Lenovo says goodbye to the PC

[Puppy]

http://www.zeit.de/digital/internet/201 ... ettansicht (german content)

The world's largest manufacturer of PCs and the iconic ThinkPads wants to focus entirely on supercomputer and data center. The radical turnaround was necessary, they said. (automatically translated)

[Ibthink]

Clickbait article, as expected when a major news-outlet writes about anything technology related.

Lenovo doesn´t make any money with servers and smartphones. They need the PC so they won´t quit the PC market anytime soon. Being one of the biggest manufacturers, they will probably be one of the manufacturers who survive the longest.

[Puppy]

I would say so but it indicates even more compromises and quality decline is coming anyway, quote:

I am not interested in the number one or two in the classic PC market," says Group Chief Yang Yuanqing. "It has no future, we must be the number one in the new markets." He means datacenter, supercomputer and mobile internet.

[Ibthink]

YY may soon leave Lenovo. His decision to invest in Motorola and the IBM Server business have proven gigantic failures so far for Lenovo and only the robust PC business saves them from running on a loss.

With the PC market shrinking, its also being refocused on the higher-end segments that actually produce growth, like workstations, gaming or very mobile thin Ultrabooks. The thing that originally facilitated the quality decline in the PC market was that it developed into a mass market where the lowest price was the most important thing. This is changing right now.

So I would expect the quality to increase in the future instead of decrease. Fewer people need PCs than 10 years ago, but those people who do also want better quality.

[Puppy]

YY may soon leave Lenovo. His decision to invest in Motorola and the IBM Server business have proven gigantic failures

Well, it is Lenovo turn to start a damage control after such (misleading ?) statement of a Lenovo representative.

[Thinkpad4by3]

YY may soon leave Lenovo. His decision to invest in Motorola and the IBM Server business have proven gigantic failures

Well, it is Lenovo turn to start a damage control after such (misleading ?) statement of a Lenovo representative.

I dont especially think lenovo is going anywhere. I think its a cover up story for a bigger internal problem.

[Dekks]

I would say so but it indicates even more compromises and quality decline is coming anyway, quote:

I am not interested in the number one or two in the classic PC market," says Group Chief Yang Yuanqing. "It has no future, we must be the number one in the new markets." He means datacenter, supercomputer and mobile internet.

How you work that from the statement is beyond me.

[Summilux]

How you work that from the statement is beyond me.

To me it's a sensible inference. If Lenovo says it doesn't care about the PC market anymore, why would they strive to maintain their already poor standards ? Why lose margins by selecting better/more expensive components and waste money in QC ?

[Dekks]

To me it's a sensible inference. If Lenovo says it doesn't care about the PC market anymore, why would they strive to maintain their already poor standards ? Why lose margins by selecting better/more expensive components and waste money in QC ?

If you believe that then you don't seem to know much about business, if that's truly the plan they will be out of business very quickly - not a recipe any senior exec will want.

[Puppy]

If Lenovo says it doesn't care about the PC market anymore, why would they strive to maintain their already poor standards ? Why lose margins by selecting better/more expensive components and waste money in QC ?

This is exactly my point. It does not mean Lenovo will stop producing PCs right now but the quality will be even worse.

[Thinkpad4by3]

If Lenovo says it doesn't care about the PC market anymore, why would they strive to maintain their already poor standards ? Why lose margins by selecting better/more expensive components and waste money in QC ?

This is exactly my point. It does not mean Lenovo will stop producing PCs right now but the quality will be even worse.

I doubt Thinkpads are going anywhere, they just change manufacturers. If Lenovo cant do it, then someone else can.

Ideapads on the otherhand are probably going down the drain. When IBM did the same, Thinkpads were fine for a good 7 years before they got messed up.

[ajkula66]

To me it's a sensible inference. If Lenovo says it doesn't care about the PC market anymore, why would they strive to maintain their already poor standards ? Why lose margins by selecting better/more expensive components and waste money in QC ?

If you believe that then you don't seem to know much about business, if that's truly the plan they will be out of business very quickly - not a recipe any senior exec will want.

Lenovo may very well be out of PC business soon enough, selling off the Think brands and keeping their cheapo concepts for local market. They play by an entirely different set of rules when compared to the rest of PC world.

They'll never go bankrupt. Regardless of what they do. Sure, some heads may roll, but that's it.

Once you understand that fact, the picture changes dramatically.

[Summilux]

If you believe that then you don't seem to know much about business, if that's truly the plan they will be out of business very quickly - not a recipe any senior exec will want.

But that's exactly what Lenovo's CEO wants : exiting the PC business.

He's probably looking for potential buyers right now. Meanwhile, Thinkpads remain neglected.

[Ibthink]

But that's exactly what Lenovo's CEO wants : exiting the PC business.

No he doesn´t. Lenovo would be as good as bankrupt fast if they did exit the PC business. Because none of their other business units makes any money.

[RealBlackStuff]

What does it take for those eejits to limit themselves to producing only 5 or 6 laptop lines?
But no, they must have at least one laptop type beginning with every letter of the alphabet!
They are probably even considering making a different laptop type for every Chinese character!

Altogether there are over 50,000 [Chinese] characters, though a comprehensive modern dictionary will rarely list over 20,000 in use.
An educated Chinese person will know about 8,000 characters, but you will only need about 2-3,000 to be able to read a newspaper.

[Summilux]

No he doesn´t.

He doesn't ? Dann why does he no longer want to be number one and why does he want to spend his energy on new markets ?

Assuming he's fine with Lenovo becoming a small PC manufacturer, how would the company not decline even faster ? Because nowhere did he mention that he wishes for fewer products of a higher quality. Less volume + bad products = death.

Lenovo would be as good as bankrupt fast if they did exit the PC business. Because none of their other business units makes any money.

Using the cash from the PC business sale and reinvesting it into a more promising area : this is called pivoting.

[micrex22]

I don't know why so many people obsess over the death of the ThinkPad (or PCs in general) or Lenovo's finances.

As far as many people and businesses are concerned, they're going to keep on buying ThinkPads. Heck, they've been buying them even with Lenovo's changes.

It's also going to be awhile yet before mainstream personal computers become a workstation niche exclusive, and even when that happens people are still going to be buying ThinkPads.

[Ibthink]

He doesn't ? Dann why does he no longer want to be number one and why does he want to spend his energy on new markets ?

He said he doesn´t care if they are number one or not in PC because this market has no big future perspective. This does not mean that they will stop selling PCs. They will sell PCs as long as that business brings in a significant profit.

His statements are quite contradictory actually with Lenovos behavior. They are in talks right now to buy Fujitsus PC business - is that the behavior of a PC manufacturer who is about to quit? I think this is more a statement aimed at investors: "this company has a future beyond PC".

YY also is a dead man walking right now. There are very credible rumors that he might be replaced very soon.

Using the cash from the PC business sale and reinvesting it into a more promising area : this is called pivoting.

The question is: Who would pay for the PC business? And how much? Who wants to enter this market that has been proclaimed dead a 1000 times by buying one of the two biggest PC makers?

They are already trying to pivot the company. They are doing this since they bought IBMs x86 server business and Motorola. Look at the financial report: http://static.lenovo.com/ww/lenovo/pdf/ ... PT_ENG.pdf All the money the PC business earns is being consumed by the losses of the other business groups.

If they would sell the PC business to whomever may buy it, they would have a one time cash income - and once that is spend, game over. But keeping the PC group running already makes them the cash they need to pivot the other business groups - as long as it does turn in a profit. So I think milking it as long as possible might make more sense for them.

[Unknown_K]

Publically traded companies have to keep having growth or stocks suffer. The PC market is saturated so long term they need to find somewhere else to get that growth. This process is what kills quite a few once profitable companies. DELL had issues because of this and then they went private.

Private companies only really care about profits (short and long term). Making the same profit year over year is what most people would care about.

[Summilux]

His statements are quite contradictory actually with Lenovos behavior. They are in talks right now to buy Fujitsus PC business - is that the behavior of a PC manufacturer who is about to quit?

I think it's the behaviour of shareholders who are forcing the CEO to buy something he doesn't want.

YY also is a dead man walking right now. There are very credible rumors that he might be replaced very soon.

... and this confirms the above statement : that the shareholders are playing against their CEO.

The question is: Who would pay for the PC business? And how much? Who wants to enter this market that has been proclaimed dead a 1000 times by buying one of the two biggest PC makers?

There are assets (such as Thinkpads) and probably patents which could be of interest to either electronics companies or investment funds.

They are already trying to pivot the company. They are doing this since they bought IBMs x86 server business and Motorola. Look at the financial report: http://static.lenovo.com/ww/lenovo/pdf/ ... PT_ENG.pdf All the money the PC business earns is being consumed by the losses of the other business groups.

There's no lack of money in the smartphone business, companies newer than Motorola are doing better. On the other hand, the servers business is difficult for everyone ; but here HP is doing better than Lenovo at preserving its market share and revenues. HP also stole market shares in Canada and USA :

Lenovo remains the leader in a PC market struggling through a prolonged downturn as people opt for smartphones to handle everyday tasks. But it barely maintained pole position over HP as its chief rival widened its share in North America, according to research firm IDC.
https://www.bloomberg.com/news/articles ... lobal-lead

This is another confirmation (after the Thinkpad disaster) that everything Lenovo touches become crap. It's either due to the CEO or the shareholders, but in any case, they're excellent at crashing every opportunity that comes to them.

If they would sell the PC business to whomever may buy it, they would have a one time cash income - and once that is spend, game over. But keeping the PC group running already makes them the cash they need to pivot the other business groups - as long as it does turn in a profit. So I think milking it as long as possible might make more sense for them.

A one time cash earning, yes, but a big one which could be necessary to impulse a grand new project. In parallel they could downsize, sell either the server or phone business, and again reinject that in the grand new project. It's more risky but that's what IBM did and now their research projects such as Watson and neuromorphic chips are starting to pay off - they're at the forefront of the next computing revolution. Lenovo is... behind, awfully behind.

[Dekks]

A one time cash earning, yes, but a big one which could be necessary to impulse a grand new project. In parallel they could downsize, sell either the server or phone business, and again reinject that in the grand new project. It's more risky but that's what IBM did and now their research projects such as Watson and neuromorphic chips are starting to pay off - they're at the forefront of the next computing revolution. Lenovo is... behind, awfully behind.

IBM are in a bigger mess than Lenovo, like Oracle their revenues are shrinking month after month, global services mired in red ink, redundancies pile up and the good ppl leave leaving a husk behind. It's most likely they will sell their best assets soon to keep the share price high so the senior management don't loose out on their share option as they spiral the plughole.

[micrex22]

IBM are in a bigger mess than Lenovo, like Oracle their revenues are shrinking month after month, global services mired in red ink, redundancies pile up and the good ppl leave leaving a husk behind. It's most likely they will sell their best assets soon to keep the share price high so the senior management don't loose out on their share option as they spiral the plughole.

IBM is in a way better spot than they were in times past, read Louis Gerstner's book if you want some more insight: https://www.amazon.ca/Who-Says-Elephant ... 0060523808).

A lot of tech companies are taking a slight hit (including Microsoft and Intel). IBM's mainframe, tape and Watson 'Cognitive Solutions' divisions are shining quite a fair bit. Plus they make a fair bit of vampiric revenue from their patents and insane R&D labs.

So IBM isn't in a bigger mess than Lenovo, although I don't think either are really in bad situations

Oracle also has been in worse situations in times past--although I don't like that company one bit. Their culture is fairly disgusting, similar to Microsoft's actually.

[Ibthink]

Lenovo remains faithful to the PC hardware and wants more - German Translated article

"The company also took a position on the news that had taken place in recent days. The "Handelsblatt" had interpreted statements from the Lenovo CEO as farewell to the PC business. [...] "No, we're not going out of the PC business," Roettger said. "We can hardware and we want hardware". The hardware sector is profitable and continues to be part of the core business of Lenovo."

Handelsblatt also corrected its clickbait-headline by now...

[Summilux]

"No, we're not going out of the PC business," Roettger said. "We can hardware and we want hardware".

ROFL ! No, you cannot hardware anymore and you merely want to milk consumers.

"The hardware sector is profitable and continues to be part of the core business of Lenovo."

Actual translation : "The consumer milking sector is profitable and continues to be part of the core business of Lenovo."