10 years after: Lenovo’s acquisition of IBM’s PC business proves a winner

Peter Hortensius, a senior Lenovo executive who’s a former IBM-er, remembers being both enthused and apprehensive when China-based Lenovo agreed to acquire IBM’s struggling PC business in late 2004.

“One one side, you are very excited,” said Hortnensius, who was part of IBM’s negotiating team and is now senior vice president and chief technology officer at Lenovo. “You are joining a company that wants you. IBM didn’t want us anymore. That’s why they sold us.”

“On the other hand, you are nervous,” said Hortensius, who was vice president and general manager of the Think brand at IBM. “I knew we had to fix some things.”

With the benefit of 20/20 hindsight it’s clear that Lenovo, which is celebrating its 10th anniversary of the IBM deal on Friday, fixed lots of things. It didn’t happen overnight but eventually Lenovo, which was the No. 1 PC maker in the Chinese market but was little-known outside of Asia, turned around IBM’s PC business – which included the iconic ThinkPad laptops – and used it as a stepping stone to become the world’s No. 1 PC maker.

“I don’t think I ever dreamed...that we would be sitting atop the PC market with the success we have had,” Hortensius said.

Among other things, Lenovo expanded the Think brand beyond laptops to workstations, servers and tablets. And while IBM focused on the large corporate customers it knew best, Lenovo developed products for small and mid-sized businesses and consumers as well.

At the time of the acquisition, Lenovo and IBM combined generated $12 billion in annual PC sales. Today Lenovo’s annual PC sales are $25 billion.

“We’re very proud of these results,” Hortensius said. “At the end of the day, these results are a testament to the team.”

The IBM deal also made Lenovo a major Triangle employer. Today is has about 3,500 local employees and a headquarters in Morrisville.

“We’ve kept the core of what Raleigh was about in 2005,” Hortensius said. “Our ThinkPad group is still based in Raleigh.”

Still, he said, Lenovo’s culture is very different than IBM’s.

“IBM, at the end of the day, is a North American company,” he said. “Lenovo is a truly global company. We run twin headquarters (in Beijing and Morrisville). If you look at our executive team, we live all over the world.”

Lenovo also has what Hortensius calls a “commitment culture.”

“If we say we’re going to do something, we do it and then we try to overachieve it,” he said. “It’s a subtle thing, but it makes a huge difference.”

This story was originally published April 29, 2015 at 3:45 PM with the headline "10 years after: Lenovo’s acquisition of IBM’s PC business proves a winner."