Transcript Lenovo Corporate Template - IP

Lenovo purchase of IBM PC Division
– IP and branding in Business Strategy
Peter Juul Jørgensen, Country General Manager
Lenovo Denmark
Lenovo Confidential | © 2006 Lenovo
Original Lenovo: from humble beginnings…
• A vision to commercialize science
and technology research results
• Starting business: to distribute and
service imported PCs
• 11 founding members
• Initial seed investment of just 25K
1984
Page 2 of 29
Lenovo Heritage
Pre-acquisition:
• #1 IT company in China
• #1 IT brand in China, #3 brand overall
• #1 PC unit market share in Asia Pacific
• #1 PC unit market share in PRC for 8 years
• FY04: Revenue, $3B; Net Profit, $146M
HomeProducts
• Desktop PCs
• Tianyi notebooks
• Xuri notebooks
• Inkjet printers
• Cameras
• MP3 Players
Commercial
Products
• Desktops
• Notebooks
• Scanners
• LaserJet printers
• Servers
• Super computers
Cell Phones
• Mobile handsets
*Source: IDC Worldwide Quarterly PC Tracker 4Q05.
PC includes desktops, portables and x86 servers
Page 3 of 29
IBM PC Division Innovation
The IBM PC
The ThinkPad
Page 4 of 29
The New Lenovo: Overview
• $14B sales (last 12 months)
• 19,000 employees
• Principal operations: Raleigh,
Beijing
• Public company with ownership
positions by Lenovo Holdings, US
Investor Group and IBM
• #3 worldwide share
• #1 market share in China
Page 5 of 29
Customer Value
Innovative
Products /
Broader Portfolio
Continued IBM
Sales Coverage
World Class
Service and
Support
IBM Financing
Ease of Doing
Business
Global Business
Partner Network
Page 6 of 29
IP was a very important asset category for the Transaction
• Assignments of:
– Utility Patents, directly related to the PC Product Set
– Design Patents, protecting important Design Elements of PC Products
– Trademarks, used by PC System Products and Peripherals
– Copyright-protected Documentation and Software for the Business
– Technology / Know-How / Design IP / Trade Secret IP for the Business
• Plus, important IP owned by Lenovo in these same categories
Page 7 of 29
IP was an important facet of the Transaction Negotiations
• Appropriate subset of IBM’s large patent portfolio (Corporate Asset)
–
–
–
–
–
Some prolific inventors in IBM’s Research Division and other IBM Divisions
Some inventions by PCD technical staff were not related to PC’s
How to arrive at the right business balance?
How to craft this into agreement language?
Similar challenges for assigned patent applications and invention disclosures
• Appropriate subset of IBM’s large software portfolio (Corporate Asset)
– Funding, creation, usage and expertise “ownership” varied
– Some SW wholly within PCD (easy negotiation)
– Some SW heavily shared, jointly developed, etc. (problematic)
• Some technologies shared by two or more IBM Divisions
– Some commonality among IBM’s several Hardware Businesses,
such as low-end Servers, Embedded PC Systems, Point-of-Sale Systems
Page 8 of 29
Lenovo’s Worldwide IP has continued to Evolve
• New patents granted
– Ongoing Application & Invention Disclosure pipeline
– Portfolio strength in China, US, Japan, and many foreign counterparts
• Robust base of design IP
– Derivative works continue from divested PC “platform” IP
– New products emerge from Know-How IP
– Pre-existing IP+ Acquired IP+ Design Talent drives Product Innovation
• Further Trademark deployment and development
– Use of Think-related brands on products in China, and worldwide
– Introduction of Lenovo-branded products worldwide
– Protection of related brands and sub-brands as the product set evolves
Page 9 of 29
Value Proposition: Best Engineered PCs
Best
Keyboard
ThinkPad Roll Cage
Biometrics with a
Security Chip
Shock-Mounted Hard Drive
Active Protection System
Rescue and
Recovery
Spill Proof
Keyboard
Page 10 of 29
Page 11 of 29
Brand health makes a big financial impact
• Returns
– Strong brands generate returns of
1.9% above industry average
– Weak brands generate returns of
3.1% below industry average
3
2
1
0
Stong Brands
Weak Brands
-1
• Half of market value of Fortune 250 is in
intangible assets
-2
-3
-4
Returns
Source: Brand Leverage Study, McKinsey Quarterly, 1999 (130 Companies)
Page 12 of 29
Buyers value the company behind the product
Worldwide Rankings
1
Customer support
Value pricing
2
3
4
5
Question:
Please rate the importance
of each of these vendor
qualities when choosing a
PC manufacturer.
PC functionality
Manufacturer brand
Leading edge technology
Flexible warranty programs
Delivery
Consultation in buying
process
Financing
Source: 2005 Gartner SB/VSB Study
Page 13 of 29
Outside of China, Lenovo has little recognition….
Value
Easy to buy
Personal?
Design
Easy to Use
Low price
?
Clear brand positioning helps customers choose.
Page 14 of 29
Branding Strategy
 Build Lenovo into a strong master brand known for innovation,
customer service and high quality.
 Strengthen the ThinkPad product sub-brand.
Page 15 of 29
Lenovo’s Three-Phase Business Strategy
Phase 1
Deliver on the promise of Lenovo
and on our commitments
Phase 2
Increase our competitiveness
through operational excellence,
innovation, and branding
Phase 3
Drive aggressive, profitable
growth
Page 16 of 29
Three Phases of Brand Building
2005
2006
2007
Maintain continuity and trust
Strengthen the ThinkPad brand and introduce Lenovo
Leverage the IBM
brand to maintain
sales momentum.
Accelerate Lenovo Brand Building
Emphasize ThinkPad
brand; start to link it to
Lenovo brand
Move away from IBM
and focus on Lenovo
and ThinkPad
Page 17 of 29
Phase 1
Maintain continuity and trust
Actions
• Great products
• Leverage IBM support and sales
• Show IBM logo in product photos
• Signoff advertising with ThinkPad
• Extensive PR
Results
• #1 customer satisfaction
• Continued regard for ThinkPad
• Maintained sales momentum
• High share of press (positive)
Page 18 of 29
Phase 1 Advertising
• Emphasize quality and
innovation
• ThinkPad signoff
• Visible IBM logo
• Lenovo intro
Page 19 of 29
Phase 2
Strengthen the ThinkPad brand,
and introduce Lenovo brand
Actions
• More great Think products
• “ThinkPad Unleashed” campaign
• Torino Olympics
• Introduce Lenovo-branded products
• Viral activities
Results
• Lenovo starting to be viewed as
making ThinkPad better
• ThinkPad metrics strong
• Lenovo awareness growing
Page 20 of 29
Page 21 of 29
Phase 3
Accelerate Lenovo Brand Building
Activities
• Clear, ownable positioning
• Formula One and Olympics
• PR
• Add Lenovo logo to Think products
• Exciting products
• Brand internalization
• Corporate Social Responsibility
Results Expected
• #1 Customer Sat
• Stronger Lenovo Brand
• Increase ThinkPad strength
Page 22 of 29
Page 23 of 29
”Green PC’s”
Page 24 of 29
”Green PC’s”
Page 25 of 29
Page 26 of 29
Why the Olympic Games?
• Sports marketing is a broadband solution for brand-building
– Innovation and technology are crucial in the operation of properties
• Worldwide sponsor of the Olympic Games
• Formula One
– Business opportunities with properties and their partners
– Reach from C-level officers to consumers
• Olympic Games are far-reaching
– An estimated 4 billion tv viewers worldwide will watch the Beijing Olympic
Games
• The Olympic Games offer a showcase for our technology
Page 27 of 29
Olympic Torch Relay: Key Moments in Time
Apr
2007
May
2007
Jun
2007
Jan
2008
Mar
2008
Apr
2008
OTR Sponsor/
Torch Design
Announcement
Mt. Everest
Test Event Reactive
Call for
Torchbearers
Announce – Oct
completion
Begin Pitching
Torchbearer
Stories
Flame
Lighting
Ceremony
Champions
OTR Media
Tours –
Design Tour
Launch Lenovo
Publicity/
Viral Programs
International
Relay
Page 28 of 29
Brand Attributes, Company and Products
Lenovo’s
Common
Attributes
Think Family
The Ultimate Business Tool
3000 Family
The Smart Choice
Innovative
•Success/Prestige
•Rock Solid*
•Lowest TCO
High Quality and Reliability
•Worry-free
•Great Value
•Exciting/Stylish
Service Excellence
Value Proposition
We help customers succeed by
providing them a smarter way to
be more productive
Value Proposition:
We help customers achieve
their work and personal goals
by providing them exciting,
affordable and worry-free PCs.
* Highest Quality, Reliability and Security
Page 29 of 29
backup
Page 30 of 29
New World Culture
From West to East
•Worldwide management savvy
•B2B marketing skills
•Design and engineering
strengths
From East to West
•Energetic entrepreneurship
•Consumer & emerging
market leadership
•Supply chain efficiencies
Values
• Shared Values
• Focus on Innovation
• People development
“Lenovo will boast a rare combination of management savvy, technical
expertise, low costs, and proven track record in the developing world.”
Page 31 of 29
Brand Positioning:
Product Map
Everyone
Putting more innovation in the hands of
more people so they can do more
amazing things.
Few
Commodity
Innovation
Page 32 of 29
Ownership
Chinese
Academy of
Sciences
Lenovo Holdings
(Private)
43,2%
Employees’
Shareholding
Society
65%
35%
Public
Shareholders
IBM
13,4%
33,2%
Investor Group
TPG, GA, NC
10,2%
Lenovo Group Ltd.
(HKSE Listed)
Page 33 of 29
Lenovo’s Global Operations
Paris
RTP
Mexico
Hungary
Beijing
Xiamen
Shenzhen
Japan
Shanghai
Huiyang
Principal Operations
Research Centers
Sydney
Sales Headquarters
Manufacturing Centers
Page 34 of 29