LENOVO 121 With the global recession, corporate customers were cutting back on spending. Computer makers like Dell and Lenovo that had depended heavily on corporate customers for sales were losing market share. Lenovo's global PC market share fell to 7.2 percent in 2008 from 7.5 percent a year earlier. In the fiscal quarter ending on December 31, 2008, Lenovo reported a loss of $97 million, down from a net profit of $172 million during the fourth quarter a year earlier. Sales dropped 20 percent from $4.49 billion a year earlier to $3.59 billion. Amelio's effort to turn Lenovo into a globally recognized brand had seemed like a good idea at the time. What was lacking was a compelling product line to justify the market hype: With uncom- petitive products and an inadequate sales presence at the local level, the money spent on branding simply increased costs without adding to sales. Lessons Learned The fact that Lenovo went back to relying on Chinese managers and shifted its focus back to China, emerging markets, and indi- vidual customers does not mean that the original acquisition was a bad idea. Legend had wanted to go global in 1988, but it only considered being serious about it in 2003, when it had become clear that diversification had failed and that there was not enough room for continued growth in China. Everyone knew that going global would require considerable time, and the IBM deal still looks like an ideal choice. The deal gave Lenovo everything the company needed to be a global enterprise: brands, customers, exec- utives, R&D, channels, and a global sales force. IBM was straight- forward and highly sophisticated in building the relationship with Lenovo and China. The payoff for IBM was not the onetime deal with Lenovo but the ever enlarging software, consulting, and serv- ices business in China itself. American Management Association / www.amanet.org