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What IBM Must Do To Ensure Success of Lenovo Deal

Some people are calling it the end of an era, others the beginning of a new one, while still others speak of it as a major breakthrough in how American industry can leverage low-cost Chinese production capabilities. What I am referring to, of course, is the $1.25 billion sale of IBM's $10 billion Personal Computing Division manufacturing operations and supply chain to China's Lenovo Group, whose primary shareholder is the Chinese government. Yes, this is a company owned by a communist country, and that is clearly going to raise some issues in regard to ThinkPad sales to the U.S. government or any organization that has policies restricting such purchases.

This complex, five-year pact to transfer IBM's notebook and desktop operations (including patents and people) to Lenovo boils down to one thing: chairman and CEO Sam Palmisano's desire to vest IBM of an operation that was no longer a priority and marginally profitable at best. IBM, which will have a 19 percent stake in the new company, says it will take at least three months for the deal to close, but between now and then it is crucial for a number of events and moves to transpire to ensure the success of the ThinkPad product line and to maintain the loyalty of the business partners who sell those products.

So let's put some of the speculation and colorful backdrop of this story aside for a moment and look at several moves that IBM must make quickly

  • Name a channel chief for the IBM/Lenovo operation immediately. There are a number of great candidates for this position, and IBM is already conducting interviews with internal candidates, but it cannot delay this move. Of course, industry insiders would like to see IBM channel veteran Frank Vitagliano assume this role, but it was unclear at deadline who would take over the position, which would report into worldwide sales executive Ravi Marwaha. Under IBM's current structure, executives responsible for setting partner strategy and managing channels are in the worldwide partner organization headed by Donn Atkins.
  • Communicate with the leading channel executives so they clearly understand the strategy. On Thursday, Dec. 9, the heads of the major channel organizations -- Ingram Micro, Tech Data, CDW, Synnex and Avnet, among others -- gathered for a major investor conference sponsored by Raymond James & Associates. None of the CEOs, including such industry moguls as Steve Raymund and Kent Foster, who are IBM's largest partners, could offer much insight into the IBM sale and what it would mean for their businesses. It was not comforting to investors or journalists asking questions of these executives that their answers were based on what has appeared in newspaper and Web site reports. You could plainly see they wanted to understand the ramifications of this deal in greater detail so they could offer more insight to inquisitive customers.
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