Emerging markets in blue, mature markets in red (Image courtesy Wikipedia)
Rumors are swirling that Lenovo has closed on a deal to buy Brazilian PC-manufacturer Positivo and is also at least interested in buying beleaguered smartphone company Palm.
We expected Lenovo to be shopping for an “easy” way into some new markets, but didn’t expect the news of two such acquisitions so close together. The Positivo talk is nothing new: Lenovo has been talking with Positivo for years and the timing may finally be right for the acquisition. Brazil is a huge potential market, and one of Lenovo’s crucial “emerging markets,” but tough to break into because without local manufacturing plants companies are subject to large tariff’s for importing their goods.
The Palm news also makes a good deal of sense, considering Lenovo bought back their mobile phone division in November 2009, paying double what they sold it for only 18 months prior. Palm’s recent line of smartphones haven’t been selling well amidst stiff competition from other smartphone companies and the exclusive availability on Sprint, only expanding to other networks recently.
Where are they going with this?
The gist is the same with both of these acquisitions: get a (relatively) easy foot in the door in their crucial areas to facilitate strong market leadership. Their game with the smartphone business will be interesting; are they looking to get another company’s hardware designs, or their software? Some of Lenovo’s China-only phones use Google’s Android operating, and I know Lenovo has a strong relationship with Google in other areas, so seeking out new hardware might make sense. But with Palm, their standout asset is the powerful, if under-appreciated, WebOS software.
Brazil will also prove to be an interesting exercise. Getting a stronghold in the burgeoning nation is a no-brainer, but how will they handle the existing Positivo brand? Being the largest computer manufacturer in all of Latin America, it would make sense to keep the strong brand positioning, but how will that coincide with the IdeaPad and ThinkPad brands? Perhaps someone with a closer insight into the South American PC industry can enlighten us in the comments.
For now, stay tuned in the coming weeks for official announcements. I have a feeling the Palm talk is just hearsay at this point, but I know Lenovo is itching to get into Brazil and wouldn’t be surprised for that rumor to come true.
Source: [Local Tech Wire]
{ 1 comment… read it below or add one }
Poor Lenovo — they need to look inward to fix basic problems like (screen quality on their existing products). Buying companies then reducing quality to the point that customers revolt really isn’t a sustainable business model in the long term.
(Written from a beautiful IBM Thinkpad T61…)
You must log in to post a comment.