio, who had previously run Dell’s Asia-Pacific operations. “He is a very intense, focused man who wants to win,” Hortensius says of his current boss. Amelio puts a few items on a to-do list; then he does them. He will zero in on a problem and hound executives until it’s fixed. Amelio, Hortensius says, is “exactly what Lenovo needed.”

For now, Amelio’s Lenovo has reclaimed its No. 3 spot among the world’s PC makers, behind H.P. and Dell. (In the U.S., Lenovo has a minuscule market share, behind even Toshiba’s.) By the end of the second quarter of this year, Lenovo had pulled ahead of Taiwan’s Acer, according to the I.T. consultancy International Data Corp., though Acer’s merger with Gateway, announced in late August, may vault the Taiwanese firm back in front.

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